Madison Investment Advisors, LLC
Madison Investment Advisors is a financial advisor firm based in Madison, Wisconsin. It manages more than $10.5 billion in assets for a wide range of clients, including individuals (both with and without a high net worth), retirement plans, corporations and other institutional clients. The firm offers both investment management and financial planning services.
Madison Investment Advisors is a fee-only firm. That means it earns revenue solely from the advisory fees that its clients pay. This is in contrast to a fee-based firm, which may earn commissions for overseeing securities transactions or selling insurance products. By eschewing these commissions, fee-only firms avoid many conflicts of interests.
Madison Investment Advisors Background
Madison Investment Advisors was founded in 1974, and it’s a wholly-owned subsidiary of Madison Asset Management, LLC. Madison Asset Management is itself a subsidiary of holding company Madison Investment Holdings, Inc., which is owned by the firm’s employees. Frank Burgess is the principal owner and chairman of the firm’s board.
Madison employs 29 advisors, and it's a well-qualified group: All of them are chartered financial analysts (CFAs). Two of these advisors are also chartered alternative investment analysts (CAIAs).
What Types of Clients Does Madison Investment Advisors Accept?
Individuals make up by far the largest portion of Madison Investment Advisors’ client base. Of these individual clients, about 90% come in below the high-net-worth threshold. The firm also works with high-net-worth individuals, banks, pensions and other retirement plans, charitable organizations, government entities, investment advisors, insurance companies and businesses.
Madison Investment Advisors Minimum Account Sizes
Madison Investment Advisors generally imposes a minimum account size of $500,000 for equity accounts and $1 million for fixed-income accounts.
Services Offered by Madison Investment Advisors
Madison Investment Advisors provides three categories of portfolio management services:
- Active bond management
- Risk-managed equity management
- Personalized balanced portfolios
As the names would indicate, the first two services focus exclusively on fixed-income and equity securities, respectively. The third option is for clients who are looking for a portfolio that encompasses both fixed-income securities and equities.
Additionally, the firm provides management via several wrap fee or model account programs that external brokers and firms sponsor.
Under cerain circumstances, the firm may provide financial planning services like retirement planning, risk management, asset allocation planning, insurance analysis and more.
Madison Investment Advisors Investment Philosophy
Madison Investment Advisors employs separate investment philosophies when analyzing fixed-income investments versus equity investments. For fixed-income, the firm takes an active, top-down approach, actively evaluating bond duration, yield curve positioning, a portfolio’s sector allocation and other factors.
When it comes to equities, the firm looks for high quality, consistent growth that the firm can acquire at reasonable prices. Madison employs a three-step approach to identify these companies:
- Evaluate the business model, looking for competitive advantages, high levels of profitability and stable earnings growth.
- Evaluate the management team, as well as their operational and capital allocation track records.
- Assessing the proper valuation of the company.
Madison generally invests in a combination of corporate bonds, municipal bonds, government bonds, common stocks, preferred stocks, government agency obligations, money market instruments and other investments as needed by clients.
Fees Under Madison Investment Advisors
Madison Investment Advisors charges a management fee that’s based on a percentage of your total assets under management (AUM). The exact rate you will be charged will vary depending on the type of account you open and the size of your account. Equity and balanced accounts follow the schedule below:
|Equity/Balanced Account Management Fees|
|Account Size||Annual Fee Rate|
|Up to $15MM||0.80%|
Fixed-Income accounts adhere to a slightly different set of charges:
|Fixed-Income Account Management Fees|
|Account Size||Annual Fee Rate|
|Up to $5MM||0.50%|
What to Watch Out For
With certain clients, Madison Investment Advisors may enter into a performance-based fee arrangement, in which the client pays a fee for portfolio performance that exceeds some agreed-upon benchmark. This type of fee arrangement creates the potential for a conflict of interest, as the firm may have an incentive to take risks and favor accounts for which it receives these fees.
The good news is that Madison Investment Advisors is a fiduciary. As such, it has a legal obligation to act in the best interests of its clients at all times.
Madison Investment Advisors doesn’t have any disclosures, which means its regulatory record is clean in the eyes of the U.S. Securities and Exchange Commission (SEC).
Opening an Account With Madison Investment Advisors
If you’re interested in starting a relationship with Madison Investment Advisors, you can reach out in a couple of different ways. You can call the firm’s headquarters at (800) 767-0300, or you can visit the firm’s website and fill out a form with your name, contact info and a message.
Madison Investment Advisors, true to its name, is based out of Madison, Wisconsin on Science Drive, near where South Whitney Way intersects with Mineral Point Road. In addition to this location, the firm also has an office in Scottsdale, Arizona.
Tips for Finding a Financial Advisor
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