Goldman Sachs will offer digital wealth management services for investments as low as $5,000 from 2020 with a new robo adviser.
Joe Duran, founder of United Capital, a wealth management firm bought by Goldman Sachs for $750m in May, has said that his team is on track to launch a robo adviser in 2020, according to the FT.
Duran said the service will allow Goldman Sachs to create solutions for clients with as little as "$5,000, $10,000 or $15,000" to invest.
It's a pipeline for future clients"
United Capital is yet to finalise the minimum investment beyond "significantly lower" than its traditional accounts serving people with $1m to $10m of investable wealth.
"It's a pipeline for future clients," he said, adding the robo adviser would initially target clients "with low complexity, not that much in assets" and allow them to "experience the Goldman Sachs' way".
This continues Goldman Sachs' retail offerings, following its launch of Marcus in 2017, which offers savings accounts and personal loans to a broad spread of households.
The robo adviser will be offered both to United Capital's direct clients and to outside advisers who use Finlife, United Capital's wealth management platform. It was developed at Goldman Sachs and other parts of the firm, including Marcus, may also deploy it in the future.
"We have a lot of clients who have kids and are in relationships with people who don't have their [level of] assets," said Duran. He added that he expected the typical account size to be higher than other robo advisers such as Betterment, which has no minimum investment threshold, "because of the kind of people the [Goldman] brand attracts".
Goldman Sachs has also invested in Nutmeg, the British digital wealth adviser, which is set to launch a tax-free investment account under its Marcus brand in the UK next year.
Duran said that United Capital's integration with Goldman Sachs was progressing "a lot quicker than I would have guessed" and that he now saw a much bigger opportunity than the original goal of doubling is $25bn of assets under management within three years.
Investor expectations for the business, however, are modest. Devin Ryan, analyst at JMP Securities, said he hoped the investor day (29 January) would "connect the dots on how [Goldman Sachs'] push into wealth management intersects with the broader consumer initiatives" under way at the investment bank.
Duran said United Capital has already trialled the product with clients introduced by Ayco, Goldman Sachs' employee financial counselling service, which offers investment management advice, tax planning and other financial services.
"We've already picked up millions of dollars of new clients from those relationships," said Duran. "The demand is higher than I expected - corporate entities love having a local adviser who can meet with them face to face."
He added that referrals from Goldman Sachs' private bank were a "much bigger growth area than originally envisioned".
This article was first published by Investment Week, a sister title to International Investment.