Outside Economics

Chiropractic Leadership

Posted by Wendell Brock, MBA, ChFC on Tue, Feb 24, 2015

Last week I wrote about Leadership and Self Reliance with the idea that this week I am following up with how this works with a particular professional business. First let me explain a little about self-reliance. The idea is for people to become self-reliant or to rely on themselves, their own powers, resources, etc. This does not mean that a person does not use the services of other people, but it means that they have prepared their lives in such a way that those services add value to what they are doing on their own. The concept is the opposite of the entitlement mentality wherein people believe that they deserve something without any effort on their part.

It should be part of everyone’s vision to become self-reliant in this world. I love my children, and I am thrilled at their successes, and I love helping them succeed, I am most proud when they accomplish their goals on their own. Each one is a great person in their own right, some are more self-reliant that others (they are all at different and stages in life where we would expect this). The vision is to help them become self-reliant in their own family unit. That does not mean they won’t need help now and then, it means they are figuring things out for themselves and then seeking help with their own plan.

As a Personal CFO, using the composite leadership principles, over the years I have worked with clients who are chiropractic physicians, (while this works with all businesses in this article I am going to reference chiropractors). I like working with them because, as part of their medical training, they are taught that the body has incredible healing powers on its own, it needs a little adjusting now and then to keep it going. They also realize that other complications arise and a person may need medical care beyond their specialty. The chiropractors I have had the pleasure of working with have a sincere desire to make people’s lives better. They are, for the most part, self-reliant.0215_Composite_Leadership_Page_1

In my work as a strategist, helping chiropractors fulfill their vision, often starts with defining what their long-term vision is, (the direction they want to go), complete with all their ideas, which generally goes beyond ten years or more. This may include building a self-sustaining practice that helps patients improve their health. A practice with all the right policies and procedures in place, so if a team member is missing for a few days or out on maternity leave, others know how to fill in. Implementation and monitoring can provide a more profitable stress free practice. After all only when a business is profitable can it continue to provide the services necessary to the public. The vision also includes the most important benefit of all, a quality family life with time for the spouse and children. Remember that ALL businesses are family businesses.

What makes the vision, come about is setting and accomplishing specific measurable goals. These goals are more mid-term in nature answering the question: what specific things can we do to accomplish the vision? The change agent is active in this role, defining these goals and designing measurable ways to accomplish them. Implementing certain strategies to bring about greater success in the practice. In the case with a chiropractor, it may involve additional marketing, to see more people at certain times of the day. Writing the policies that employees need to follow to make that patients receive the level of service and care they are seeking. Establishing an office budget to better manage the office’s financial resources. Designing strategies to minimize taxes. Risk management and how to protect against exposed risks. Many of these goals can be implemented in as little as a few months to a year.

As items are implemented in a manner of priority to the chiropractor, the practice begins to change in the practice and home life. Stresses are reduced as items on the “to-do list” are accomplished. The Manager (in this case the Chiropractor) sees the things that are necessary to accomplish day in and day out to accomplish the goals set. This direction provides a charted course that ultimately makes the practice easier to manage. Employees know what to do in their areas of responsibility as well as understand the responsibilities of others, thereby creating a cohesive team effort.

A challenge that has always occurred is the monitoring of what is happening. Through constant outside monitoring, small lapses are able to be caught and corrected. As financial issues arise they are dealt with right then. Providing counsel at that time is easier than trying to fix a problem months later. We can’t predict the future but we can be prepared for what may come. Monitoring the practice allows the chiropractor to focus more on patient care, which helps the practice become more profitable.


In all of these areas the chiropractor and Personal CFO work closely together to accomplish the vision. It is through long-term goals, mid-term implementation, day to day work and continuous monitoring that accomplishes the goals. Together we are able to review progress, maintain the course, and accomplish the vision. This is how the chiropractor shows leadership in their practice. These principles can be applied to any business that wants to get ahead.

Topics: Personal CFO, Leadership, self-reliance, Chiropractic

Leadership and Financial Self-reliance

Posted by Wendell Brock, MBA, ChFC on Tue, Feb 17, 2015

A couple weeks ago I went to a dinner meeting where Dean Lee Perry spoke, he serves as the dean of the Marriott School of Management at Brigham Young University. Moral and Ethical Leadership was his message, specifically, issues around a composite view of leadership. This message was of particular interest to me because assisting business owners and professionals to become financially self-reliant, is what I enjoy most about my work.

The composite view of leadership breaks the rolls down into three separate, but equally important types of leaders: the strategist, the change agent, and the manager. This applies directly to my business of helping small business owners/professionals get more out of their businesses and secure their future happiness by engaging sound financial principles that lead to self-reliance. As a Personal CFO to business owners/professionals I help them find and address the right questions and answers to financial issues they face.Composit_View_of_Leadership5

The Strategist

The strategist has a long term view with a vision, typically two to five years out. Some financial issue extend well beyond five years. The strategist works closely with the owner/professional to develop a vision for their business. This is where, for many clients, questions about business planning strategies, income tax strategies, retirement planning or estate planning come into play. These events are usually off in the distance, sometimes so far off that we cannot see them over the horizon, but the date will come sooner than we may think.

What strategies should be employed to make this season of life well prepared for, planned, and most of all enjoyed. The abundant life is possible for each of us; long term planning is necessary to obtain the fruits of our efforts. An apple tree must be planted before we can harvest apples years later.

The Change Agent

The change agent works on more immediate mid-term goals, which are necessary to put the proper habits, tools and mental attitude in place to make the vision a reality. Goals that support the vision in a plan may have a dozen or so recommendations. Together the change agent and the owner/professional work through implementation and continuous monitoring of a comprehensive financial plan. Many goals can be accomplished in a few weeks to two years, each supporting the long-term vision.

Within two to six months most all recommendations of a financial plan are implemented, then the plan is monitored long term. An example of implementation may be setting up a particular retirement plan, or implementing an income tax strategy to help save tax dollars. The change agent’s work may finish in a few months only to start work again the next year as life events, business conditions, the economy, may require alterations.

The goals are best reached with regular monitoring, which keeps the whole plan moving forward instead of operating from financial one crisis to another. Bumps in the road happent, but they are often smoothed out with continuous monitoring and interaction with the business owner/professional and myself the personal CFO. Many issues are easily solved when dealt with immediately rather than trying to fix them after the fact, thus keeping the goals on target.

The Manager

The manager is critically important to the whole process of successfully completing goals and making the vision a reality. (Note: in this case the manager is not the typical middle manager in a company, the manager is the owner/professional.) The manager works the plan minute by minute, hour by hour, and day by day. The position of building profitable efficiencies into the operations of the business, is where the “rubber hits the road”! Particularly in small businesses where the owner may work closely with the employees, or often the case in professional practices, where they may do most all the work.

In a small business the owner/professional is often the manager, change agent, and strategist. The work of doing all three positions affectively is often overwhelming. My practice is centered on assisting the owner/professional with the strategist and change agent positions so they can spend more time focusing on what they are good at: growing their business, providing their customers the best service from the day to day operations of their business, and spending more quality family time.

Working closely with the owner/professional on creating a vision and the goals to accomplish that vision, we are able to make progress towards a life of financial self-reliance. Look for my article next week where I will look at how this works with a particular profession.

Topics: business owners, Personal CFO, professionals, Leadership, slef reliance, Moral and Ethical Leadership

Investment Portfolio Performance

Posted by Wendell Brock, MBA, ChFC on Thu, Feb 05, 2015

Everyone envisions great performance within their investment portfolio. Performance is one of the most sought after characteristics of any portfolio. However, evaluating the return only ignores risk and several other factors that affect performance.

Achieving a balance between the risk and performance or return is what a balanced investment portfolio is all about. In a balanced portfolio the stocks generally provide the greater return and the bonds are there to help minimize the overall risk; risk management techniques are important to consider, providing a balance between two distinct asset classes, stocks and bonds.

These two major asset classes are often broken down between many other asset classes. For example, bonds may be divided between US Treasuries, US corporate bonds, international bonds, inflation protected bonds, junk bonds, municipal bonds, etc. Stocks are likewise divided; there are the large cap, mid cap and small cap, international stocks, real estate stocks, retail stocks, commodity stocks, natural resource stocks, utilities, etc.

Risk is also broken down, as there are several types of risk that each stock and asset class are subject to. There are four major types of risk: technical risk, fundamental risk, interest-rate risk and inflation risk. Each of these risks can play a significant role in a stock or bond’s performance. All publicly traded stocks are subject to technical risk (a.k.a. macro or market risk). Many simply rise and fall with the market as a whole. While fundamental risk, (business or default risk) deals primarily with the company itself; is the management team running things right? Default risk can come into play if the company gets in such a spot that it needs to file bankruptcy; such is the recent case for Radio Shack.

So here are a few things to watch when evaluating performance…

Don’t forecast.

Many folks have a wonderful year in the market and then think all the succeeding years will be the same and they expect the same. They figure that they will hit a jackpot in 10 or 20 years based on what their account did last year after all it should continue to perform at the same level in the future, right? Just like farming, farmers have seldom perfect farming weather year after year. Some years there is a drought and others flooding!

Don’t work off averages

An average return only tells us if the fund has been positive or negative over a period of time is all. Each year is a story to itself; long-term averages don’t always tell the whole story, the average will hide down years. If a portfolio goes up from $10,000 to $11,000 great we had a 10 percent gain. However, if the account goes down by 20% it will take 25% to get back to break even. This is the math of losses, which often plays a major role in the emotional choices to sell at the bottom or get out when things are not looking “great”.7Twelve_1

Keep a multi-year perspective

“Maintaining a multi-year perspective is vital to the mental and emotional health of an investor. Year-to-year returns are ‘noisy’ whereas 3-year rolling returns are more indicative of general performance patterns.”[1] One year’s return may not provide an accurate image of an entire portfolio model and may limit the investor’s vision.

While this may sound counter to the previous paragraph; it is not. The previous paragraph about averages is meant to keep the average return in perspective with the annual return. This section provides the reasoning to keep a long-term investment perspective; stick with the game plan for the long-term giving it time to work on your behalf. One year is not a sufficient amount of time to let a long-term portfolio model strategy work.

Expect Losses

According to Dalbar investors earned less than ½ the rate of return over the past 30 years that the market earned. Again, money is emotional, it is not math. This lack of return is due in part to investors pulling money out at inopportune times; the market is down, need college funds, down payment for a house, and other major unexpected expenses. The biggest looser is fear when the market tanks.

Yes it is wise to minimize losses, hence a properly balanced portfolio, but the best thing to do is have a game plan for when the market reverses. Ask that question now and make a plan. Are you going to hold on? Sell when the market is down by X% and get back in when? What if the market drops to your target sell level, we sell, and then it does not continue down, but reverses the next day and shoots back up! These bounces are devastating to portfolios; create a logical plan and agree on the plan with your advisor. The old adage of: “Buy low and sell high” might be part of your plan, when the market drops, should you buy more instead of selling?

Two Parts to Climbing a Mountain

If a person is not retired, then they ought to keep adding to their investment/retirement accounts, this will help immensely. (Many folks switch jobs and rollover their 401K to an IRA and let it sit never adding another nickel! To the extent possible keep adding.) This part of mountain climbing referred to as ascending, and when referring to investing, it is accumulating. Going up the mountain is typically easier, and less stressful on the body. Be an accumulator of assets and shares.

On the other hand, if a person is retired, then they are heading back down the mountain, descending or de-accumulating. It is always more trick getting down the mountain than up, for one it is much harder on the knees! There are far more accidents going down a mountain than up. It uses different tools and techniques; in this phase having some market exposure is good, but a person will want to develop greater security in their payouts too. Similar to having a sure footing with every step down.

Check emotions, make a plan for when the market does go down, and manage risk in a balanced portfolio and things should go alright. Most important keep a positive outlook, ask questions, do not be mean and nasty with advisors – they really do want to see investment accounts go up and up! Most advisors I know stress and lose sleep over client’s accounts and their performance.

[1] Craig L. Israelson, PhD. Architect of the 7Twelve Portfolio Model, Professor of Financial Planning at Utah Valley University (UVU).

Topics: retirement, Investment Portfolio, Investment, Risk Management


Wendell W. Brock, MBA, ChFC

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