Wealth tech startup Altruist unveils new tax management suite

The fintech provider’s new tools let RIA clients automate tax-savings strategies, including tax-loss harvesting and gains deferrals.

Fintech platform Altruist has unveiled a new raft of tools to help independent advisors manage their clients’ portfolios in a more tax-efficient way.

The challenger custodian with a focus on independent RIAs has unveiled TaxIQ, a suite of tax management tools designed to enhance after-tax returns for clients.

The new offering, designed for advisors to automate tax-saving strategies efficiently, is integrated into Altruist’s platform, which includes account opening, trading, rebalancing, reporting, and billing functionalities.

Given that Americans typically pay about one-third of their lifetime earnings in taxes, optimizing for tax efficiency can significantly improve portfolio performance. Research from the Journal of Wealth Management indicates that using tax management solutions can help advisors outperform the market by one to two percent annually without resorting to market timing or stock picking.

Traditionally, the complexity of these strategies has restricted their use to high- and ultra-high-net-worth clients.

“Advisors have long been searching for tax-sensitive investing capabilities that don’t require complex, manual processes,” Adam Grealish, head of investments at Altruist said in a statement.

“Coupled with other capabilities at Altruist, like direct indexing and fractional shares, independent firms now have a robust set of tax-optimizing tools to help deliver exceptional client outcomes at a much greater scale,” Grealish said.

TaxIQ allows advisors to implement processes and strategies such as gains deferrals, wash sale avoidance, and opportunistic tax-loss harvesting, which are handled through Altruist’s automated, tax-sensitive rebalancer.

Once fully activated, Altruist advisors can pursue tax-based alpha without managing individual positions, selecting tax lots, or timing trades.

Altruist is offering its tax loss harvesting functionality within TaxIQ at 10 basis points per year, with a free trial available through September 2024. Post-trial, this feature will remain free across all fee-based models on Altruist’s Model Marketplace.

At just four years old, the fintech provider has made bold moves to show its value in the wealth space. It was just last year that it unveiled its own custody and clearing business, Altruist Clearing, in a bid to challenge entrenched names like Fidelity and Schwab. More recently in March, it announced a new high-yield cash product to help advisors offer their clients competitive yields on their uninvested savings.

Last month, the LA-based fintech said it had raised $169 million in a funding round led by Iconiq growth, pushing its valuation up to north of $1.5 billion.