• Self-employed planners reported the biggest jump of 26%, bringing their median income to $110,000.
• Planners working at financial planning firms saw a 6% increase to $117,000, while those affiliated with broker-dealers moved up 8% to $106,000.
• The highest average income - $172,722 - was reported by planners who use both fees and commissions, a 10.8% increase.
• Fee-only planners reported the lowest average income -

The article also points out that "the fervor of the fee-only movement has abated in recent years, with many planners opting for some combination of fee and commission structures among clients whose income can vary widely."

SLOW MARKET, LOWER PREMIUMS DRIVE PROFITS UP? - Life reinsurance companies are having banner years, according to research by Conning & Company ("Life Reinsurance, Profiting from Risk"). The reason is purely mathematical. As the life market in the U.S. has slowed and competition has increased, many primary life companies are passing more and more risk through to reinsurers (for example, in 1994 only 31% of life business was reinsured, but by 1997 it had grown to 59.3%). This is increasing the "pool of lives" for the reinsurers, resulting in more accurate pricing models and lower premiums.

INTERESTING - Answer Financial, Inc. recently raised another $35 million to fund its Insurance Answer Center. The Center offers auto, home, life and annuity products over the Internet to employees of large companies and affinity groups. The interesting part is that one of the major investors is Conning & Company, a well-known research firm that we quote frequently in E-News (see above). They should know the market...let's see if all that research pays off.

QUICK UPDATE - The NAIC has recommended a package of amendments to the Financial Services Act of 1999 (H.R. 10) that are intended to clearly define how insurance and banking products will be regulated. The NALU, IIAA and NAII trade groups have all lined up in support of the proposed NAIC amendments. The House Commerce Committee is currently debating the bill and is expected to make changes favorable to the securities and insurance industries. Meanwhile, word has it that Senate leaders are expected to meet to settle differences and debate on financial services reform could begin soon on the Senate floor.

GOING...GOING...GONE? - The "window of opportunity" for reforming Social Security may be closing. We're again faced with our politicians placing more importance on short-term political risks and rewards, rather than on long-term solutions. The Republicans apparently feel that reform carries with it too many political risks prior to the next election. While President Clinton set the stage for discussion by proposing that budget surpluses be used for Social Security purposes, neither the While House nor Congressional Democrats have put forward a detailed plan on Social Security reform, apparently preferring to use the issue as a "club" against Republicans in the next election. On Thursday, the Social Security Administration released an analysis concluding that a House Republican proposal to create individual investment accounts (the Archer-Shaw plan) would eventually solve Social Security's financial problems and could result in a lowering of the payroll tax by 2050. Perhaps this positive news will spur some positive Congressional action.

AWESOME! - The Commerce Department reported on Friday that the U.S. economy grew at a strong 4.5% annual rate in the first quarter of 1999, far exceeding expectations. This solid growth in gross domestic product (GDP) came despite a record trade deficit of $55.6 billion. Without the trade deficit, the GDP would have grown a remarkable 6.9% in the first quarter.

IPO CONCERNS - In its most recent issues, Investment News reports on IPO concerns at both Prudential and John Hancock, both of which are preparing for initial public offerings next year. At Prudential Investments, both its president and chief investment officer have left in recent weeks, on the heels of disappointing results from a $20 million sales and marketing campaign and as Prudential Investments continues to lose market share. Meanwhile, John Hancock Funds' has seen its two signature portfolios struggle, resulting in a 40% decline in gross fund sales this year.

PASSING GRADE - The Securities Industry Association (SIA) reports that a test of the ability of Wall Street's computers to process mutual fund transactions in the year 2000 was conducted through a testing cycle of simulated trades over the weekend of April 17-18 with no disruptions.

COPS GO AFTER SNOOPY! - The entire police department of Cohoes, New York has brought suit against MetLife for misrepresentation and fraud in the sale of life insurance policies ("vanishing premiums" again).

EXCHANGE NEWS - Unable to design a feasible combination, the NASD and Philadelphia Stock Exchange have terminated discussions concerning a possible merger. Meanwhile, SEC chairman Arthur Levitt supports plans by U.S. stock exchanges to extend trading hours, but only after any year 2000 computer problems are addressed and the transition from fractions to decimals in stock trading is completed.

INTERNATIONAL CONCERNS - A recent Internet publication quoted a VP of Claims at a large eastern mutual as saying that "30% of international death claims are fraudulent and the foreign death claims are rising at 6% to 8% a year." If this is true, some carriers need to reassess their international operations.

ELIMINATE EMPLOYERS - From the health insurance system, that is. Presidential candidate Steve Forbes asserts that the best way to control health care costs is to take decision-making power from employers and return it to employees. Mr. Forbes is essentially proposing a medical savings account structure under which employers would deposit the amount they would normally pay for coverage into MSAs for their employees. Employees would then have an incentive to manage these funds more judiciously than under the current system. The proposal makes some sense. For example, a RAND Corp. study from 1974 to 1991 found that when individuals were forced to pay more of the cost, health care utilization dropped significantly.

SUITING UP - American Express Financial Advisors is facing a federal lawsuit that challenges the company's practice of deeming its 10,000 financial advisors "independent contractors" rather than "employees." This is a hot issue today, with American Express joining a growing list of companies being challenged by workers regarding their job status. Since workers classified as employees are entitled to benefits and companies have to pay payroll taxes, the financial impact on companies of suits such as these can be significant.