For the past ten years, we have helped our clients reach their financial goals by integrating investment management with financial planning in the areas of tax, estate, retirement, and Social Security planning in a cost-effective manner. As of July, 2019, Madrone manages $92M in client assets.
Our approach to investment management and financial planning is based on three primary principles:
All investment and financial planning advice must be objective, and solely in the clients best interest. Currently, 90% of investors receive advice under a "broker" standard, in which the financial advisor has no legal obligation to act in the client's best interest. As a result, many investors who get advice from brokers end up owning mutual funds that have underlying fees that are many times more expensive than comparable low-cost funds, or owning high-commission "alternative investments", or other complex financial products whose high fees often have a detrimental impact on long-term investment returns. In contrast, all information provided to our clients, regardless of the subject, is governed by the fiduciary standard.
It's not enough to be a fiduciary - fees matter a great deal as well. Many investors unknowingly pay two percent or more in total advisory and investment fees. Historically, two percent in annual fees have reduced long-term returns by as much as forty percent of everything the investor would have earned over that time frame. For example, one who invests $500,000 for twenty years and earns seven percent annually will see that account grow to $2.5M, while another investor who earns five percent will see that account grow to $1.5M - a difference of one million dollars - half of the investor's entire return.
Rather than base fees on a percentage of the client's investments, our clients pay an annual dollar-based flat fee that averages about one-third of one percent of assets under management. A flat annual dollar-based fee also avoids many of the conflicts of interest of the percentage-based fee. Our clients expect us to provide expert and objective advice on a variety of investment and financial issues, and they are provided with that advice with no regard for any financial interests we may have. Which is how it should be. Otherwise, it's not really advice - it's a product-based sales pitch.
Investment success is not just a matter of simply picking investments . Investment success also requires providing appropriate advice in areas such as tax, retirement, and general financial planning. Advice in areas such as tax, retirement, estate, and Social Security planning is often where clients can obtain real finanical benefits, for it is the after-tax returns that matter most. For example, how should investments be allocated among taxable, IRA, Roth, HSA, or section 529 education savings accounts, and in what order of priority should the client be contributing to those different accounts in order to minizmize taxes in both the short and the long terms? In what order should one's investment accounts be drawn down in retirement? When should capital gains be realized, or Roth conversions considered? Should Social Security benefits be delayed - or, in some cases, taken early? Taken together, smart financial planning decisions, evaluated - and reevaluated - on an ongoing basis, will often provide investors with as much or more value as sound investment management will.
If you are interested in seeing how we might provide you with fiduciary-based investment management services, fees that are usually cost-effective, and a comprehensive approach to tax, retirement, and financial planning, please call us at 415-785-4585, or email us at firstname.lastname@example.org.
Madrone Investment Advisory, LLC, is a California Registered Investment Advisor based in San Rafael, Ca., which provides investment management and financial planning services to individuals and families as well as for 401(k) small business owners. As of January 1, 2019, Madrone Investment Advisory had $85.5M in assets under management.
Michael Zaidlin, J.D.,is a graduate of the University of San Francisco School of Law and founded Madrone Investment Advisory in 2009. He brings an extensive background in tax and estate planning to the fields of investment and financial planning and speaks frequently on financial planning topics to both professional as well as public groups. Recent speaking engagements include the following:
Whistletop Financial Planning Series, San Rafael, Ca.
Marin County Bar Association - Family Law Section
California Association of Certified Public Accountants - San Francisco Chapter.
East Bay Trusts and Estates Lawyers - Annual Convention
San Francisco Bar Association - Estate and Trusts Section
Marin County Section on Aging.
Sonoma County Estate Planning Council.
Marin County Estate Planning Council.
Marin County Bar Association - Estate Planning Section.