Goldman Sachs Chief Executive Officer David Solomon (center) during an event attended by Prime Minister Rishi Sunak at the Business Roundtable during his visit to Washington DC in the United States June 8, 2023 in Washington, DC.
Niall Carson | WPA Pool | Getty Images
Goldman Sachs said Monday that it agreed to the sale its personal financial management unit to a competitor called Creative Planning.
The transaction is expected to close in the fourth quarter of this year and result in “a profit” for New York-based Goldman. The bank declined to disclose the sale price for its PFM deal.
Goldman acquired a team of approximately 220 financial advisors managing $25 billion in assets in May 2019 announced the $750 million acquisition of United Capital Financial Partners. At the time, CEO David Solomon announced the deal as a way to expand Goldman's reach beyond the ultra-rich clientele, which is its greatest strength, to those who are just wealthy and might have a few million dollars to invest.
But amid Solomon's efforts to divest or close several businesses related to his ill-fated retail banking plan, the PFM business was deemed undersized in the context of Goldman's larger ambitions in wealth and wealth management . Goldman said in February that it only has about 1% of the market for high-net-worth companies, those with $1 million to $10 million to invest.
“This transaction is a step forward in fulfilling the goals and objectives we set out at our investor day in February.” Marc Nachmanglobal head of wealth and wealth management at Goldman said in a statement Monday.
The sale “allows us to focus on executing our best-in-class wealth management and job growth strategy for ultra high net worth individuals,” while continuing to support high net worth clients through a strategic partnership with Creative Planning, he said.
The sale of the PFM business will help boost profit margins in Goldman's asset and wealth management division, Jefferies analysts led by Daniel Fannon wrote in a research note Monday.
“With the sale of the Marcus installment loans completed in the second quarter of 23, the GreenSky sale process initiated and the continued reduction of legacy investments on the balance sheet, the bank is “getting closer to a more sustainable and profitable business, which it presented at the Investors' Day.”, wrote Fannon.
Creative Planning is a Kansas-based registered investment advisor with more than 2,100 employees and $245 billion in assets under management and advice.