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Goldman Sachs considers sale of wealth business segment amid strategic shift

Goldman Sachs considers sale of wealth business segment amid strategic shift

Goldman Sachs, the leading investment backed, reportedly announced on Monday that it is contemplating selling a portion of its wealth business. The move is a part of a strategic shift back to focusing on serving ultra-high-net-worth individuals, while moving away from catering to high-net-worth clients in broader markets.

The renowned Wall Street institution is presently exploring options for its registered investment adviser (RIA) division, known as Personal Financial Management (PFM), responsible for managing approximately $29 billion in assets. This shift in approach follows the restructuring undertaken by CEO David Solomon the previous year, which involved dividing the company into three distinct units and scaling down its ambitions for the consumer sector. Over the past three years, the consumer business had incurred losses amounting to $3 billion.

Stephen Biggar, an analyst at Argus Research, noted that the RIA, or PFM, had struggled to establish profitability and growth in the realm of high-net-worth individuals within the mass markets segment, which stood apart from Goldman's primary clientele consisting of the ultra-wealthy.

For the record, RIA was acquired by Goldman Sachs in 2019, formerly named United Capital Financial Partners, for $750 million when its managed assets stood at around $25 billion. This acquisition aimed to diversify Goldman's client base beyond the ultra-rich demographic, but the unit has remained a relatively minor component of the bank's wealth business.

Goldman's private wealth division, with oversees assets amounting to $1 trillion, primarily serves clients with investable assets of $60 million or more. The high-net-worth individuals, who fall within the segment Goldman is contemplating selling, typically possess investable assets ranging from $1 million to $10 million.

With pressure on CEO David Solomon to revitalize Goldman's performance after a 60% profit decline in the second quarter, stemming from write-offs in the consumer sector and real estate investments, the bank intends to expand its core wealth business, particularly in serving ultra-high-net-worth clients. This commitment echoes the aspirations articulated during the investor day held in late February.


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