Goldman Sachs Group Inc. has agreed to purchase online custodian Folio Investing for an undisclosed price in a push to build out its wealth management division and expand its reach to Main Street investors.
In a letter informing customers of the sale on Thursday, Folio CEO Steven Wallman said the planned acquisition would help scale up the boutique custodian and finance innovative product developments at the firm, particularly in the execution, clearing and custody space.
Discussions surrounding a possible deal started last year, according to the letter. The deal, which is subject to regulatory approval, is expected to close in the third quarter.
“The acquisition of Folio by Goldman Sachs brings together two leading financial services firms for the continuing benefit of our clients and business partners,” Wallman said in the letter.
A spokesperson from Goldman Sachs confirmed the acquisition is in process and also vouched for the accuracy of the letter sent to Folio customers, but would not comment further.
“While the discount brokerage segment is one of the fastest growing industry segments in the United States, it does require a tremendous amount of scale to stay economically viable in this line of the wealth management business,” said Alois Pirker, wealth management research director at Aite Group.
The custodial division of Folio will be folded into the bank's global markets division, as first reported by Reuters. Folio has roughly 160 employees and $11 billion in assets under custody for registered investment advisers.
In January, Goldman Sachs Group Inc. broke out results for its wealth management division for the first time in its history. With $4.4 billion of revenue for last year, the business is dwarfed compared to that of other Wall Street behemoths like Bank of America and is almost 40% smaller than the similar division at JPMorgan Chase.
Goldman has expressed interest in building its wealth management capabilities and has made several acquisitions in recent years. Last year, it paid $750 million in cash to acquire United Capital, and its FinLife CX digital platform and financial planning software. United had approximately $25 billion in AUM, $230 million in revenue and close to 100 offices around the country at the time of the acquisition.
The United deal gave the storied investment bank an opportunity to reach more high-net-worth clients, namely those with $1 million to $15 million in assets — a step down in assets from the firm’s normal ultra-high-net-worth clientele.
In 2018, Goldman restructured its four-year-old online bank Marcus to streamline operations. The retail banking platform already offered personal loans and deposit accounts. And last year, Goldman announced that it had built an in-house robo-adviser to serve mass affluent clients, which it’s planning to launch sometime this year.
“Goldman was working on building a robo-adviser platform,” Pirker said. “Folio has advanced robo-adviser technology that can fast-track the building and rollout of Goldman’s platform.”
Zocks has inked an exclusive partnership with mega-RIA Hightower, while Jump becomes the choice AI operating system for Equitable Advisors' field force.
The agency's proposal to rescind the contentious 2024 Biden-era mandate opens up a 60-day public comment period.
The Carmel, Indiana RIA grew nearly 150% in assets since severing ties with its first backer following a FINRA dispute.
Meanwhile, Raymond James' employee arm adds a defector from D.A. Davidson, and South Carolina-based RIA Ballast Rock Private Wealth recruits a new advisor.
A FINRA arbitration panel sided with a former wealth manager fired over a $642 deli platter and a disputed client event.
As $84 trillion prepares to change hands, advisors who treat estate planning as peripheral are quietly building a sieve, not a book.
In volatile markets, the advisors who win aren't the ones with the best calls - they're the ones whose clients stay the course.
