Goldman Sachs Divests Another Business Acquired During CEO David Solomon’s Tenure
Goldman Sachs has announced its agreement to sell its personal financial management unit to its competitor, Creative Planning. The transaction is set to be finalized in the fourth quarter of this year and is expected to yield a gain for Goldman Sachs. However, the specific sale price for its personal financial management (PFM) business has not been disclosed. In May 2019, Goldman Sachs acquired a team of approximately 220 financial advisors overseeing $25 billion in assets through the $750 million purchase of United Capital Financial Partners. This move was seen as a means to expand Goldman’s reach beyond its core ultra-rich client base and cater to the wealthier segment with a few million dollars to invest. Nonetheless, as part of CEO David Solomon’s strategy to divest or close down businesses tied to the bank’s retail banking plan, the PFM business was considered too small in the context of Goldman’s broader ambitions in wealth and asset management. In February, Goldman Sachs revealed that it held just 1% of the high net worth market, representing individuals with assets ranging from $1 million to $10 million.
Marc Nachmann, the global head of asset and wealth management at Goldman, emphasized that the sale aligns with the bank’s objectives outlined during its investor day in February. It allows Goldman to concentrate on its ultra-high-net-worth wealth management and workplace growth strategy while still serving high-net-worth clients through a strategic partnership with Creative Planning. The sale of the PFM business is expected to enhance profit margins in Goldman’s asset and wealth management division, a move that Jefferies analysts view positively. They noted that Goldman is progressing toward becoming a more durable and profitable business, shedding legacy balance-sheet investments and making strategic moves like the Creative Planning partnership. Creative Planning is a Kansas-based registered investment advisor with over 2,100 employees and $245 billion in assets under management and advisement.