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June 12, 1995 01:00 AM

APOLOGY FOR MY LETTER; ADVISER'S DUAL CIOS;DAILY 401(K) SWITCHING

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    Please make public my apologies to Bob Shultz for a remark that appeared in the Letters to the Editor section of your May 29 issue.

    My strong reaction to the earlier news article (May 1, page 46) about David Storrs and The Common Fund clouded my judgment. That reaction, of course, was the result of 11 years of cherished experience with The Common Fund and its leadership, and also the article's unfortunate assertion that Bob's differences with David Storrs would make The Common Fund's hiring of a CIO "more difficult."

    Clearly my differences with Bob Shultz are personal, involving primarily differences of style and our views of corporate management. These, like some of the views expressed in the article, should have remained private and in any event should not have left the impression that I consider him any less than a competent, knowledgeable professional.

    I also erred, more greatly still, in writing the letter on Collins' letterhead and, in so doing, inadvertently involving this firm in my own effort to defend The Common Fund. It should be clear that no person at Collins beside myself had any knowledge of this letter before its printing, and that the sentiments expressed there are solely my own and not in the least representative of Budge Collins or Collins Associates.

    Daniel A. Wingerd

    Redlands, Calif.

    I am writing to you on behalf of Woodford Capital Management Inc. In January, we responded to the Pensions & Investments 1995 Investment Adviser questionnaire. Due to an error on our part, an omission was made. When asked for the name and title of the firm's chief investment officer, only one individual was named, myself, in the profile published on page 105 in your May 15 directory of money managers.

    The response also should have included Michael E.S. Gayed, president and chief investment officer. Mr. Gayed is my fellow principal at Woodford Capital Management and the other founder of the firm.

    Additionally, the suite number for our New York office is 1401, not 1410 as listed.

    Thank you for your inclusion of Woodford Capital Management in the investment management database and directory.

    Peggy Woodford Forbes

    Chairman, Chief Executive Officer & CIO

    Woodford Capital Management Inc.

    San Francisco

    Brian E. Schaefer's March 6 Commentary Page article, "The trouble with daily switching for 401(k)s," was interesting and raised a number of valid concerns. But I feel his views on the dangers of 401(k) plans offering daily switching capabilities oversimplified a number of key issues and trends in the retirement arena today.

    Companies are moving away from defined benefit plans as the primary retirement source for their employees. These plans are expensive to run and difficult to budget for, especially in a corporate environment where earnings are more volatile. Companies are not anxious to expose the balance sheet to pension funding requirements especially if long-term earnings are not easily predictable.

    Companies also feel pension plans create a false sense of security. As employees become retirees and live substantially beyond age 65, the original pension cannot sustain these retirees in the later years, especially when inflation is factored into the retirees' budget.

    Employees are becoming more mobile. Long-term pension formulas do not help a mobile workforce meet retirement needs. Therefore, employees give little credit to companies for their pension plans because the plan is not likely to impact many of today's employees. In fact, we see a trend today to cash balance pension programs so employees can see their benefit and often carry it with them to their next employer.

    Most importantly, employees need to take ownership for their own retirement planning. The movement into 401(k) plans today is an attempt to make retirement funding a shared responsibility. To encourage employees to participate and contribute to their 401(k), these plans have become more flexible. You usually see hardship provisions and loan provisions in plans. These provisions give employees the courage to save because they have a safety valve in their plan should a life crisis occur.

    As more account balances are made up of employee contributions, it is reasonable to give that employee control over these amounts. We also know many of these people will change jobs, taking their vested balances with them. In a few years, the baby boom generation will begin to retire, many with substantial retirement plans being rolled into individual retirement accounts. They need to develop the expertise to deal with these monies. In the 401(k), the company does have some input and control, particularly in the selection of the investment choices. After retirement or distribution, the entire financial product array is available to these people. They must be prepared to handle this responsibility.

    I would agree with Mr. Schaefer that the flexibility of daily systems were given to the employees before the education and training they need to effectively deal with the money. That gap is being closed quickly. Plan sponsors are demanding from service providers the needed educational programs, and we are quickly developing these programs to meet the demand.

    Daily valuation can be dangerous if not handled wisely.

    However, companies do not feel they can or should play the role of a father protector to their employees. By providing quality plans with focused investment choices and supporting these plans with effective educational and retirement programs, the plan sponsor can best prepare employees for the day they are entirely on their own with these benefit dollars.

    Timothy J. Connors

    Senior vice president

    Manager-Large Corporate Institutional

    Asset Services Sales

    KeyCorp

    Cleveland

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