Goldman Sachs Sells Off Another Acquisition During CEO David Solomon's Tenure
Goldman Sachs has revealed its intention to sell its personal financial management (PFM) unit to its competitor Creative Planning. The transaction is anticipated to conclude in the fourth quarter of this year, yielding a gain for Goldman. The bank, however, has chosen not to disclose the specific sale price for its PFM business.
Goldman initially acquired a team of approximately 220 financial advisors overseeing $25 billion in assets in May 2019 through the $750 million purchase of United Capital Financial Partners. This move, spearheaded by CEO David Solomon, was aimed at expanding Goldman's scope beyond its core clientele of ultra-affluent individuals to cater to a broader spectrum of individuals with significant investment capacity, albeit perhaps not in the ultra-rich bracket.
However, given Solomon's strategic drive to divest or close various businesses linked to his earlier retail banking initiatives, the PFM business appeared relatively small in relation to Goldman's larger ambitions within wealth and asset management. In February, Goldman had disclosed that it held merely 1% of the high net worth market, which encompasses individuals with investable assets ranging from $1 million to $10 million.
Marc Nachmann, Global Head of Asset and Wealth Management at Goldman, stated that this transaction aligns with the objectives outlined during the investor day in February. The sale enables Goldman to focus on advancing its premier ultra-high net worth wealth management and workplace growth strategy. Simultaneously, the bank plans to continue supporting high net worth clients via a strategic partnership with Creative Planning.
The divestiture of the PFM business is expected to bolster profit margins within Goldman's asset and wealth management division, according to research by Jefferies analysts led by Daniel Fannon. These analysts noted that with the completion of the Marcus installment loans divestiture in the second quarter of 2023, the ongoing GreenSky sale process, and the reduction of legacy balance-sheet investments, Goldman is moving closer to realizing its vision of becoming a more resilient and profitable entity, as outlined during the investor day.
Creative Planning, headquartered in Kansas, is a registered investment advisor boasting over 2,100 employees and managing/advising assets worth $245 billion.