Goldman Sachs plots mass market exit

Goldman Sachs is currently exploring the possibility of selling an investment-advisory business that it acquired four years ago. This move marks a reversal of one of the key deals initiated during CEO David Solomon’s attempt to expand the bank’s portfolio to cater to a wider range of customers.

The focus of this potential sale is the personal financial management business, which emerged from the acquisition of United Capital, a registered investment adviser based in California. Goldman acquired United Capital for $750 million in 2019, as part of Solomon’s strategy to diversify the bank’s revenue streams beyond its traditional emphasis on serving ultra-wealthy clients.

In response to queries regarding this development, the bank stated, “We are currently evaluating alternatives for that business as we determine where to invest our resources and where we see the greatest opportunity.” Despite this announcement, shares of the bank experienced a slight decline of 0.3% at 9:41 am in New York.

Although the personal financial management business constitutes a relatively small portion of Goldman’s overall wealth offerings, it serves as a symbol of the bank’s earlier efforts, led by Solomon, to broaden its business lines. The acquisition of United Capital, founded by entrepreneur Joe Duran in 2005, granted Goldman an immediate presence in the mass affluent market. At the time of the acquisition, United Capital boasted 220 advisers and managed $25 billion in assets.

Goldman currently manages assets totaling more than $1 trillion for over 16,000 clients within its ultra-high-net-worth wealth-management unit, which includes United Capital. This unit stands as a cornerstone of the bank’s growth strategy, as it shifts its focus away from its retail efforts that had incurred greater losses than anticipated.

In addition to exploring the sale of its investment-advisory business, Goldman Sachs has also pursued the potential sale of GreenSky, a move that comes a little over a year after the acquisition was completed. These shifts in strategy underscore the significant change in direction undertaken by the bank’s management team. Reports of the potential sale were initially covered by Citywire and RIABiz.