Goldman Sachs is eyeing wealth management for the mass affluent as part of the continuing expansion of its nascent consumer banking business, a project that may involve partnerships similar to its recently announced deal to issue credit cards to customers of Apple, executives said.
Currently in the early stages, Goldman's investment platform will said to include both digital capabilities and the human element, according to chief financial officer Stephen Scherr.
The announcement is the latest example of the Wall Street giant looking for growth opportunities outside of its traditional base of ultrawealthy and corporate clients.
We will pursue partnerships to engage the mass market"
The New York company that has built its reputation as the investment banker and wealth manager to the top echelon of corporate clients and individual investors also is taking action to expand wealth services through its new Marcus consumer lending business.
To reach the mass-affluent, which most banks define as people with investable assets of $100,000 to $1m, Goldman will use Ayco. The Saratoga, New York-based financial planning business has focused on corporate executives reached through human resources departments, but it is now attempting to bring in a wider swathe of employees who will give Goldman money to manage.
The company is also investing in technology that will give corporate employees tools for signing up for robo-like services as they fill out their financial planning questionnaires, said a person familiar with the strategy.
"This likely will be some sort of mixed approach in terms of technology and human engagement," Scherr said on the analyst call, in discussing the expansion of the Ayco service as well as the new wealth component of its Marcus platform. "We are at the midpoint of the development plan."
"We will pursue partnerships to engage the mass market," Goldman chief executive David Solomon said on a conference call with analysts after the company reported first-quarter results that failed to meet analysts' revenue expectations. He did not provide specifics of the plan, or the timeframe for completion of the blueprint that Goldman executives first alluded to one year ago. But Solomon noted that partnerships are "critical" to the mass-market growth strategy.
Goldman Sachs reported that its net income fell 20% during the first quarter compared with a year ago. David Solomon said in a statement that he was pleased with the performance despite what he called a "muted start to the year."
Although earnings topped Wall Street's forecasts, revenue fell 13% to $8.8bn and missed analysts' consensus estimates of $9bn. Goldman Sachs posted a steep decline in revenue from underwriting initial public offerings as well as a slide in revenue from stock trading and investment management fees.
Still, the investment bank also said that its compensation and expenses -- often referred to as its bonus pool -- were 20% lower than a year ago. Goldman Sachs set aside $3.26 billion during the quarter, which works out to an average of $90,780 for its 35,900 employees.