Goldman Sachs wants to expand its wealth management services for wealthy clients, especially those wealthy executives and individuals who already work closely with Goldman in their corporate capacity.
For years, Goldman has been even less than an also ran in the wealth management business. It’s more like a “barely ran.” In fact, the profitability of Goldman’s other business, especially trading, had been responsible for some firms that had big financial advisory businesses to shrink that side of their firm to devote more resources to trading.
These days Goldman has about 350 financial advisers, according to Investment News. It wants to grow into the “high hundreds.” Insiders tell us that many of Goldman’s clients are actually former and current Goldman executives. Can there be such thing as an in-house, proprietary brokerage? If so, Goldman’s running it.
Goldman is certainly not looking to compete with UBS, Merrill Lynch, or Morgan Stanley in running a large retail firm for affluent investors.
“If they’re just continuing to sell investments to rich people, it’s not going to be that dramatic, because people won’t be fooled that they’ll get access to the Goldman magic,” Mr. Prince said. “They can add offices and get a very steady stream of business, but if it remains a stepchild to their trading and investment-banking areas, it will be a pain in the neck to manage.”
Goldman should focus on clients with a net worth of at least $25 million, Mr. Prince said.
Goldman, which is expanding in Arizona, Florida, Georgia and other areas with lots of retirees, is not dangling large pay packages to compete with wirehouses for star brokers, according to a knowledgeable source.
Goldman’s branch managers are looking for relatively junior advisers who have the “proper Goldman degree of controlled aggressiveness” and whose clients generally have $10 million or more of investible assets,” the source said.
One problem Goldman has in recruiting both wealth management clients and advisers is that neither really gets very much respect within the firm. Goldman wealth management clients do not get the privileged access to information that, say, a hedge fund client might get. And the advisers are generally seen as people who don’t know anything about the markets but have connections to the ultra-wealthey and an entrepreneurial drive to “build their business.”
“As a result, a lot of them are total dopes,” one person familiar with the matter told us.