Goldman Sachs Explores Sale of Wealth Management Unit as It Refocuses on Ultra-High Net Worth Clients
Goldman Sachs is considering the sale of a portion of its wealth management business, signaling a shift in its strategy towards focusing on serving ultra-high net worth individuals and moving away from high-net-worth clients in mass markets. The Wall Street bank is evaluating options for its registered investment adviser (RIA) unit known as Personal Financial Management (PFM), which currently manages around $29 billion in assets. This move is aligned with CEO David Solomon’s efforts to reorganize the firm into three units and scale back the consumer business that has experienced losses over the past few years.
The decision to explore the sale of the RIA unit comes as part of Goldman’s restructuring efforts to return to its core strengths. The bank’s wealth business has faced challenges in gaining profitability and scale with the RIA unit, which targeted high-net-worth individuals in mass markets outside of Goldman’s primary clientele of ultra-wealthy individuals. Goldman’s private wealth arm oversees $1 trillion in assets for ultra-high-net-worth clients, who possess $60 million or more in investable assets.
Goldman acquired the RIA unit, formerly known as United Capital Financial Partners, for $750 million in 2019 as an attempt to broaden its client base beyond ultra-rich clients. However, the unit remained a smaller segment of the bank’s wealth business. The firm’s plans to sell its fintech business, GreenSky, and its scaling back of unsecured consumer loans reflect its strategic focus on core areas.
Goldman’s wealth business faces competition from rivals like Morgan Stanley, where CEO James Gorman has expanded the wealth management arm through acquisitions to generate steady income from fees. Goldman’s shift towards catering to ultra-high net worth clients is aimed at providing more stable revenues compared to the volatility of its investment banking and trading operations.
As Goldman continues to reposition itself towards its core strengths and profitable segments, the possible sale of the wealth management unit highlights its efforts to optimize its business portfolio for long-term sustainability.