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UPDATED: Inflating the Big Mac One Calorie At A Time

Posted by on 11:13 am in Inflation | 0 comments

UPDATED: Inflating the Big Mac One Calorie At A Time

The consumer-price index in July increased 1.8% from a year ago. This represents the core CPI. This upsurge was driven by an increase in medical and housing prices increasing.  This post has been updated from our previous post on May 8, 2015. Continuing our research using the Big Mac as a gauge of inflation, we build on past posts but use our own research to draw conclusions. In previous articles, we have relied solely on The Economist’s calculation of the Big Mac price. The Economist has been conducting the research sporadically since 1986. However, it was not until a few years ago that they began updating their research periodically in January and July. Believing this span is too great, we have compiled our own look at the price of the Big Mac in the United States. Thanks to my assistant, Geraldine Garcia, we have surveyed 30 McDonald’s restaurants throughout the nation to obtain the average price and compare that to the trend. From our research, we have determined that currently, the average price of a Big Mac is $4.79, down $0.01 from $4.80 in July 2014. Clearly this indicates little or no inflation over the last year. As stated in previous posts, I believe that the Big Mac provides a better indication of price movements than the government compiled Consumer Price Index (CPI). Many of us can neither follow nor actually experience what the CPI means or how it moves. Conversely, the Big Mac is consumed constantly, and we shell out hard-earned dollars to purchase the sandwich. Thus, it is a real-time metric of our economy. The CPI was reported to have decreased 1.8% over 12 months. Food and gas prices saw an increase of 0.2%; however, the Big Mac increased significantly more. This under-reporting of inflation impacts savers, investors, retirees and individuals receiving Social Security, just to name a few. Just recently, Placed Insights surveyed the eating habits of Americans to determine that individuals eat 17 Big Macs per second. This means Big Macs are eaten at a rate of 1,200 a minute, 61,200 an hour, 1,468,800 each day and 536,112,000 a year. These numbers prove that people experience the change in the price of the Big Mac daily. It is tangible. Consequently, it is a good way to view inflation. While we have just observed why the Big Mac makes for a good inflation gauge, it is also important to relate it to the financial advisor profession, and how we communicate the impact of inflation to individual clients. Bet on the Big Mac Ed Easterling, the founder of Crestmont Research, believes that the level of inflation – to a great extent – drives the valuation of the stock market. Mild inflation (1-3%) is typical, and relates to the highest of valuations. However, when inflation is above 3% and the market multiplies, the amount that investors are willing to pay for each dollar of earnings declines. Market valuations also decline with inflation below 1% and even further when prices decline outright. Easterling uses CPI to measure inflation, which may be the appropriate tool when it comes to tracking longstanding trends. CPI has a longer history to track than the Big Mac; however, CPI has changed over time as the weighting for different components has shifted. So, essentially, the...

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Providing Workplace Procedures to Improve Company Coordination – Part Two

Posted by on 10:13 am in Business Development, Decision Making, Time Management | 0 comments

Providing Workplace Procedures to Improve Company Coordination – Part Two

In part one of our series, we discussed how having an organized team of employees and established procedures in place can turn your small business into a money-making empire. While implementing policies and procedures into the workplace can help keep employees on track and unify team efforts in order to reach goals, there are other pieces of the puzzle needed to increase productivity and generate profit. More and more small businesses are looking to improve opportunities for growth by outsourcing day-to-day back office tasks. The right approach to outsourcing often varies from business to business. Some small businesses may have an adequate number of in-house staff responsible for handling daily administrative tasks; however, the time may come when such employees begin to seek outside help to undertake new projects that don’t necessarily require another full-time employee. Recruiting Contractors to Eliminate Back-Office Burdens When it comes to project delegation, almost any task can be outsourced. Because of the abundance of qualified professionals leaving structured companies to work as independent contractors or freelancers, many more activities are needing assistance from outside individuals. Tasks that may easily be outsourced to save the company time and money include contracting: Web designers Virtual bookkeepers Ghost writers Graphic designers Executive assistants and/or a project manager Optimal Outsourcing: Increase Productivity While Maintaining Authenticity With daily tasks continuously growing, many small businesses opt to hand over activities that are of little to know interest to employees; however, this can be problematic for anticipated growth as many assignments that appear unimportant or minimal in nature have a considerable impact on the strength and progression of the company. There are a number of key areas that are essential to business management and therefore, must remain under the responsibility of the employees. Areas such as human resources and talent management must remain authentic in order to drive business. Outsourcing such areas would hinder a business’s ability to promote a service that is both unique and attractive to clients. Instead, focus on the areas and tasks that exhaust employee time and money and interfere with the achievement of company goals. Such opportunities include: Accounting – By connecting with a skilled accountant, you can save valuable company time and have the certainty that your company’s financials are in the hands of a professional with the skills and knowledge to keep your small business afloat. Banking – As a small business owner, it’s important to manage finances with an institution you trust. Enlisting in the help of a specialist can assist companies in making smart decisions about loans, grants, and the general cash flow of the company. Editing and Social Media Management – In this day and age of digital media, establishing a presence on social networking and blogging sites is crucial to gaining awareness and securing clients. Therefore, finding an individual who specializes in word construction and editing can save you time on producing content and ensure that your company’s goals and strategies are being conveyed accurately and intelligently. Chances are the greater your company performs, the more likely you are to delegate tasks that can be conducted in less time for less money through outsourcing. In order to keep your business running smoothly, you must provide trust in your new team members that the jobs being appointed are in good hands....

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Providing Procedures to Improve Company Coordination – Part One

Posted by on 11:21 am in Business Development, Staffing | 0 comments

Providing Procedures to Improve Company Coordination – Part One

When it comes to financial advising, there is nothing stronger or more productive for a financial planning business than to have a dynamic team of employees and established procedures in place. Procedures can take your practice from a hobby to a business and is often the key ingredient needed for you to transition from an employee to a successful business owner. It’s no secret that having a team of well-organized and motivated employees builds a better business, but how can you be sure your employees are up to speed on the daily tasks and future goals of the company? It all boils down to the implementation of policies and procedures. In part one of our three-part series, we will discuss the importance of developing an efficient team and the benefits of enforcing procedures in the workplace. Empower Your Employees with an Organized Outline Not only are procedures effective for the owners and clients, but having valuable processes in place helps company employees as well. While some workers may feel restricted with procedures, implementing policies can create a sense of empowerment and also helps to identify important job responsibilities, as well as anticipated outcomes that the company wants to achieve. Creating a positive workplace takes careful consideration when assigning roles to company employees. Designating certain tasks and projects to the right people on a team can increase individual productivity, thereby allowing the company as a whole to generate higher profits in less time. Eliminate Interruptions and Propel Your Practice into a Business By having all the pieces and a process in place, you as a financial advisor are building a rewarding, meaningful business for yourself. You are in the position to create a transaction and have the ability to maximize your time and focus. By enforcing procedures and delegating specific roles to employees, you can increase profits without back office interruptions and setbacks that occur as a result of disorganization and poor instruction in the workplace. The benefits of having the right people in the right place are endless. Not only are you able to spend less time training and more time creating profits for your company, but you are allowing your employees the ability to become self-sufficient, quick-thinking and highly productive when supervision is not available. Stay tuned for part two on how operational outsourcing can positively impact employee productivity and build a better business. photo credit: Kittikun Atsawintarangkul via...

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Entrepreneurial Evolution: A Generational Change for the Financial Advisory Business

Posted by on 9:02 am in Business Development, Financial Planning, Investing, Investment Products | 0 comments

Entrepreneurial Evolution: A Generational Change for the Financial Advisory Business

The financial advising world is continuously changing; however, one topic of concern seems to remain on everyone’s mind: how can the accessibility of financial planning become more apparent to consumers? Marcio Silveira, financial planner and founder of Pavlov Financial Planning believes that Americans are not in the best financial situations, as many companies no longer provide pension plans and benefit packages. Yet, clients do not have to fend for themselves. It was through Implement Now, the next generation practice management virtual summit that I first learned of Marcio and his unique approach when it comes to coaching clients. Marcio is holding off on the assets under management model, and is steadily evolving towards the idea of receiving payment for financial planning advice. In addition, he is eschewing his reliance on traditional insurance and investment products and consequently is opening the door for younger clients by offering them help in this “do it yourself” culture. It is important to note than this transition does not simply suggest that Marcio and other younger advisors will renounce its product-and implementation-based services. While the AUM model just “doesn’t work” for much of the middle class and younger folks, it is still a good business model for many advisors. Financial planning provides advice for a wide range of insurance and investment products, and many people do need or want help implementing them. The Age of Innovation – A New Approach to Financial Advising As his financial planning continues its evolution towards getting paid for advice, Marcio is among a new wave of advisors supporting a different model – building a business that advocates the delivery of financial planning advice for a fee. Given the unique needs for Marcio to operate under this monthly retainer business model (obtaining CRM for workflows, payment mechanisms, oversight software, etc.), organizations are collaborating to help young advisors with tools, templates and access to technology to help support new models. The XY Planning Network  is a prime example of an original model. XY Planning Network’s model contains a convenient month-to-month payment structure and a recurring revenue model. This allows advisors to grow their business and increase their income over time by developing a base of clients who pay an ongoing fee for advice. Michael Kitces, partner at Pinnacle Advisory Group and founder of Kitces Report, along with fellow financial advisor, Alan Moore, created XY Planning Network to support fee-only CFPs who use the retainer model. So far, more than 35 firms have joined and the network continues to grow, with 72 current members. For just $397 a month, financial firms receive marketing and technical support, low-cost compliance services, and coaching on business development. The primary goal of XY Planning Network is to support a new career path for entrepreneurial young advisors who want to build an advisory firm by working with their own network. Marcio found this model appealing as it fit with his still, purpose and business culture. Marcio’s recommendations tend to be most beneficial for younger consumers who are seeking advice in regards to cash flow and debt management. In the future, these clients will likely need additional instructions when it comes to investments, but in the early stages of formulating a business, advice in terms of planning is what is most needed. While this strategy is a great alternative to the AUM-based model, let us...

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Creating a Strong Sales Process Manual to Better Your Business – Part 2

Posted by on 10:37 am in Sales, Sales Perspectives | 0 comments

Creating a Strong Sales Process Manual to Better Your Business – Part 2

Running a successful business can offer opportunities of freedom. Not only can effective business management provide an ample income, but can also allow you time to enjoy what you want to be doing, rather than continuously trying to keep your head above water. However, you cannot enjoy the freedoms that accompany a successful operation without a strong sales process in place. In our previous post, we touched on the importance of understanding your business processes and how implementing the nurturing process can help your company increase and develop a strong clientele base. In part two, we will cover the additional steps in the sales process that are necessary to grow your business and strengthen relationships for maximum lead conversion. Step Three: Close Deals with an Effective Sales Process A compelling sales process is made up of multiple key elements that work together to strengthen existing client relationships and increase efficiency in company procedures. In part 1 of our email series on sales processes, we briefly touched base on how incorporating lead nurturing into your process can effectively convert prospective leads to committed clients. Strong client relationships are essentially the foundation of your practice; therefore, your process should be designed to allow a significant amount of time to be spent with each potential client to better understand his or her needs, goals and how your service can be valuable to the client and beneficial to your company. At AUM in a Box, we make seven attempts to connect with each lead, but we don’t end our relations there. In order to understand what we are doing well and what we could be doing better, it is essential that we track our progress. We have found Salesforce.com to be a great tool in tracking where our leads are in the prospecting process. By having numbers behind everything we do, we are able to become more efficient and productive, thus making our sales even better. Step Four: Map out Your Client Relations Route Now that you’ve gathered the data necessary to understand your client’s goals and expected outcomes, it’s time to draft your map. To begin, think about what you needed when you were just starting up your business. From there, take some time to think about the kind of experience you want to give to your ideal client. Below is a process map that contains 18 macro steps. Your personal map may have more or less, but these are the ideas I believe you need to have in order to provide holistic planning to your clients: Become a stable advisor – How you plan to run your business Branding, marketing and lead generation Solid sales strategies Compliance Viable business model Business process management Practice management CRM – Database New accounts/applications Risk management Legal – estate plan Tax strategies Financial plan – retirement plan Investment management Customer service Billing Accounting Successor advisor – How you plan to leave your business Your sales process should ultimately allow you the choice to continue owning your business and receive an annuity each month to sustain your lifestyle, or sell the business for maximum profit now that you have a process in place to easily welcome a new owner to purchase and continue running the business. No matter what outcome you desire, having a complete process will...

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Creating a Strong Sales Process Manual to Better Your Business – Part 1

Posted by on 4:27 pm in Sales, Sales Perspectives | 0 comments

Creating a Strong Sales Process Manual to Better Your Business – Part 1

For many advisors and business owners in general, the thought of creating a successful, longstanding business that the owner can grow old with and eventually sell is a dream come true. Unfortunately, most advisors merely create a job and not an actual business. Consequently, the prospect of selling a job to another advisor is difficult and having a business you’re tolling away can be nothing short of frustrating. This is why having a sales process “manual” can not only help you run a better financial planning firm, but turn your job into a thriving business. Step One: Understand Your Processes to Effectively Build Sales The first question you need to answer before proceeding in developing a strategy to increase sales is why you want to build your firm and what the impact of the ‘why’ really is. You cannot effectively navigate a plan if you’re unsure of the course ahead. When it comes to developing a process, there are three elements to consider. The first is making sure you have a definite purpose. Perhaps you want to increase efficiency or you are looking to create a consistent client experience. Whatever your reason, be sure to understand your purpose moving forward. Second, you should carefully envision the potential outcomes. Questions you may ask yourself are: How can we complete this with as little work as possible? How does this plan help us to fulfill our purpose? Is our finished product is usable? Understanding your potential outcomes helps your business steer clear of issues along the way and maximizes efficiency so more of your time is spent with clients. Lastly, take time to review your process for any areas that may need revision.  Helpful ways to organize information may include using templates to create the policy, procedure & checklists. Categorizing each topic into a table of contents may also allow for easy navigation in the future. Step Two: Implement the Nurturing Process to Increase Clientele  In order to earn the sales you want to see, your process should focus on building the number of contacts you have on a list. By following this process, you will see your warm leads move to hot leads. To convert potential clients to loyal followers, you need to incorporate lead nurturing into your sales process. Lead nurturing allows you to create something of value to your prospective clients. By educating clients over time, you are building the value proposition that clients can latch onto. One of the many benefits of having a sound process in place is that you are initially creating a business for yourself. Developing a firm process enables you to create a transaction and generate an annuity or an income that is being paid to you for doing something you truly are passionate about. Get started today! Download AUM in a Box’s example of a process map below and start creating your own. Simply submit your name and email and the download will be sent to your inbox. Stay tuned for part two on how implementing a solid sales process can improve back office support and efficiency so that you can focus on closing more deals and building stronger relationships with your...

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Financial Planning is Not a Niche

Posted by on 10:59 am in Client engagement, Sales Perspectives | 0 comments

Financial Planning is Not a Niche

I am a big advocate of finding a niche. With so much competition from robo-advisors such as Vanguard and Schwab, competing as a financial advisor can be difficult. But it does not have to be! This past week I was working with an advisor in Georgia. “My niche is financial planning,” he said. Despite what I know to be excellent financial planning, the process in and of itself is not a niche. A niche enables you to set yourself apart. Distinguish you from the likes of Betterment and Weatherfront. Perhaps provide extra value. If you are just concentrating on financial planning, you cannot set yourself apart. Understanding Your Clients’ Needs to Specify Your Market A niche focuses on a specific industry, career, age, demographic, hobby, or interest. For example, I work with two advisors who have established their very own unique niches. One advisor outside of Dallas realized there was a plethora of horse owners, but none of them he had as clients. He started interviewing them to understand their needs, wants and desires. Horse owners have a great deal of expenses, but they love their animals. By involving himself in this passion of horse ownership, he is now invited each year to the annual conference for Thoroughbred Owners and Breeders Association and the American Horse Owners Association. He discusses the financial needs and desires of these owners. He is the expert. The second niche market master I work with is an advisor in Oregon. Like many advisors, especially working for LPL, he works out of a credit union. At first he simply conducted business with the public through the credit union, but after getting to know the management, he began converting the company’s employees into clients of his own. In order to successfully earn clients from within the credit union, he had to demonstrate his knowledge and justify what set him apart from other advisors. He has now successfully created his niche in working with credit unions and their clients. He manages their retirement plans, helps them with executive compensation and employs personal financial needs. This advisor knows the specifics of the industry. He remains up to date on current trends and understands what credit union employees are thinking about. When it comes to financial planning, both of these advisors have a significant advantage on Vanguard and Schwab because they understand the issues that investors are dealing with and have used their insights to hone in on specific markets. So if you think your niche is financial planning, think again. photo credit: Vlado via...

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The Five Key Ingredients to High Performance Greatness

Posted by on 11:12 am in Business Development, Client engagement, Financial Planning | 0 comments

The Five Key Ingredients to High Performance Greatness

Imagine a presentation going completely wrong. The PowerPoint cannot seem to function and will not advance to the next slide. The video you queued up won’t play, and to top it off, the sound system makes this loud “BANG!” every couple of minutes like a shotgun going off. Now think about this disaster unfolding in front of 225 people; 225 individuals that could potentially become your next client. This is what happened to Warren Rustand at a recent presentation delivered to the Entrepreneurs Organization of Colorado at the Aspen Academy.  And yet, through it all, he stayed calm and collected and delivered a performance worthy of a standing ovation. His teachings that evening can be used as a road map for any business owner, but are particularly imperative for financial advisors. Rustand has used his own advice to become a successful professional.  Not only is he the current CEO of Providence Service Corp., but has served as a member of the Board of Directors for more than 40 public, private, and not-for-profit organizations. In 1973, he was selected as a White House Scholar under President Gerald Ford, to act as his scheduling secretary, and his leadership and determination was showcased at the University of Arizona, where he played basketball and became an All-American player. Often financial advisors are alone without any instructions to follow, and yet we are expected to grow the business, provide financial guidance, and operate the field at a high performance level, all which take an utmost amount of focus and discipline. The 5 Principles to Achieving High Performance Greatness In his recent presentation, Warren Rustand revealed his own road map for high performance greatness. The composure he kept despite all the missteps in his presentation showed that his tips on how to perform at an elevated level really do work. The 5 steps Rustand presented to help motivate advisors include the following: Commit to Personal Discipline Live with Purpose Act with Intent Make Conscious Choices Call to Serve Committing to a Personal Discipline.  How many times have you started a New Year’s resolution, only to have given up by Valentine’s Day? Some people need to play a game; others need a carrot hung in front of them to get moving. Rustand believes in order to become successful, you first need to change your mindset. If you find yourself needing a charge of energy in order to get your sales going, try our 21-point day. Having a Purpose. It is very easy for our days to get strung together. We may be busy shuttling children to band and soccer practice and likely find ourselves faced with client requests through it all. Where do the days go? Rustand believes you can remove the frantic vice by having a purpose. He lives by a strong vision for himself, his family and his business. With that idea in place, he makes decision each day from a point of strength asking if the activities in the day fulfill the principals, values and the beliefs that he espouses to. Chuck Blakeman, speaker and author of Making Money is Killing your Business, provides a good foundation for creating your own mission and vision. Having the mission and vision defined; however, does not guarantee success. According to Rustand, we need to execute such...

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An Effective Exchange: Six Strategies to Build Trust in Your Clients

Posted by on 10:11 am in Checklists, Client engagement | 0 comments

An Effective Exchange: Six Strategies to Build Trust in Your Clients

In the 723 conversations I had with advisors last year, it became apparent that seminars were predominantly the most frequently cited sales tactic. I also gathered that most of these advisors were not finding much success in seminars or else they wouldn’t be looking to speak with me on how to generate sales. Some advisors have told me they’ve had significant success with workshops in the past, but those numbers have grown increasingly worse each year. One of the primary downfalls in conducting seminars is the high cost involved with orchestrating such an event. Not only must the host pay to mail invitations, but he or she is also in charge of financially covering the meal.  In addition, response expectations are much lower than they once were. In the past, it was possible to mail invitations to 1,000 people and receive 40 or more accepted invites, whereas you now need to mail between 3,000 and 4,000 invitations in order to guarantee an attendance of three dozen individuals. The cost of mailing invitations alone might run you $1,500 to $2,000 before even factoring in the cost of dinner, which can be substantial as the price can range anywhere from $24 to $48 a head. Earning Trust to Increase Business Opportunities In most service businesses, and especially financial planning, there is a saying: “people do business with people they know, like and trust”. As a result, the effectiveness of some strategies may not be as strong as others if they do not allow the prospect to truly meet you and more importantly, trust you. In the book Get Clients Now!, author C.J.Hayden provides six strategies that all service providers are encouraged to use. They are listed based on effectiveness and range from: Direct Contact and Follow-up Networking and Referral Building Public Speaking Writing and Publicity Promotional Events Advertising The effectiveness of any one of these strategies may vary based on your talents, situation, ability to execute, timing and the topic that each method is applied to. However, the average degree of effectiveness is generally correlated to how well people know you, trust you and like you. Invest In Your Clients and They Will Invest In You There are some entertainers among us that do extremely well “putting on” seminars. The reason I describe this as a production is because the hosts tend to be good actors.  I am not suggesting these individuals are deceiving the client, but rather they have the ability to get into character remarkably well.  Unfortunately because these skilled speakers are so convincing, most advisors believe they too can deliver an equally captivating performance for their audience. This is clearly not the case. I once conducted business with a financial consultant in Colorado Springs who worked directly with an advisor who was an expert at performing and putting on seminars.  This “expert” gave his colleague a playbook of what to do and say for every step of the way. Despite his help and continuous effort, the seminars still fell flat. What this consultant didn’t realize was that he did not have the skillset to perform in front of a crowd and paying for meal upon meal ended up being a huge financial setback, rather than an investment in the business. In order for a seminar to be successful,...

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Social Security Administration Can’t Pay for a Big Mac

Posted by on 1:43 am in Inflation | 0 comments

Social Security Administration Can’t Pay for a Big Mac

Last month, the Social Security Administration (SSA) announced the expansion of Social Security benefits due to the cost-of-living adjustment (COLA). Unfortunately, if you are living off your Social Security benefits, you have probably realized it is not enough to keep up with food prices. With the SSA announcing the COLA for 2015, we thought it would be a good time to see how Social Security benefits are actually stacking up to the inflation we are experiencing. As I have said in a previous Big Mac post (updated October 24, 2014), I believe that the Big Mac provides a better indication of price movements than the government compiled CPI. Many of us can neither follow nor actually experience what the CPI means or how it moves. Conversely, the Big Mac is consumed constantly, and we shell out hard-earned dollars to purchase the sandwich. Thus, it is a real-time metric of our economy. Let’s take a look at the last 14 years of COLA adjustments.   The first few years in the 2000s, Big Mac prices increased at a lower rate than COLA; however, since 2003, Big Mac prices have increased at a much faster clip. This would suggest that if you are living off of Big Macs for your sustenance, you are buying significantly fewer today than you were back in 2000. The lack of funds in the Social Security trust is well-publicized. To date, there has not been a revamp of the benefit calculation to account for the trust’s potential of being illiquid by 2030. However, the SSA is combating the lack of funds in one very crucial way: under-reporting inflation! By reporting a COLA that is lower than the actual rate of inflation, people are receiving fewer dollars than they may have put in, or would expect to receive if COLA tracked the rise in prices of the Big Mac. Completing this analysis, we can see a significant decrease in the number of Big Macs one can purchase. In 2000, the average Social Security benefit was reported at $785. Today, accounting for the COLA increases reported by the SSA, the average benefit would reach $1,149 per month. At an average price of a Big Mac at $2.44 in 2000, and the average price now residing at $4.80, as reported by the Economist in July 2014, an individual could purchase 90 fewer hamburgers. This is almost one-third fewer hamburgers! No wonder why Congress and the SSA have not changed the benefit calculation — they don’t have to! By reporting lower inflation, the SSA can reduce the benefit payout without lifting a pen or bringing the decision to a vote by Congress....

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