Goldman to Acquire Boutique Wealth Manager For $750 Million
May 16 2019 - 9:55AM
Dow Jones News
By Liz Hoffman
Goldman Sachs Group Inc. is buying boutique wealth-management
firm United Capital Financial Advisers for $750 million in cash,
striking its biggest deal in two decades as it accelerates a push
away from Wall Street into lower-octane businesses.
United, whose 220 financial advisers manage $25 billion in
assets, will slot into Goldman's existing wealth-management
business, which skews toward billionaires. The Wall Street Journal
reported last week that the companies were nearing a deal.
Goldman's new chief executive, David Solomon, is pushing the
firm to be more diversified and dependable, less a Wall Street
powerhouse and more a financial supermarket modeled after JPMorgan
Chase & Co. It is looking to offset declines in its bond and
commodity-trading divisions and smooth out the swings in its merger
and capital-markets units.
That pivot is sending Goldman in search of steadier businesses
that will prosper in hot markets and cold ones and suck up little
of the firm's capital.
Wealth management fits the bill. Advisers collect flat fees to
manage money for clients, who can invest in Goldman's own branded
funds and borrow against their portfolios. Their spare cash can be
swept into Goldman's online deposit accounts, a cheap form of
funding that the bank is eager to grow.
Goldman's existing private bank manages about $480 billion for
clients, with a minimum account size of $10 million. The bank is
also building an automated investment tool aimed at the masses.
United's clients fall in the middle, with $1 million to $5
million in assets. They can be tricky clients, with finances
complex enough to occasionally need a human adviser but not
lucrative enough to merit the full white-gloved service.
They most resemble clients of Goldman's Ayco business, which
provides financial planning and advice to corporate executives.
Wealth management remains a fragmented business, with thousands
of small advisers scattered around the country.
That makes United an unlikely target for Goldman, which has done
few deals for fear of diluting its culture and polluting its
home-built technology. It is expected to be more acquisitive under
Mr. Solomon, a former deal banker who has built a 30-person
strategy team scouting new business opportunities and takeover
targets.
Write to Liz Hoffman at liz.hoffman@wsj.com
(END) Dow Jones Newswires
May 16, 2019 09:40 ET (13:40 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
Goldman Sachs (NYSE:GS)
Historical Stock Chart
From Mar 2024 to Apr 2024
Goldman Sachs (NYSE:GS)
Historical Stock Chart
From Apr 2023 to Apr 2024