Deals & People August 23, 2023

Goldman Looks to Shed RIA Arm, Will Continue Third-Party Custody Push

While the firm is looking to divest the results of its 2019 acquisition of United Capital, it will continue to push into third-party asset management and custody businesses.

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The Goldman Sachs Group Inc. is considering parting with a registered investment adviser it acquired in 2019, but the asset manager still expects to push ahead with third-party solutions for advisory firms, including asset management and custody solutions.

Earlier this week, reports broke of Goldman Sachs seeking to sell the United Capital Financial Partners Inc. division, now called Personal Financial Management, it acquired in 2019 for $750 million in cash. The New York-based asset manager made the deal, CEO David Solomon said at the time, to enhance its private wealth offerings through its Ayco personal finance and workplace division, bringing more scale to wealth management solutions with “access to the intellectual capital and investment capabilities of Goldman Sachs.”

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The firm has since confirmed it is looking to pivot, moving away from direct investment and management of smaller personal financial management to focus on ultra-high-net-worth clients, as well as providing third-party services to the consolidating RIA space.

“Goldman Sachs has a premier ultra-high net worth wealth management business (PWM) with over 16,000 clients and $1 trillion in AUS [assets under supervision] that has consistently grown its client base, AUS and fees,” a spokesperson wrote in an email. “We also continue to invest in and grow our services to the third-party RIA market through our asset management, custody, structured notes, stock lending and deposit taking products and services.”

At its investor day earlier in the year, the firm reiterated plans to grow its private wealth and workplace practice, Ayco; its related private banking and lending business; and Marcus Savings, its high-yield consumer-focused savings platform.

Now it is looking for other options for the more individual financial advisory business, according to the statement.

“Personal Financial Management (PFM), our proprietary RIA business, is a very small component of our overall wealth franchise,” the spokesperson wrote. “We see continued opportunities to invest in this segment but with less strategic impact to GS. 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. We expect to find an outcome that benefits both our clients and our advisors.”

Goldman’s PFM division has about $29 billion in assets under supervision, according to an SEC ADV filing. The firm would be selling into an RIA deal market that, while depressed through the first half of this year, is still robust, according to a recent report by DeVoe & Co.

Meanwhile, the firm will continue with third-party advisory services, such as a July deal it signed with Creative Planning LLC in which the retirement plan advisory and wealth manager will have access to Goldman Sachs Adviser Solutions “institutional grade.” Those services will include GSAS’ middle and back office for alternative investments, electronic lending platform, advanced analytics and other product offerings.
Data & Research August 23, 2023

Few Americans Report ‘Financial Freedom’ Amid Record High Credit Card Debt

Research from Achieve suggests Americans are struggling to make ends meet, but separate research from WalletHub notes inflation is masking relatively strong debt management.

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U.S. credit card debt has reached an all-time high of $1.031 trillion owed as of the end of the year’s second quarter, with few Americans reporting having financial freedom.

According to a new survey from Achieve, just 11% reported they are living their definition of financial freedom. In defining financial freedom, 12.6% of respondents believed it meant being rich, while 32.1% said it was having enough money to give up working.

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“We’re seeing far fewer Americans with the goal of becoming ‘rich’ and many families pivoting to just trying to be able to pay their bills on time,” Brad Stroh, co-founder and co-CEO of Achieve, said in a statement. “With all of the economic pressures facing American families, financial freedom is currently more about making ends meet.”

Although Americans reported low levels of financial freedom, many are still optimistic, Achieve found. More than half (52%) of individuals said their progress toward this goal is improving, as opposed to 37% who report it is getting worse.

Achieve’s data came from a July survey of 1,000 U.S. consumers aged 18 and older.

Economic pressure and the impact of rising costs are certainly affecting how Americans are managing their finances. In separate research, personal finance firm WalletHub found that Americans are, in fact, managing debt better than in the past. Total credit card debt, when taking inflation into account, is currently below its peak by 18%.

“When you account for the massive impact inflation has on balances as well as the fact that debt-to-deposit levels are roughly 50% below the peak, U.S. households are actually in a lot better shape financially than it seems at first glance,” Odysseas Papadimitriou, WalletHub’s CEO, said in a statement. “Inflation is masking the fact that people are actually managing their debt better than they have in the past.”

At the end of Q2, the average household’s credit card debt was $8,668, 20% below the record on an inflation-adjusted basis.

There have been several times inflation-adjusted debt levels were higher. Credit card debt, adjusted for inflation, actually reached its all-time high in Q4 2008. U.S. households owed more to credit card companies from 2006 to 2009, as well as around 2019, according to WalletHub’s analysis.

The quarterly household debt report by WalletHub is based on analysis of the latest data on consumer finances available from the New York Federal Reserve and the U.S. Bureau of Labor Statistics.

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