Processes & Practices

With what types of clients do you work?
What types of personal financial planning services are offered?
What is the process to start working with you?
How are you compensated, and when do you get paid?
How will you communicate with me about my account?
Who will be working on my account?
Must I engage your law firm in order to be an investment counsel client?
Is there a difference between a “broker” and an “investment adviser”?
Why do I need both an “investment adviser” like Martinelli Discenza and a “broker” and “custodian” like Charles Schwab & Co., Inc.?
Are my communications with your investment advisory firm “privileged?”

With what types of clients do you work?

Our investment advisory clients have a broad range of employment backgrounds, ages, and investment objectives. The majority of our clients are individuals, and their retirement plans (such as IRAs) or trusts. We can be particularly valuable to clients who are going through a life transition, such as retirement, divorce, loss of a spouse, or sale of a business; as well clients come to us simply because they lack either the inclination or expertise to manage their own investments. We are effective in translating new financial circumstances into sustainable, long-term investment strategies in addition to building on an established foundation. Our clients generally have a minimum of $250,000 of investable assets available for management and usually considerably more.

What types of personal financial planning services are offered?

We consult with the client to determine their overall financial objectives, and then design an investment program that is consistent with those goals. We are responsive to the particular needs of each client, and strive to help with personal financial planning issues including identification of and recommendation of other financial services, such as insurance, when needed. Our available services include analysis tailored to each client as well as identification of and/or guidance on strategies and tools.

Analyses may include:

Evaluation as to whether income is sustainable over one’s lifetime, based on a client’s assets, tax rates, assumed inflation and assumptions unique to each client’s income goals;
Assessments of specialized client holdings, such as stock options, concentrated holdings and highly appreciated securities, and stock purchased through an employee stock purchase program;
Evaluations of opportunities to use tax-deferred retirement plans for both company-employed and self-employed individuals.

Guidance on strategies and tools includes:

Gifting strategies and tactics, including amounts and forms of the gifts;
Savings strategies and vehicles for specific long-term goals, such as developing a plan to fund a college education;
Retirement planning, including strategies and structures for retirement plan withdrawals, rollovers, conversions, and plan asset transfers.

What is the process to start working with you?

We recommend starting with a brief 15-20 minute introductory phone call for us to learn a bit about each other, and to plan the first meeting. Before our first meeting, we will send you an informational package about our firm, and encourage you to fill out a Personal Information sheet.

During our first meeting we will explore your expectations in much more detail, introduce you to our investment approach and reasoning, and describe how we believe our approach could best be applied to your situation. We will answer questions you might have about how we would work with you.

At this point, if you have decided to work with us, we would take you through the implementation steps for your investment program. Learn more about our overall process.
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How are you compensated, and when do you get paid?

We charge a management fee based on a percentage of the value of the assets we manage. We are “fee only” advisers and accept no commissions or other forms of compensation from investment product providers or financial institutions. The fee is quoted as an annual percentage fee, and is billed quarterly in arrears by applying one-fourth of the annual percentage fee to the managed assets at the end of each calendar quarter. For example, if the annual fee is 0.9%, then 1/4 of 0.9% (0.225%) is applied to the market value of the client’s account at each quarter-end. The fee is normally deducted directly from the client account or accounts. To the extent an extraordinary amount of financial planning time were required by a client, we would charge an hourly fee.
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How will you communicate with me about my account?

We will send you a written investment performance report quarterly. This quarterly report is in addition to the monthly brokerage account statements you will receive directly from Charles Schwab & Co., Inc. in its capacity as custodian of your accounts. Beyond these routine reports, we will also send occasional special mailings on topics of interest and clients will often talk with us by telephone several times during the year. We try to meet in person with each client at least once per year. Clients are also encouraged to contact us by e-mail or telephone at any time to discuss their investments, ask any questions, or discuss any financial matter.
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Who will be working on my account?

Your account will be individually reviewed at least monthly by Gary Martinelli, who is principally responsible for portfolio decisions. Gary and John Discenza work together on financial planning. Lisa Kozak and Lisa Daoust assist with administrative matters.
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Must I engage your law firm in order to be an investment counsel client?

No. While our firms offer a full range of legal and investment counseling services, the two are separate. Clients are free to choose the services they desire. MDICI not only provides portfolio management services to clients of lawyers in other offices but also to other lawyers themselves.
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Is there a difference between a “broker” and an “investment adviser”?

Although many large brokerage firms blur the differences between their “registered representatives” to whom they sometimes refer as “financial advisers” (they cannot use the term “investment adviser” without qualifying as such) and “investment advisers,” there is a decided legal distinction between the two. “Investment advisers” are regulated under the federal Investment Advisers Act of 1940 (for larger advisers) or under similar state laws (for smaller advisers) and, under these statutes, are considered “fiduciaries” who are duty-bound to place client interests above their own, to disclose all possible conflicts of interest, and to furnish clients with written, detailed business and personal histories and business policy statements. “Brokers” are regulated under the Securities Exchange Act of 1934, as amended, which imposes neither “fiduciary duties” nor similar disclosure requirements. As a result, the broker-customer relationship is usually an “arms’s length” rather than a “fiduciary” relationship. This means that brokers are required to pick suitable investments for their customers but have no obligation to act in the best interests of clients. Federal regulators are presently considering whether and the extent to which “fiduciary” responsibilities should be imposed upon brokers.
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Why do I need both an “investment adviser” like Martinelli Discenza and a “broker” and “custodian” like Charles Schwab & Co., Inc.?

An investment adviser and a brokerage firm/custodian such as Charles Schwab & Co., Inc. can, and in the context of our business, do have decidedly different roles. As an investment adviser with the authority to make portfolio decisions for clients, Martinelli Discenza performs the research legwork, does the analysis and ultimately makes the decisions as to client asset allocations and securities selection. Martinelli Discenza also prepares detailed quarterly reports for and letters to clients.

As a brokerage firm/custodian, Schwab executes (i.e., buys and sells) transactions in securities pursuant to Martinelli Discenza’s instructions. It is geared to work with independent advisers and to effect transactions at reasonable prices.

A second important function for Schwab is to hold client securities in its custody and to produce transaction confirmations and monthly statements. Monthly statements provide independent verification of the information provided by the investment adviser.
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Are my communications with your investment advisory firm “privileged?”

Although both our law firm and our investment advisory firm are required to, and as a matter of practice, treat your personal information confidentially, applicable law makes communications between a lawyer and a client “privileged” whereas communications between an investment adviser and a client are not “privileged.” A “privileged” communication is communication that a person generally is not required or free to disclose in a legal proceeding.

Since all of the investment advisory representatives of our investment advisory firm are also lawyers associated with our law firm, it is IMPORTANT for clients to know that communications (even with lawyers) will be “privileged” only to the extent made in the context of a legal consultation.

Generally speaking, our law firm bills for its services on the basis of hourly fees. Our investment advisory firm is compensated based upon a percentage of assets under management. Although not always determinative, if you do not expect to be billed for legal services on an hourly basis, your communication with our personnel likely arose in an investment advisory context and would not be “privileged.” Should you be in a “gray area” or otherwise in doubt about whether your communications with us are privileged, please ask the attorney or investment advisory representative with whom you are working.

Read our Notice Concerning Your Privacy Rights for more information about investment advisory accounts.
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