’ transformation continues, with the Wall Street firm saying Monday that it is “currently evaluating alternatives” for its personal-financial- management business.
The move comes at a challenging time at the bank. A slump in deal making caused the company to miss forecasts for its profits in its most recent quarter. And its chief executive, David Solomon, has been at the center of media reports questioning his leadership.
Goldman’s personal-financial-management business was born out of the bank’s earlier ambition to serve more so-called mass affluent consumers. The firm began bulking up in that area with the acquisition of United Capital for $750 million in 2019. As of the end of 2022, the unit had approximately $29 billion in assets under supervision, according to regulatory filings.
Meanwhile, the whole of Goldman’s wealth-management business, which caters to so-called ultrahigh net-worth customers, has $1 trillion in assets under supervision spread across 16,000 clients. While Goldman plans to continue to invest in wealth management, it is looking to be more strategic and focused in that effort.
“Personal Financial Management (PFM), our proprietary RIA business, is a very small component of our overall wealth franchise,” Goldman said in a statement announcing plans to seek alternatives. “We expect to find an outcome that benefits both our clients and our advisors”
Citywire RIA. reported news of the possible sale on Friday.
It isn’t the only about-face Goldman has done recently. Goldman has plans to sell GreenSky, the online lending platform it acquired in 2021. And the bank has also been winding down Marcus, the online consumer-banking business Goldman launched in 2016. Earlier this year, the bank sold some of its Marcus lending portfolio in an effort to narrow the bank’s focus.
Goldman made its moves into consumer lending and financial planning for the mass affluent believing that there was a large untapped market and that the new business segments could provide a more durable source of revenue at times when trading and deal making—Goldman’s traditional bread-and-butter—were weaker. But many inside and outside of Goldman felt these new business lines were out of step with the bank’s strengths and culture.
The critics appear to have been right. Goldman’s consumer-lending business, for example, lost more than $3 billion since 2020, while Goldman said Monday that personal financial management is a “very small component” of its wealth business.
“We see continued opportunities to invest in [PFM] but with less strategic impact to GS,” Goldman said.
Investors are hoping the bank is getting back on track.
Write to Carleton English at [email protected]