Goldman Sachs sells its $29 billion investment advisory business

Goldman Sachs (GS) agreed on Monday to sell its Unit $29 billion personal financial management (PFM) deal to Creative Planning, a Kansas-based Registered Investment Advisor (RIA).

Points to remember

  • Wall Street investment bank Goldman Sachs has agreed to sell its $29 billion personal financial management (PFM) unit.
  • This is part of an effort to reorient the company's business strategy towards its primary customer base: ultra-high net worth investors.
  • As one of the largest registered companies in Investment Advisor America (RIA), Creative Planning may be well positioned to take over Goldman's PFM unit.

It's a move meant to shift the Wall Street giant's focus back to its super-wealthy clientele, a market Goldman has long dominated. The PFM unit is a spin-off from United Capital, an advisory firm that Goldman bought in May 2019 for $750 million, as part of the efforts of then-CEO David Solomon. to expand the company's customer base beyond the ultra-rich and cater to those somewhat less wealthy.

However, this decision turned out to have no impact on the company's long-term strategy. In February, Goldman was targeting only 1% of the high net worth market, that is, those with between $1 million and $10 million to invest. By comparison, high net worth individuals – Goldman's primary customer base – typically have funds to invest in excess of $60 million. Goldman's private wealth management arm oversees more than $1 trillion in assets from approximately 16,000 clients.

The sale should be finalized at fourth quarter and positively impact the finances of the Wealth Management division, thereby increasing its profit margin.

“This transaction is a step towards achieving the goals and targets we set out at our Investor Day in February,” he said. said Marc Nachmann, global head of asset and wealth management at Goldman Sachs. "It increases the margin of assets and assets. Wealth Management and allows us to focus on executing our premier wealth management and workplace growth strategy for the ultra-high net worth.

As one of the most Large private investment advisers, with more than 2,000 employees and $245 billion in combined assets under management (AUM), Creative Planning could be well placed to take over Goldman's PFM unit.

Goldman Sachs shares were up more than 1% in Monday afternoon. They have lost more than 5% so far this year, underperforming the broader financials sector of the S&P 500, which has been flat year-to-date.


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