Goldman Sachs (GS.N) has revealed its contemplation of divestment from a segment of its wealth management division, signaling a strategic shift towards catering primarily to ultra-affluent individuals and moving away from high-net-worth customers within mass markets.
The renowned Wall Street institution is actively exploring options for its registered investment adviser (RIA) unit, named Personal Financial Management (PFM), which oversees approximately $29 billion in assets, according to an official statement. This change in approach follows a reorganization of the company into three distinct units overseen by CEO David Solomon last year, coupled with a recalibration of ambitions for its consumer-oriented ventures that recorded a cumulative loss of $3 billion over the past three years.
Simultaneously, Goldman Sachs is advancing its plans to offload its fintech enterprise, GreenSky, while also for the divestment for a significant portion of its unsecured consumer loans—a move initiated after discontinuing such lending activities in the previous year.
Stephen Biggar, an analyst at Argus Research, noted, “This is part of the overall restructuring of the firm, back toward its roots.” He emphasized that the RIA, operating under the name Personal Financial Management (PFM), had struggled to achieve profitability and scalability within the context of mass-market high-net-worth clients, as opposed to Goldman’s core affluent customer base.
Goldman Sachs refrained from commenting on the financial performance of the PFM division.
In afternoon trading, the company’s stocks dipped by 0.6%, in contrast to the S&P index of bank stocks (.SPXBK), which recorded a marginal increase of 0.2%.
In 2019, Goldman Sachs acquired the RIA, previously identified as United Capital Financial Partners, for $750 million. This move was intended to diversify the bank’s clientele beyond ultra-wealthy individuals; however, the RIA division has remained a relatively minor component of the institution’s broader wealth management endeavors.
