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Goldman Sachs strikes wealth advisory deal as it revamps strategy

Published 08/28/2023, 11:27 AM
Updated 08/28/2023, 02:40 PM
© Reuters. FILE PHOTO: The logo for Goldman Sachs is seen on the trading floor at the New York Stock Exchange (NYSE) in New York City, New York, U.S., November 17, 2021. REUTERS/Andrew Kelly//File Photo
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By Saeed Azhar and Manya Saini

NEW YORK (Reuters) -Goldman Sachs on Monday said it has struck a deal to sell part of its wealth business to an independent wealth manager, part of a strategy refresh which is seeing the bank exit some businesses and focus its wealth offering on targeting the super rich.

The Wall Street bank, which did not disclose the sale price, said the sale to Creative Planning LLC is expected to close in the fourth quarter and result in a gain.

The latest sale is part of a shift in strategy after CEO David Solomon reorganized the firm into three units last year and scaled back ambitions for its consumer business, which lost $3 billion in the last three years.

Goldman bought the registered investment adviser (RIA), formerly known as United Capital Financial Partners, for $750 million in 2019 when it managed about $25 billion in funds.

Creative Planning has more than 2,100 employees across its affiliates and $245 billion in combined assets under management and advisory.

The RIA business was relatively small in size compared with Goldman's core business that focuses on the super rich.

Goldman's private wealth arm oversees $1 trillion in assets for ultra-high net worth clients, who have $60 million or more in investable assets.

High net worth individuals - who would fall within the business Goldman is considering selling - typically have about $1 million to $10 million to invest

Marc Nachmann, Goldman Sachs global head of Asset & Wealth Management, told Reuters the current strategy is to invest more on its core businesses such as ultra-high net worth and workplace growth strategy including the proceeds from the sale.

"We think there's a lot of space for us to grow. So we feel really good about it," Nachmann said, adding these plans are without a potential acquisition.

The bank can serve high net worth investors through RIA and other wealth management clients, such as Creative Planning, Goldman said.

Earlier in July, Creative Planning announced it had entered into a strategic custody relationship with Goldman's advisor solutions platform, which serves independent advisors.

Shares of Goldman Sachs were up 1.8% in afternoon trade.

"This transaction is consistent with Goldman's ongoing efforts to streamline core segments and de-emphasize legacy consumer-centric businesses," said Daniel Fannon, banking analyst at Jefferies, in note.

"Within wealth, GS can now focus exclusively on growth of the workplace and premier UHNW (ultra high net worth) advice channels, while also supporting private banking and lending revenues."

© Reuters. FILE PHOTO: People walk in the Goldman Sachs global headquarters in Manhattan, New York, U.S., November 15, 2021. REUTERS/Andrew Kelly/File Photo

Goldman Sachs & Co (NYSE:GS) LLC is serving as financial advisor and Weil, Gotshal & Manages LLP is serving as legal counsel to Goldman Sachs.

Goldman is also pushing ahead with a sale of its fintech business, GreenSky, and has also offloaded the bulk of its unsecured consumer loans after it halted this kind of lending last year.

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