Get ready, advisors! Goldman Sachs is stepping back into the RIA space.
Not that it ever really left.
Following months of gossip about the future of its investment advisor business, Goldman Sachs finally ended all the speculation in august by announcing the sale of its Personal Financial Management unit to Creative Planning, a leading RIA with $245 billion in client assets. Terms of the deal were not disclosed, but those Wall Streeters’ long schadenfreude concerning Goldman CEO David Solomon’s unsuccessful attempt to crack the consumer business saw their accounts rise.
Or at least they grinned as if it did.
Goldman acquired United Capital for $750 million in 2019 and then renamed it Personal Financial Management. The RIA unit targeted high-net-worth clients, but not the ultra-wealthy, who have accounts of $20 million to $50 million and are the typical target clients for the esteemed investment bank.
The unit’s summer sale, along with Solomon’s other recent maneuvers to scale down Goldman’s consumer-oriented operations, shifted the bank’s focus back to the super-rich.
According to a February Investor Day presentation, Goldman services around 16,000 ultra-high-net-worth clients with an average account size of around $60 million, totaling nearly 8% of that market. The average ultra-high-net-worth client’s tenure at the bank is over 10 years.
Goldman insiders say the reorganization is less a retreat from the RIA marketplace than a realignment. The unit’s new focus is not to compete with RIAs (a leading cause of industry resentment toward PFM that Solomon failed to foresee) but to serve them in a way very few banks can.
“Goldman Sachs is targeting RIAs who provide investment advisory solutions and guidance to a sophisticated client base with unique needs. We look to partner with growth-focused advisory firms seeking to enhance their business and clients’ outcomes through digitally advanced, institutional-grade custody solutions and the full breadth of services required by the modern-day advisor,” said Richard Lofgren, managing director and head of advisor engagement for Goldman Sachs Advisor Services.
There’s no doubt that a lot of advisors need those services now that many of their clients have attained account balances that — although not ultra-high — are undoubtedly high enough to introduce them to more advanced financial solutions. And when it comes to alternatives, structured products, complex single-stock strategies or lending against nontraditional products, there are only a handful of banks with the resources or trading acuity to rival Goldman’s.
Solomon himself addressed the new plan at a recent financial services conference, calling the new organization “purer” because it enables Goldman to serve RIAs without conflict, while maintaining its ultra-high-net-worth business.
“We do think that’s an opportunity to bring more assets into our asset management business,” he said.
It’s not only about access to Goldman’s vaunted traders, though. Technology will also play a vital role in the white-shoe firm’s plan to offer white-glove service, Lofgren said.
“Technology is a such an important tool that advisors use to address the unique needs of their clients. we don’t feel like technology will completely take the place of dedicated advice and guidance; rather, it will aid the speed with which client accounts are opened, data is examined and evaluated and performance or tax reports are created,” he said.
Most of the responsibility for the bank’s new One Goldman Sachs RIA strategy will be held by Adam Siegler, head of Goldman’s third-party wealth business for the Americas within its global banking and markets division. Siegler was tapped this summer to oversee the firm’s RIA strategy, taking ownership from Padi Raphael, global head of Goldman’s third-party wealth business, who had been leading it since Joe Duran, co-head of the PFM group, left earlier this year.
Regarding the change in leadership, Marc Nachmann, global head of goldman’s asset and wealth management division, expects a smooth transition. “Adam has been working closely with Padi and asset management leadership over the past year to develop our One Goldman Sachs RIA strategy, and I am confident that our team will help position Goldman Sachs as the partner of choice to the large and fast-growing RIA market,” he said.
“We are now intently focused on delivering market-leading solutions to RIAs, including asset management across public and private markets, structured notes, lending, deposits and custody so that financial advisors in turn can deliver exceptional service to their high-net-worth and mass affluent clients,” Nachmann added.
While industry statistics pointing to a succession crisis can cause alarm, advisor-owners should be free to consider a middle path between staying solo and catching the surging wave of M&A.
New joint research by T. Rowe Price, MIT, and Stanford University finds more diverse asset allocations among older participants.
With its asset pipeline bursting past $13 billion, Farther is looking to build more momentum with three new managing directors.
A Department of Labor proposal to scrap a regulatory provision under ERISA could create uncertainty for fiduciaries, the trade association argues.
"We continue to feel confident about our ability to capture 90%," LPL CEO Rich Steinmeier told analysts during the firm's 2nd quarter earnings call.
Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.
Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.
