Goldman Sachs could sell its personal financial management business as it moves away from retail banking.
“We see continued opportunities to invest in this segment but with less strategic impact to GS,” the bank said in a statement provided to PYMNTS Monday (Aug. 21).
“As such, we are currently evaluating alternatives for that business as we determine where to invest our resources and where we see the greatest opportunity,” the bank said. “We expect to find an outcome that benefits both our clients and our advisors.”
Goldman argues its personal financial management (PFM) business is a “very small” part of its overall wealth franchise, which has $1 trillion in assets under supervision. PFM, meanwhile, handles $29 billion.
“At Investor Day earlier this year, we laid out our plans to continue growing our private wealth, workplace (Ayco), the related private banking and lending business and Marcus Savings. We see outstanding opportunities to continue investing in these core businesses where we have a long-term track record of success,” the spokesperson said.
On an earnings call last month, Goldman CEO David Solomon spoke about the bank’s “pivot to narrow our consumer ambitions” as the firm focuses efforts on traditional investment banking and market-driven operations.
As noted here at the time, the bank’s second-quarter results showed the continued impact of its retreat from Main Street banking, such as its move to sell its Green Sky business.
“While Wall Street may be parsing the details of revenue declines amid stock market volatility and deal-making turbulence — where investment banking-related, top-line contributions fell 20% — the company’s presentation materials detail efforts to reevaluate GreenSky and some added charge-offs in its consumer arm,” PYMNTS wrote.
Goldman’s consumer platforms business enjoyed revenues of $577 million, increasing 18% over the first quarter of this year and surging 129% since last year. However, its provision for credit losses in the segment was $544 million, up more than 100% compared to the first quarter of 2023 and up 75% from the same period in 2022.
The bank’s shift away from retail banking is happening as a number of lenders are expanding their efforts to cater to the wealthiest customers.
Among them is J.P. Morgan Chase’s 23 Wall, a family office where roughly three dozen people cater to 700 families worth more than $4.5 trillion, though Goldman and Citi have been beefing up their family offices as well.
“The expansion of these business units has been driven by the increasing wealth of the world’s richest people, the challenges they face as investors dealing with rising interest rates and inflation, and the growing tendency of wealthy families to become more sophisticated in how they manage their wealth,” PYMNTS wrote in May.