Goldman Sachs Sells Off $29 Billion Investment Advisory Business

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Goldman Sachs (GS) on Monday agreed to sell off its $29 billion Personal Financial Management (PFM) unit to Creative Planning, a Kansas-based Registered Investment Advisor (RIA)

KEY TAKEAWAYS

  • Wall Street investment bank Goldman Sachs has agreed to sell off its $29 billion Personal Financial Management (PFM) unit.
  • It’s part of an effort to reorient the firm’s business strategy back toward its core client base: ultra-high-net-worth investors.
  • As one of America’s biggest registered investment advisors (RIAs), Creative Planning could be well-positioned to take over Goldman’s PFM unit.

It’s a move designed to reorient the Wall Street giant’s focus back toward its ultra-high net worth clientele, a market which Goldman has long dominated. The PFM unit is a spinoff from United Capital, an advisory firm that Goldman purchased in May 2019 for $750 million, as part of then-CEO David Solomon’s effort to expand the firm’s client base beyond the ultra-rich and cater to those slightly less affluent.2

However, the move proved inconsequential in the firm’s long-term strategy. As of February, Goldman catered to just 1% of the high-net-worth market, or those with between $1 million and $10 million to invest. By comparison, ultra-high net-worth individuals—Goldman’s main client base—typically have investable funds in excess of $60 million. Goldman’s private wealth arm oversees more than $1 trillion in assets from roughly 16,000 clients.3

The sale is expected to close in the fourth quarter and positively impact the wealth division’s finances, boosting its profit margin.

“This transaction is progress toward executing the goals and targets we outlined at our investor day in February,” said Goldman Sachs Global Head of Asset and Wealth Management Marc Nachmann.1 “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.”

As one of the nation’s biggest private investment advisors, with more than 2,000 employees and $245 billion in combined assets under management (AUM), Creative Planning could be well-positioned to take over Goldman’s PFM unit.

Shares of Goldman Sachs were up over 1% in afternoon trading Monday. They’ve shed more than 5% so far this year, underperforming the broader S&P 500 Financial Sector, which is flat year-to-date.

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Edmund Shing, PhD

Global Chief Investment Officer
BNP Paribas Wealth Management

Edmund has over 29 years of experience in financial markets in a wide variety of positions, ranging from proprietary trading to portfolio manager in a number of financial institutions in London and Paris.  He previously held the role of Global Head of Equity and Derivative Strategy at BNP Paribas in London from 2015 to 2020, and has been Chief Investment Officer at BNP Paribas Wealth Management since November 2020.

Edmund is responsible for piloting our investment strategy and will continues to rollout out recommendations and themes with actionable advice that brings our expertise to our clients and support to our client-facing teams.  In this time of change, his expertise in following and anticipating markets is a true value added for both our customers and those at Wealth Management who serve them.

Edmund has a PhD in Cognitive and Computing Science from the University of Birmingham in the United Kingdom, and has done advanced studies in Knowledge-Based Systems and in Experimental Psychology.  He is an EFFAS-certified financial analyst. He has also authored the book “The Idle Investor” published by Harriman House in 2015, proposing 3 simple investment strategies that take only a few minutes to execute per month.

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