RIA custodian Altruist has rolled out Altruist Cash, a new product that allows advisors to offer clients an annual percentage yield of 5.10% for cash held in the service's cash accounts.
The Culver City, Ca., fintech firm said in a press release that the APY is 11 times the national average and higher than that offered at any other custodian firm serving RIAs.
Altruist said a high-yield account was a highly requested feature by advisors on its platform. “Now RIAs don’t have to choose between visibility into clients’ entire financial picture and industry-leading APY,” Jason Wenk, Altruist’s founder and CEO, said in a press release. “Altruist Cash joins a growing list of features that help advisors drive greater impact, including fractional shares, fully-paid lending, and a suite of upcoming tax management features.”
The new cash management option also gives users access to FDIC insurance through partner banks, up to $1 million for individual accounts and $2 million for joint accounts, Altruist said. Users can also execute same-day transfers and there are no minimum balance requirements, or setup or subscription fees, the company said in the release.
Altruist Cash is the newest product the six-year-old firm has launched to grab share in the custodian space, dominated by behemoths Charles Schwab and Fidelity. Fintechs like Altruist are aiming to take share from traditional institutions, which control 80% of the $7 trillion in advisory assets, Altruist noted in a release last year. In a 2021 report, McKinsey & Company called RIAs the fastest-growing category in the U.S. wealth management space, growing 12% annually since 2016.
Last September, Altruist eliminated certain fees for brokerage accounts and then charged a monthly fee of $1 per account to clients who custody their assets with Altruist, with the first 100 accounts being free. Adam Grealish, head of investments at Altruist, told Financial Advisor that the firm has since waived those fees altogether for clients who use the Altruist brokerage platform and the firm as their custodian. “This is very, very unique in the industry,” he said.
In March, Altruist launched Altruist Clearing, which it described as the “first all-in-one custodian” service combining custody with digital account opening, trading, reporting and billing into a single solution for RIAs.
Grealish said Altruist has been “much more than doubling in size every year and we intend to continue growing on that trajectory.”
Management wants to maintain this pace of growth, he said, which has been driven mostly by organic growth. The “only notable acquisition,” Grealish added, was the purchase in March of Shareholders Service Group, a brokerage and custodial platform serving more than 1,600 advisors.
“Everything else has been organic,” Grealish said, of the firm’s growth.