One huge trend in the TAMP industry is to go beyond traditional models and managers to address a broader range of back-office challenges that take too much of an advisor’s time. But few of these so-called “hybrid TAMPs” match the full spectrum of outsourced operations, compliance, technology, and retirement planning services offered by Virtue Capital Management, a new member of America’s Best TAMPs. And no one offers their powerful and uniquely flexible approach to tactical asset allocation.
Tennessee-based Virtue Capital Management has been a pioneer in the hybrid TAMP space for more than 15 years, combining wealth management, retirement planning, compliance, operations, and business management support.
But what sets Virtue apart from its larger competitors, according to co-founder and President Jeremy Rettich, is the unique way it treats the people and companies it works with.
“Maybe this has something to do with our Southern heritage, but we like to think of Virtue as a family of companies that offers everything our extended family of advisors needs to run their business,” says Rettich.
“We partner with some of America’s leading money managers to offer best-in-class models and strategies that we can customize to proactively manage risk. We co-own a compliance firm and an insurance marketing organization. We have a strategic relationship with a law office and staffing and benefits firms. Plus, we let RIAs piggyback onto our sophisticated back-office tech stack. And, unlike other hybrid TAMPs, we don’t make them use our investment capabilities as the price of entry to get access to our other services.”
But while Virtue’s advisor-clients can choose the services they want a la carte, nearly all use its investment platform to take advantage of its world-class managers as well as its proprietary tactical and dynamic asset allocation overlays, a key competitive advantage. And unlike other TAMPs, Virtue offers comprehensive operational support, serving as the liaison to do the heavy lifting between advisory firms and their custodians.
World Class Managers, One-of-a-Kind Tactical and Dynamic Triggers
Like most TAMPs, Virtue offers strategic models using standard buy-and-hold directives. Their models come through partnerships with some of the most respected money managers, including Clearbridge Investments, Zacks and Brown Advisory.
But Virtue takes it a step further by offering a variety of proprietary tactical overlays that can be applied to these and other strategic models. These overlays are designed to maximize appreciation potential in bull markets and fend off major losses in bear markets.
Among its most popular is its suite of VCM Multi-Trigger Overlay strategies. The strategies feature three algorithmic “triggers” that react to extreme movements in the S&P 500 or to longer-term market momentum indicators. A “risk on” trigger calls for full or gradual shifts from equities to high-quality fixed income bonds or treasuries during market downturns. A “risk-off” triggers calls for gradual buy-backs of equities during a market recovery.
“We like to think of our Multi-Trigger Overlay as a dimmer switch that can ‘dial up or down’ risk based on the severity and type of market condition at any given time. Having three different independent tactical indicators provides risk-on/risk-off diversification that can help advisors and clients navigate varying market conditions,” says Rettich.
While most advisors use Virtue’s CFA co-created “overlay” models, the firm also lets advisors apply its overlays to their own models.
“We have advisors who still want to manage their own clients’ portfolios but are looking for objective tactical asset allocation advice. We help them by providing the same triggers we apply to our own models. When a trigger calls for a tactical shift in equities or bonds, advisors are notified. It’s up to them whether to implement them or not. Having access to this tactical guidance gives advisors a leg up in landing high net worth clients who are looking for a more sophisticated and dynamic level of portfolio management,” says Rettich.
A Family Tradition
Rettich jokes that he had an IRA before he had his driver’s license. He attributes his interest in investing and personal finance to his father. After running franchises for several home security firms, he joined his father’s firm and then formed his first RIA in 2006. Over time he added a broker/dealer to offer both investment management and life insurance and annuities to meet the retirement income needs of its target audience of retirees and pre-retirees.
In 2013 he established Virtue Capital Management, initially to offer TAMP capabilities and services to its own team of investment adviser representatives (IARs). But he soon found out that other RIA firms were interested in what Virtue had to offer.
“One of the things we kept hearing from IARs/RIAs is that while they were great at gathering assets and addressing their clients’ financial challenges, they didn’t want to be day-to-day money managers or get bogged down in business activities like hiring, operations, billing, staffing and benefits administration. That’s when we decided to start acquiring and partnering with other firms that allow advisors to outsource as much or as little of their everyday business functions as they want,” says Rettich.
Virtue welcomes both IARs and registered investment advisor firms into its family.
“Some start out as IARs with us, and when they’ve grown to a specific point establish their own RIAs. When they go independent, they can still leverage our in-house compliance services and maintain their books on our tech stack, so there’s minimal disruptions to their business,” says Rettich.
Virtue’s family is growing. They currently work with approximately 125 RIA firms and independent IARs. AUM is at $950 million and Rettich expects it to cross the $1 billion threshold very soon.
So, what’s in store for the Virtue Capital family? One thing Rettich is very excited about is its growing M&A practice. Seizing upon the growing need for succession planning among older advisors, Virtue purchases firms to add its own RIA, matches buyers and sellers, and even buys books of business from retiring advisors for their own affiliated IARs to take over for a lower share of revenue.
And while Virtue is certainly on a growth track, it always makes sure its family comes first.
“The more we can do to make life easier for our advisers, the better it is for them—and for us,” says Rettich.
If you’re looking to partner with a TAMP that treats you like family, rather than just another source of revenue, Virtue Capital Management invites you to contact them today.
