Corrections or additions?
These articles by Kathleen McGinn Spring and Bart Jackson were
prepared for the June 23, 2004 issue of U.S. 1 Newspaper. All rights
reserved.
Survival Guide
Top Of Page
Poppy Comes to Princeton
Stockbrokers are drawn to Princeton like metal to a magnet, with the
most recent additions to the retail financial scene being Fidelity
Investments and TIAA-CREF.
Now here comes David Lerner, the 68-year-old from the Bronx whose
pitch is frequently heard on New York radio stations. Unlike most of
the giant companies, Lerner’s firm carries the founder’s name. And
unlike the company that Charles Schwab founded – which does have the
founder’s name – Lerner personally supervises and gives seminars for
potential clients. Lerner will speak at Seasons on Quakerbridge Road
on Wednesday, June 23, at 7 p.m. The seminar is free by reservation;
call 609-806-2700.
Lerner’s firm is regional, and his target client is over 50, those who
are finished raising their children and have a little money to invest.
It has more than 50,000 clients and 350 employees in five offices,
including the headquarters in Syosset, Long Island, and branches in
White Plains, New York; Darien, Connecticut; Teaneck; and now
Princeton. One of David Lerner’s younger brothers, Martin, works for
the firm.
The founder’s story, billed as a Horatio Alger tale, starts with his
being the son of a house painter. He grew up with four brothers in a
small apartment in the Bronx, developed polio at age 13, and spent a
year in a charity hospital. He graduated from Hunter (now Lehman)
College and has a master’s degree from the City University of New
York. He taught history and economics for years at Bayside High School
in Queens and sold mutual funds on the side.
David Lerner’s "Eureka moment" came in 1976 when he was taking a
shower.
"He had this brilliant idea that he could teach investing to the
public the same way he was teaching his high school students. He
called out to his wife that he had a great idea for a new business and
was told to get back in the shower and not make the floor wet," says
Susan Lipsig, company spokesperson.
The "Poppy" part of Lerner’s ads came from his grandchildren, who
called him by that nickname. "He used to say he was buying zero coupon
bonds for his grandchildren," says Lipsig, "and so we called them
Poppy bonds. We began to use that in the ads, saying, `Take a tip from
Poppy.’ So he became known throughout the area as Poppy."
Vince Monaco manages the new Princeton branch, which moved on Monday,
June 14, into 5,200 square feet on Rockingham Row at Princeton
Forrestal Village (609-806-2700). Matthew Malatich of CB Richard Ellis
helped Lerner find this space, and Greg Lezynski represented the Gale
Company.
The son of a New York detective, Monaco grew up on Staten Island and
majored in marketing at Pace University, Class of 1986. He was
assistant branch manager in Teaneck before coming to Princeton to open
this office. He and his wife live in Mahwah and have three school-age
daughters, including a set of twins.
Though Lerner is a full service firm with a $20 billion portfolio, it
has a definite bias toward tax free municipal bonds, real estate
investment trusts or REITS, and collateralized mortgage obligations.
"Our sales policy is safe, conservative, dividend producing, focusing
on preserving capital," says Monaco.
Recruits go through a 12-week training period and do not need industry
experience. In fact, inexperience is preferred. "We have our own
philosophy," says Monaco. "We bring in a lump of clay and mold them to
be a David Lerner broker. Our message is loud and clear. Tax-free
bonds are essential and the stock, for us, is an accommodation. None
of our brokers will ever call our clients with the hot stock of the
day."
Lerner brokers will offer stocks or mutual funds as an accommodation
for a client who insists on buying them, but Lerner focuses on older
clients who want to preserve capital and gives them three investment
opportunities:
Bonds. "We have one of the largest regional municipal bond trading
desks on the east coast, and we trade millions of dollars a day. We
carry dozens of bonds at any given time," says Monaco.
The value of the bonds will go down in a rising interest rate market,
Monaco admits, "but if you hold them to maturity you are guaranteed
the interest rate will never fluctuate and you will get the principal
back at maturity." On what he calls the "buy and hold" philosophy
Monaco advises his clients to buy the longest maturity to get the
highest coupon rate.
With its big focus on municipal bonds, the Lerner company sells them
at both a wholesale and a retail level. Retail sales are represented
by offices like Princeton’s. On the secondary market, Lerner could
sell to banks or brokerage houses. As might be expected, the company
has very good relationships with municipalities, and after the 9/11
crisis David Lerner and Bear Stearns together raised $1 billion in
municipal bonds for the city of New York.
REITs. Lerner always offers a real estate investment trust, and the
last four REITs in its portfolio focused on hotels. The current REIT
has extended stay hotels and targets an eight percent dividend. "They
cater to traveling business people who always have to do business.
Even if they can’t fly, they will drive," says Monaco. After the 9/11
crisis, occupancies dipped, "but that went right back up and we were
able to pay our dividend. We don’t say it’s guaranteed, because it is
a business. But it is a business with an 11-year track record and
52,000 investors."
Collaterized mortgage obligations or CMOs are paying six percent, says
Monaco. Taxable and usually offered for a short term, they are
guaranteed by Fannie Mae and Freddy Mac and have never defaulted.
"When someone says they need something guaranteed, we show them a
CMO," says Monaco.
"Our last three years have been record years," Monaco says, referring
to the bull market that burned some equity investors. "We say that the
stock market is for the extra money and not to gamble with your hard
earned assets. People don’t want to worry about their principal, and
the stock market can’t guarantee that. Our clients use the money to
help pay monthly bills."
Top Of Page
In Your Face, Virtually
Nothing beats good old face to face. Pressing the flesh, displaying
your gizmo, and then guiding the potential customer smoothly,
patiently through all of its bells and whistles remains the best sales
clincher. But the cost efficiency of running a rep out to Ulaan
Battar, Mongolia, is dubious – to say the least. And today, for many
businesses, that’s exactly how wide their clients and potential
clients range. So, if not the best thing, companies are opting for
virtually the best thing – video and audio conferencing.
For the uninitiated, conducting cyber-business transactions becomes a
bit more understandable with the half-day seminar, "Growing your
Business with Web and Conferencing Tools," on Thursday, June 24, at
9:30 a.m. at the College of New Jersey. Cost: $10. Call 609-989-5232
or visit www.NJSBDC.org. Sponsored jointly by the New Jersey Small
Business Development Center and the New Jersey Technology Council,
this workshop features Linda Dumas, sales director for a
Freehold-based conference technology company, HelpMeeting. Designed
for sales, marketing, and customer service professionals, this seminar
shows various levels of teleconferencing and the tools available to
facilitate each.
"Most people have a fair idea of what conferencing tools are out
there," says Dumas, "but they don’t connect them with their business
needs." But for Dumas, technology has always been just one more tool
to get the job done.
She grew up in a tiny, friendly town in the northwest corner of
Tennessee, and moved just slightly north to attend Kentucky’s Murray
State College, where she earned an undergraduate degree in business
and marketing. After earning an MBA from New York University, Dumas
spent the next 15 years in technology sales for large companies in New
York and New Jersey.
"I even tried my own entrepreneurial company," she says, "but that was
in 2000, and what with going the venture capital route, it never
really got well launched." So, using a tool even more powerful than
technology, she networked, contacting two engineers with whom she had
worked at Lucent Technologies. In a prime example of the power of
keeping up with former colleagues, she learned that the two engineers
were starting HelpMeeting to sell their newly invented conferencing
software, and they needed a good head of sales.
Dumas sees audio and video conferencing as a selection of levels,
rather than as a collection of features. "You have to ask yourself,
‘what level of interactivity do I need for each conference?’ Bigger is
not always better," she says. At each level, various capabilities can
be added on to make the total conferencing package.
Audio only. Mr. Bell’s telephone remains the ideal tool for many
conferencing needs. Problems seldom get solved via the impersonal
transfer of E-mails. Human voices can work out solutions with much
less ambiguity, and more precise subtlety, than can notes swapped back
and forth.
Teleconferencing lines are now inexpensive, and can be set up quickly.
If you must employ your computer, use it to type out a script or
points you want to cover during the conversation. It will make you
look polished and prepared.
Hint: the conference call only works if you use it. Establish regular,
periodic call-in times so that your scattered sales force can exchange
ideas at the end of day, even if only for a few minutes.
Basic data transfer. Share with your client what you’ve got on your
PC. Show him a sales demo or a troubleshooting disk. Utility
companies, sick and tired of arguing over the phone with customers,
are increasingly making the switch. Now when a customer calls up
questioning a statement, both parties can pull it up and discuss over
the phone what they see on the screen. Such basic data sharing can be
done with still files – or even with videos.
"The main consideration with such shared files," says Dumas adamantly,
"is that they should never need downloading." Many institutions,
including banks, are not only leery of downloading strange files into
their systems, but also have set absolute policies against it.
Generally, people do not mind a simple log on system, even with a
temporary password exchanged over the phone.
Expanded sharing. Once the spreadsheet or demonstration video is
posted for all in the conference to view, there are a host of add-ons
that make interaction more real. Collaboration capability allows any
party online to change data on the transferred file. Thus everyone in
your sales force can instantly update the spreadsheet they share
online.
A nifty tool for meetings is "whitepapering," which sets a blank page
before all in the conference and allows anyone to sketch new images,
just as they would when sitting around a table with that big flip pad
at the head. Sketches and marks can also be imposed over existing
images, as NFL game announcers do in an attempt to make the game more
clear.
Chat capability allows flashes of written commentary to zip from
virtual meeting attendees’ keyboards into an area beside the shared
file. This method of communication is slower than speaking via the
telephone or internal microphone within a computer, but it does
provide a permanent record of the comments.
As you pile on the conference toys, Dumas warns, take care to watch
for mistakes. "Remember, your transmissions are representing your
company’s product," she says. Potential clients translate the
slightest flaw in your presentation into a flaw in your product.
Advanced audio/visual. Putting a face to that distant voice brings a
touch of humanity to the whole meeting. For several years now, it has
been possible to show still photos of each attendee, and to have a
light bar flit among them as each was speaking. These images can be
thumbprint size, or they can fill the screen. The technology has
improved, the images have sharpened, and the entire process is now
cheaper and easier to operate.
In all of these processes, speed becomes a factor. "Cable and DSL are
not yet available everywhere," points out Dumas. "If you plan to shoot
out a video to people in northwest Tennessee, they may still be
receiving on dial-up and will lag far behind you. Instead of that
video you planned, you may want to try a lower speed PowerPoint
instead."
Real time video. This is as slick as it gets. Ten people, each in his
own office, can examine videos and documents in real time. You’ve seen
it on TV, watching the candidate squirm in a chair several states
away, while the anchor and other video guests fire questions at him.
It looks great and now you can do it – sort of.
"With each level comes trade-offs," says Dumas. "You have to be aware
that you are never going to get the quality you see on TV." Exactly
how cleanly the images come through depends on the capacity of your
software, your computers, and your monitors. This is definitely a tool
you should try out before you buy.
After 20 years in the field, Dumas admits that video/audio
conferencing will never replace face-to-face. In fact, it will
probably not supplant personal meetings as extensively as E-mail
already has replaced the hand-written letter. But it will supplement
our communication. Some pieces of business can be quickly and
inexpensively handled by chatting across cyberspace, saving the
matters we value most, for the venue we most prefer – chatting across
the desk.
– Bart Jackson
Top Of Page
Health for Sale
Why are healthcare costs spiraling skyward? Place 12 people in a room,
pose that question, and you will net an even dozen completely
different, confidently emphatic answers. The New Jersey Hospital
Association has seen it time and again in its focus groups. Each
individual points to his favorite villain – the overpaid, yacht-owning
doctors, the plutocrat pharma, the HMOs, or the current U.S.
president. Very few see rising medical costs as an ever-expanding
beast that is fed by many, but controlled by none.
To help business owners and voters gain a greater understanding of
what drives medical expenses, the Middlesex County Chamber of Commerce
is hosting a forum on "The Rising Cost of Healthcare" on Friday, June
25, at 8:30 a.m. at Devry College in North Brunswick. Cost: $40. Call
732-821-1700. The seminar speakers include Ron Czajkowski,
communications director of the New Jersey Hospital Association; Jim
Leonard, of the New Jersey State Chamber; and Michele Guhl of the New
Jersey Association of Health Plans.
Seasoned journalist Czajkowski has spent the last two decades charting
America’s rising healthcare demands and noting the effects. Czajkowski
grew up in Somerville and earned a bachelor’s degree in English from
Muhlenberg College in English literature. After receiving a master’s
degree in journalism from Syracuse University, Czajkowski stepped into
the professional world in l973, writing for a series of New Jersey
papers, including the Hunterdon County Democrat and the New Brunswick
Daily Home News. He also spent several years teaching English at
Blairstown Academy.
In l985 Czajkowski brought his media relations talents to the New
Jersey Hospital Association, where has remained ever since. Throughout
his tenure, he has observed the financial vices squeezing our state’s
hospitals.
"Healthcare costs are a global issue," says Czajkowski. "It’s less a
case of hidden villains than a host of cost drivers, of which most
people are not even aware."
Providing unfunded, but mandated, care. With the stick of law and the
carrot of funding, both state and federal governments have prodded
hospitals into scores of expanded programs, ranging from drug
rehabilitation to in-house safety councils. These laws were well
intended. Legislators simply sought better hospital care for their
constituents, and with great public hoopla the first year’s funding
checks were awarded to finance the program.
Then, with year after year of belt tightening, the state’s checks
diminished by some 20 percent annually, and, finally, for some
programs, they vanished. But the legal responsibility of the hospital
to produce the expanded service went merrily on. Now, with the federal
government opting for bullets over bandages, hospital funds are
slashed even further.
Caring for the uninsured. Most hospitals take their roles as care
givers to patients of all circumstances very seriously. Yet care
entails cost. Despite a proliferation of insurance plans, Czajkowski
points out that we now face geometrically rising numbers of uninsured.
Over 44 million Americans currently have no form of health insurance.
New Jersey’s 1.4 million uninsured are now costing healthcare
providers $800 million annually.
Calling Dr. HMO. We live in an era of medical rationing, and decisions
on care are often left to health maintenance organizations. Many state
residents have been refused treatment, have had treatment curtailed,
or have had reimbursement partially denied due to HMO or other
insurance restrictions. Such cost-engendered guidelines frequently
curtail the physician from giving what he sees as the best of care.
Doctors are told that the patient’s insurance company does not see a
given operation as necessary, or that his reimbursement for a
procedure done in New Jersey will be based on a cost estimated in
Montana.
Additionally, healthcare providers face an unprecedented challenge of
bill collecting against these stone-walling health maintenance
organizations. New Jersey hospitals are now owed $250 million in
uncollected payments.
Taking more drugs. Large pharmaceutical companies and malpractice
suits are often cited as major medical bandits – both by providers and
by recipients. While Czajkowski grants that they are definite cost
drivers in medical treatment, he says that they are not the prime
factors – at least not compared with effect of the soaring cost of
prescription drugs.
Last year, Americans spent $169 billion on drugs. Various surveys show
the average American over 40 taking from two to five more daily
medications than that age group was taking 20 years ago. Whatever the
reason, virtually all experts see this trend increasing and all of us
gobbling more pills in our future.
Girding for malpractice suits. Increasingly, it is not the cost of the
law suits themselves that are bankrupting physicians and hospitals,
but the fear of them. Insurance companies, in fear of the massive pay
out, charge crushing malpractice premiums. Physicians are asked to pay
extra insurance for each in-house procedure – drawing blood, for
example.
Going out of business. Three of New Jersey’s 84 hospitals have
recently been forced to close their doors for lack of funds. What with
cut funding, increased non-paying patient loads, and restricted
remuneration guidelines, they have had little choice. Of those
remaining, only one is currently run as a for-profit organization.
Interestingly, the lone for-profit, Salem County Hospital, faced the
same cash-flow dilemma. Its investors came in, refinanced debt, and
have helped it back to the break even point.
But more than any financial juggling, Czajkowski says that we need
better policies and more money for healthcare coming from all levels
of government. "Healthcare is a big expense," he says, "and the money
has to come from somewhere. The last time I went to a ball game in
Canada, every ticket, hot dog, and beer was tagged with an incredible
tax, but the Canadians calmly explained that this paid for their
national healthcare."
In terms of policy, many healthcare advocates see a minimal
"Volkswagen-level" of healthcare federally provided for everyone in
America, with optional, purchasable coverage that can bring it up to a
Cadillac. This seems sensible, and would function for a fraction of
the administrative costs involved in private plans. Yet, Czajkowski
notes, there are scores of industry and interest groups that strongly
oppose such a set-up.
"Our best hope," Czajkowski insists, "lies in the democratic venue.
Like this talk. Getting the word out, and having the public push its
policy makers to the decision they want."
– Bart Jackson
Top Of Page
Environmental Hot Topics
Hey, are we running out of room? A high-profile mid-June economic
report trumpeted the fact that New Jersey is way ahead of its
metro-area neighbors in adding jobs. Housing is going up at a rapid
clip too. Growth is good, but can we be experiencing too much of a
good thing? Many in the Garden State are wondering just how green it
can remain – and for how long.
As if in answer, several surprisingly low profile pieces of
legislation have recently sought compromise between environmentalists
and developers. All of these recent laws are discussed in "Hot Topics
in Environmental Law," part of the New Jersey Bar Association’s annual
Environmental Law Forum Friday through Sunday, June 25 through 27, at
the Golden Inn Hotel in Avalon. Full registration: $299 (daily rates
available). Call 732-214-8500 or visit www.NJICLE.com.
The Hot Topics roundtable opens the Environmental forum with a panel
selected to cover all legal aspects. Co-moderator John McKinney Jr.,
partner with Wolff & Samson P.C., covers what has to come to be know
as the Highlands Bill, and also the Fast Track bill (S-1368). New
Jersey’s recent brownfield reconstruction legislation is presented by
Dennis Toft, also a partner in Wolff Samson, while New York’s legal
solutions to the same situation are reviewed by attorney James J.
Perconi of Perconi LLC. Neil Yoskin, partner with Bennett and Yoskin,
discusses new storm water legislation. A summary of current federal
decisions, particularly about polluted site cleanup suits, is provided
by Kenneth Mack of Fox Rothschild LLP.
These are the laws that will sculpt the shape of our land for years to
come.
For the past three decades McKinney has been monitoring environmental
dilemmas. He is the fourth generation of McKinney attorneys, with the
fifth currently in law school. Virtually all of his legal experience
has been tied up with environmental matters. In fact, McKinney was the
first full-time environmental attorney ever hired by AT&T.
"Actually, I felt very much at home in AT&T," he says. "Scientists and
managers all respected my counsel. After all, they lived in this state
also."
After earning a B.A. from Principia College in St. Louis and a law
degree from William & Mary, McKinney settled in his hometown of
Princeton, joining a Nassau Street law firm. Today, as a partner in
West Orange’s Wolff Samson, McKinney lives in Hackettstown – "one of
the prime development centers in the Highlands bill’s master plan," he
notes.
Log rolling is customary in legislatures. It is the way things get
done in the face of opposing points of view. Based on an old term
loggers used when two men tried to stand on a single floating log, it
means: If you can roll this piece of legislation this way I’ll vote
for it, as long as you vote for my favorite bill. Such was the process
employed in passing the massive Highlands Preservation Bill.
The Highlands bill. Covering a whopping 800,000 acres in Warren,
Sussex, Hunterdon, Bergen, Morris, Passaic, and Essex counties, the
recently passed Highlands Bill has set up a state-governed
environmental preservation plan for one-sixth of New Jersey’s total
land mass. It designates 395,000 acres as preserved, of which 145,000
acres are undeveloped. Taken as a single chunk, it is an odd
assortment of regions with some of New Jersey’ most densely populated
areas standing cheek-by-jowl with some of her most scenic and rural.
It encircles the Delaware Water Gap, home to the Appalachian Trail,
and also suburban Paramus, land of sprawling malls.
The goal of the bill is to lay out a master plan for this area that
would prevent the Appalachian Trail from becoming a mall walk. The
concept is to allow, and even encourage, further development within
zones that are already highly populated, while leaving the pristine
areas pristine. A Highlands Council of state appointed representatives
is to oversee the plan. If a municipality seeks to develop outside one
of the defined zones, it must gain a variance from the board.
Actually, the stated purpose of this bill is to protect water
supplies. And even this purpose is controversial. Opponents state that
it goes way beyond water and severely limits growth. Proponents point
out that water quality reaches far beyond sewage dumping alone. Even
if the sewage from a developed area is treated, the vast amount of
paving entailed in such land use causes rain to run off into the
streams, carrying all the roadway’s pollutants with it.
Further, by destroying wetlands, (a point noted in the Route 92 versus
Plainsboro Preserve argument), water is carried quickly away without
time to naturally filter itself through the cleansing soils. For much
of central and northern New Jersey, the water supply flows through the
area covered by the Highlands Bill.
As might be expected, environmentalists, overall, have praised the
bill, with a few unhappy rankles. The construction lobby is less
happy, worrying about loss of business. Home rule advocates in towns
within the Highlands Bill area are not happy either, complaining that
their right to manage has been ceded to the state. Other towns, those
with preservation high on their agendas, are pleased.
But now the log rolls back.
The fast track. In a deliberately unheralded move on Friday, June 11,
Senate bill S-1368 came of committee with an unusually small amount of
publicity. Nicknamed the Fast Track, this bill, seen by some as a
McGreevey bargaining chip, aims at streamlining the process of
obtaining construction permits.
"People are calling this a companion piece of legislature," says
McKinney, "but that is not really correct." The Highlands Bill covers
only the 800,000 acres mentioned above, while the Fast Track’s
"streamlining" applies to any region of the state designated for
growth – about 30 percent of the state’s total land mass.
Specifically, the proposed legislation mandates a 45-day decision on
permits from the day of application made to the community.
Additionally, the state would appoint a Fast Track Czar in the
Department of Community Affairs. His veto alone would squelch all
protests from local communicates, the Department of Environmental
Protection, or any other institution seeking to halt or qualify a
permit.
The construction firms applying for Fast Track would have to pay extra
fees for the privilege, creating a fund to be used to hire more DEP
inspectors.
Builders are supporting this proposal as a landmark slashing of red
tape. But by Friday, June 10, word of the bill had gotten through to
the environmental community and outraged voices could be heard. This
legislation guts any municipal power to ward off the invasion of
unwanted housing or business developments, they are saying.
A green future? Certainly, the two pieces of legislation have failed
as a compromise, and have brought preservationists and developers to
unprecedented disagreement. Yet this debate is as old as democracy.
"This is a long range plan," notes McKinney. "We really cannot tell
how the Highlands Bill will shape our landscape, for better or ill,
for at least another 25 years." But he cites it as a significant
change in public policy. The state now has a master plan that will
direct growth into some areas and keep other areas protected.
"Previously, much of preservation policy has been decided by
litigation," says McKinney. The local town councils would square off
against a builder, and take the issue to court. Zoning policies
typically extended no more than the few miles across any given town.
Now the state has made a choice. We must give it a chance and
determine its wisdom.
The federal hand. While who builds where has become a state
environmental issue, the ground they build on falls increasingly under
federal restriction. Attorney Mack, partner in Princeton-based Fox
Rothschild notes that many major cleanup projects have become mired in
some tricky legal and ethical issues.
During WW II, the U.S. government ran many manufacturing operations
nationwide, sometimes alone, sometimes jointly with extant
corporations. In some cases, pollution resulted from these operations.
Dupont was one such government partner, and the company has run into
an interesting problem in trying to clean up contaminant spills caused
by their dumping and by that of the government. Dupont was mandated to
clean up, in compliance with the Resource Conservation and Recovery
Act. But since part of the original pollution came at the hands of the
government, Dupont sued for help in the cleanup.
The government denied Dupont’s claim, saying that the company’s
clean-up was voluntary. No one was suing them to do it. Dupont said
that complying with the law is scarcely voluntary. The case, now in
appeals, sets precedent for hundreds of sites where government
pollution was involved.
"To have the government make the law and then deny aid where they were
contributory, seems a little like squeezing the company at both ends
and certainly discourages their going the extra cleanup mile," says
Hatch.
– Bart Jackson
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