I know I can make this effect work by using collision groups, but I do not want to loop through all the characters in the game and make them in a non-collidable collision group. The reason I want to do this is that I am making a client-sided part that the physics also to be client-side.
Have you experimented to see if your two objects are in a new group and removed from the default group do they get collisions with any other object?
If you put a part in a collision group, everything can collide with it
It is my understanding that all objects are members of the default collision group and if a new group is created and an object is added to that new group and removed from the default group they do not collide with other objects.