Goldman Takes $750M Wealth-Management Step

The acquisition of United Capital advances Goldman's "long-term strategy to offer clients solutions across the wealth spectrum."
Matthew HellerMay 20, 2019
Goldman Takes $750M Wealth-Management Step

Goldman Sachs has agreed to acquire United Capital Financial Partners for $750 million, adding to its wealth-management footprint as it seeks to diversify away from trading.

Goldman currently offers wealth-management services through a division that works with the ultra-rich — or those with at least $25 million in net worth — and its Ayco business, which caters to corporate executives. The two businesses have nearly $500 billion of assets under management.

Newport Beach, Calif.-based United is a boutique firm with only $25 billion in AUM. But its clients have $1 million to $15 million in assets, offering Goldman an opportunity to expand its wealth-management reach.

The deal, which is Goldman’s largest in two decades, will accelerate its “long-term strategy to offer clients solutions across the wealth spectrum,” CEO David Solomon said in a news release.

Shirl Penney, president and CEO of Dynasty Financial Partners, told InvestmentNews that the deal will help Goldman “execute their stated game plan to widen the firm’s footprint in wealth management. It also gets them in the RIA [registered investment advisor] space, which has been the hottest and fastest-growing segment of the wealth management industry.”

Like other Wall Street banks, Goldman has been aiming to diversify to offset declines in revenue from fixed income, commodities, and currencies. Its trading revenue dropped 11% in the first quarter.

In other recent wealth-management moves, Morgan Stanley in February said it agreed to buy Solium Capital, an employee stock plan manager, for $900 million, and, in November, BlackRock said it planned to buy a 4.9% equity stake in Envestnet.

“Wealth-management revenue tends to be stickier. That makes it attractive,” Brian Kleinhanzl, a KBW analyst, told CNN.

United Capital employs more than 220 financial advisors serving 22,000 clients in more than 90 offices across the U.S. Its advisors use its FinLife CX digital platform to grow their business, customize portfolios, and stay connected with clients.

“Goldman Sachs can leverage that technology to improve the platforms it uses for its private wealth management and Ayco businesses,” CNN noted.