David Solomon (centre), Chief Executive Officer of Goldman Sachs during an event attended by Prime Minister Rishi Sunak on the Business Roundtable during his visit to Washington DC within the US on June 8, 2023 in Washington, DC.
Niall Carson | WPA Pool | Getty Images
Goldman Sachs said Monday that it agreed to sell its personal financial management unit to a competitor named Creative Planning.
The transaction is predicted to shut within the fourth quarter of this 12 months and “end in a gain” for Recent York-based Goldman. The bank declined to reveal the sale price for its PFM business.
Goldman acquired a team of about 220 financial advisors managing $25 billion in assets in May 2019, when it announced the $750 million acquisition of United Capital Financial Partners. On the time, CEO David Solomon heralded the deal as a strategy to broaden Goldman’s reach beyond the ultra-rich clientele that’s its primary strength to those that are merely wealthy, with perhaps a number of million dollars to take a position.
But amid Solomon’s push to unload or shutter several businesses tied to his ill-fated retail banking plan, the PFM business was deemed too small within the context of Goldman’s larger aspirations in wealth and asset management. Goldman said in February that it only had about 1% of the high net value market, or those that have between $1 million and $10 million to take a position.
“This transaction is progress toward executing the goals and targets we outlined at our investor day in February,” Marc Nachmann, global head of asset and wealth management at Goldman, said Monday in an announcement.
The sale “allows us to give attention to the execution of our premier ultra-high net value wealth management and workplace growth strategy” while continuing to support high net value clients through a strategic partnership with Creative Planning, he said.
Selling the PFM business will help boost profit margins in Goldman’s asset and wealth management division, Jefferies analysts led by Daniel Fannon wrote Monday in a research note.
“With the offloading of Marcus installment loans accomplished in 2Q23, the GreenSky sale process in motion, and the continued reduction of legacy balance-sheet investments,” the bank is “getting closer to becoming the more durable and profitable business it outlined at investor day,” Fannon wrote.
Creative Planning is a Kansas-based registered investment advisor with greater than 2,100 employees and $245 billion in assets under management and advisement.
