Wedmont Private Capital LLC, a startup registered investment advisor founded by two financial services veterans, has launched a platform based on a flat-fee model that includes free direct indexing, according to a news release.
Direct indexing entails designing individual client portfolios to replicate a broad market index, allowing clients to take advantage of movements in the price of individual stocks in order to proactively harvest tax-losses to offset capital gains and income taxes.
This strategy is increasingly popular among high-net-worth investors, but typically includes an additional fee. Wedmont provides direct indexing at no additional cost to its asset management fee, and without any trading costs.
“It’s a game-changing model,” Wedmont co-founder Dominic Corabi said in a news release. “We’ve long believed that the traditional model of private wealth management was overdue for a restructure. Wedmont is our answer.”
Wedmont, which bills itself as a tech-enabled wealth management firm, is charging a flat $10,000 annual fee to high-net-worth clients with a $1 million minimum portfolio. According to Wedmont co-founder James Pelletier, the new flat-fee model enables clients to accumulate significantly more wealth than they would have amassed working with a traditional manager who would typically charge a percentage of the client assets managed as compensation for their services.
“Take an investor with a $5 million portfolio, paying an industry average advisor fee at .84%," Pelletier said in a phone interview. "That’s a $42,000 a year fee. So that’s the current model. With our model, we’re saving that client $32,000 on an annual basis. That’s very significant savings that could be invested in other ways to the benefit of the client.”
The Wedmont platform’s client portal and mobile app allow clients to monitor their portfolio's full asset spectrum of cash, fixed income and equities, as well as a range of alternative offerings such as private equity and hedge funds.
Wedmont Private Capital set up shop last September, and it launched its new platform last week. Pelletier said the company is in the process of hiring advisors to work with high-net-worth clients on its platform.
Pelletier previously was vice president and a private wealth advisor within the ultra-high-net-worth division of UBS. Corabi formerly was chief of staff of the Financial Advisor Services division of Vanguard. Before those jobs, the two met when both were advisors to ultra-high-net-worth families at Credit Suisse.