Part 3

Steve: But if I hear this, and I'm not very sophisticated, I would say, "I'll go for the twenty-five percent one." So what's the hitch? I mean, why wouldn't everyone place their money in the twenty-five percent fund, and stay away from the six percent fund? Or is there significantly more risk in the twenty-five percent fund?

Carrie: Well, the hedge fund itself is, you know, fairly-the risk for return is quite attractive. It has a very talented manager behind it, and it has done quite well. What you want to do within any portfolio is you want to diversify among the asset classes, because conditions in the marketplace change. Interest rates rise, interest rates fall, the economy's a little bit more active in other years than it is in recent times. So what you're looking for is not to have all your eggs in one basket. You want to diversify among the different asset classes, so if things work out to favor-you know, the marketplace doesn't [inaudible] one particular asset class. If you're invested elsewhere, you have that protection. Steve: Now, how about people who try to play the market at home, and study the newspaper and read all the reports about how different companies are doing-I guess there must be quite a range. Some of them might be quite successful, some of them less successful. Would you say that by and large, people are better off to go to a professional manager?

Carrie: Well, some people like to, you know, be involved in the markets themselves, just for the adrenaline rush, you know, the [inaudible], they're making their own decisions. But over time, there are some people that have done quite well. Luck of the draw, in some cases, others are kind of the hobby man at home that do this. But the professional is someone that can look at your portfolio objectively and take the emotional quotient out, so that they're not making irrational decisions, they're actually making, you know, putting in place a [inaudible] strategy, and that might work in your favor in the long run, because it's great to have the big win one year, but can you sustain that? Sometimes the exuberance of that big win will lead you in an even greater fall, so we recommend professional advice, but you know, if you want your play money on the side, we don't necessarily frown against that. Steve: Now, getting back to some of the areas, Howie, that you mentioned initially-the employee benefits. Are there trends in terms of employee benefits? Is this a sort of a static industry-health, whatever-or are there different programs and different demands, different needs, different products coming out all the time?

Howie: Originally, I would suggest, in the seventies there were a trend in employee benefit plans. I guess, the overall, riding kind of philosophy of the benefit plan was to prevent an employee from having a financial catastrophe due to a health problem. In other words, if he had a health issue, which required a significant expenditure to cure, they didn't want him to be financially bankrupt of that. At the same time, it was still part of his or her responsibility, so there would be deductibles put on that. For example, I would suggest in the seventies, on a typical health plan there would be a twenty-five dollar deductible. In other words, you paid the first twenty-five dollars, and then after that the insurance company would pick up the remainder. Same with dental plans. And then in the eighties, there was a real shift in kind of the philosophy, and it was based on competitiveness in the marketplace, whereby companies were providing benefit plans that provided everything. There was no deductible. One hundred percent dental plans, one hundred percent health plans. So consequently, the employees would use these plans because it didn't cost them anything, because the benefit plan would pay the whole thing. The backstop to that was that these contracts are annually renewed every year by the insurance company. So the company would have an annual renewal with the insurance company. The insurance company would look at-for example, they would say, "Okay, we collected one dollar of premium, we paid out ninety-three cents, so we had a seven cent spread on that, which is not enough to pay for our overhead or our profit to our shareholders. So this year, instead of charging you a dollar, we're going to charge you $1.20." And this trend continued to the point that health costs became unworkable. They became very expensive. So the trend now is to go back to these deductibles, and also have what is called "coinsurance," which is, rather than a deductible, a percentage. So for example, you may have an eighty percent dental plan, which means that you pay for the first twenty percent of the cost, and then the following eighty percent is picked up by the insurance company. So that is kind of the new trend now, and there's even a more evolving trend now, called health spending accounts, where a company, rather than providing specific benefits, will give you an allowance of X amount of dollars per employee, and how you spend that in your health account is up to you. So it is an evolving market.