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Goldman offloads Investment Advisory operations


On Monday, Goldman Sachs (GS) announced an agreement to divest its $29 billion Personal Financial Management (PFM) division to Creative Planning, an Registered Investment Advisor (RIA) based in Kansas.

This strategic move is aimed at refocusing the attention of the prominent Wall Street firm towards its clientele with ultra-high net worth. This particular segment has been a stronghold for Goldman Sachs for a considerable period. The PFM unit was initially derived from United Capital, an advisory firm acquired by Goldman in May 2019 for $750 million. This acquisition was part of the then-CEO David Solomon’s initiative to expand the firm’s customer base beyond the extremely affluent and cater to a somewhat less wealthy demographic.

However, the outcome of this strategy was less impactful than anticipated for the firm’s overarching plan. As of February, Goldman’s reach extended to a mere 1% of the high-net worth market, constituting individuals with investable assets ranging between $1 million and $10 million. In contrast, the primary client base of Goldman Sachs, the ultra-high net worth individuals, typically possess investable resources exceeding $60 million. Within its private wealth division, Goldman manages over $1 trillion in assets on behalf of around 16,000 clients.

The completion of this sale is anticipated during the fourth quarter and is projected to have a positive influence on the financial standing of the wealth division, thereby bolstering its profit margin.

Goldman Sachs Global Head of Asset and Wealth Management, Marc Nachmann, expressed, “This transaction is progress toward executing the goals and targets we outlined at our investor day in February. It is margin accretive to Asset & Wealth Management and allows us to focus on the execution of our premier ultra-high net worth wealth management and workplace growth strategy.”

Creative Planning, a major private investment advisory firm with a workforce exceeding 2,000 employees and a combined assets under management (AUM) value of $245 billion, seems well-prepared to take over Goldman’s PFM division.

During Monday’s afternoon trading, Goldman Sachs shares observed a rise of more than 1%. However, they have witnessed a decline of over 5% thus far in the current year, demonstrating weaker performance compared to the broader S&P 500 Financial Sector, which has maintained a flat trajectory year-to-date.

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