MBA Career Insights: Goldman Sachs Considers Selling Segment of Wealth Business in Strategic Overhaul

Last Updated on August 22, 2023 by Robert C. Hoopes

Goldman Sachs Considers Sale of Personal Financial Management Unit

Goldman Sachs is reportedly contemplating the sale of its wealth business, Personal Financial Management (PFM), as it shifts its focus towards serving ultra-rich clients. PFM, which manages approximately $29 billion in assets, is part of Goldman’s registered investment adviser (RIA) unit.

The decision to potentially sell PFM comes after CEO David Solomon restructured the firm into three units last year, scaling back its ambitions for the consumer business, which has suffered losses of $3 billion in the past three years. This move is part of Goldman’s overall restructuring strategy to return to its roots, according to analyst Stephen Biggar.

Goldman had acquired RIA, formerly known as United Capital Financial Partners, in 2019 for $750 million with the aim of expanding its client list beyond the ultra-rich. However, the unit has since remained a relatively small part of the bank’s wealth business.

Goldman Sachs’ wealth business has trailed behind competitors like Morgan Stanley, which has built a robust wealth management arm through strategic acquisitions, generating steady income from fees. To narrow the gap, Goldman plans to focus on growing its core wealth business, catering to ultra-high-net-worth clients. This includes offering workplace financial planning through Ayco and Marcus savings.

Following the announcement of the potential sale, Goldman Sachs’ shares slipped 0.6%. However, this move aligns with the broader trend of U.S. banks competing to serve ultra-wealthy clients. These financial institutions recognize the stability and consistent revenue that comes from providing various financial services to this niche market, compared to the volatility of investment banking and trading operations.

As Goldman Sachs contemplates the sale of its wealth business, it remains to be seen how this strategic move will shape its future growth and competitiveness in the wealth management industry.