Goldman Sachs Group Inc.'s foray into the retail-focused wealth management business was short, lasting only four years, On Monday, the bank said it was dumping its registered investment advisor business to refocus on the super-rich.
The shift in strategy shows how tough change can be for an institution like Goldman, industry sources said.
In 2019, Goldman acquired United Capital Financial Partners for $750 million and then renamed it Personal Financial Management. The RIA unit targets high-net-worth clients, but not the ultra-wealthy, who have accounts with $20 million to $50 million and are the typical target client for the giant investment bank.
Last week, Goldman Sachs said it was considering selling Personal Financial Management in a bid to shift its focus back to the ultra-rich and away from the merely rich, or the millionaire next door type.
On Monday, the bank ended a week of speculation by announcing it was selling the RIA business to Creative Planning, a leading RIA with $245 billion in client assets. Terms of the deal, which is expected to close by the end of the year, were not disclosed.
Goldman's decision was not a surprise to some in the broad financial advice marketplace.
"The brand didn’t translate as powerfully as [Goldman Sachs management] thought to Main Street from the ivory tower," said Ron Carson, founder and CEO of Carson Group, during an interview for an episode of the InvestmentNews Podcast.
Instead of focusing on the day-to-day business of financial advisors, Goldman will continue to work with them through its asset management and fund platform, as well as its nascent RIA custody business. Indeed, the bank is looking to invest in RIA custody to gain scale with a broader group of financial advisors, a spokesperson said.
Goldman has revised its strategy in the past, one consultant noted.
"Goldman's shift echoes its transition during the 2008 crisis when it acquired a banking license, granting it new strategic avenues like broadening its client base and launching consumer lending products," Pierre Buhler, managing director with consulting firm SSA & Co., wrote in a research note on Friday. "Schwab and Fidelity have established themselves in the high-net-worth sector, underscoring the challenges of serving this segment, which is perceived as being closer to consumers, necessitating automated and integrated processes.
"The central task for Goldman Sachs lies in divesting assets that slow down its growth trajectory and reorienting toward its primary business," Buhler noted. "Aligning with this shift, streamlining the compliance group to match the scaled-down organization is vital, given the substantial compliance costs that hastened Goldman's exit from consumer business.
"In essence, Goldman Sachs' strategic realignment encompasses a return to its core business and divestment from high-net-worth advisory services, enhancing its ability to navigate potential recession risks," he added.
Also, Summit Wealth Group nabs a Commonwealth advisor in Tennessee, Oxford Financial adds two managing directors, and Verdence draws an ultra-high-net-worth advisor from Fidelity.
When advisors have tech to handle meeting prep and organization, it frees up time they can reinvest more thoughtfully into helping clients.
LPL Financial and Raymond James also add independent advisors from Osaic and Edward Jones in Michigan and Arizona.
The SEC-registered RIA advises on more than $1 billion in client assets, with no advisory fee through 2027 and no human financial advisors.
95.8% of house trades were winners. For clients? The SEC says just 14.9%.
Knighthead Life entered the market with a competitive MYGA. A strong launch earned advisor confidence and paved the way for FIAs.
As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor
