Goldman Sachs weighs selling part of its heritage business

NEW YORK, Aug 21 (Reuters) – Goldman Sachs (SG.N) It is weighing the sale of a portion of its heritage business, it said Monday, as it refocuses its attention on serving the ultra-rich and steers clear of high-net-worth customers in mass markets.

The Wall Street bank is evaluating alternatives for its registered investment adviser (RIA) unit, called Personal Financial Management (PFM), which manages about $29 billion, it said in a statement.

The move comes as Goldman pulls out of its consumer operations, which have lost $3 billion in the past three years, and is forging ahead with a selling your fintech businessGreen sky.

Goldman bought RIA, formerly known as United Capital Financial Partners, for $750 million in 2019 when it was managing about $25 billion in funds. The purchase was aimed at expanding Goldman’s client list beyond the ultra-rich, but the unit has remained a small part of the bank’s wealth business.

Goldman’s private wealth arm oversees $1 trillion in assets for ultra-high net worth clients.

Citywire RIA first reported on the possible sale.

Potential divestments come after CEO David Solomon rearranged the firm into three units last year and scaled back the ambitions of its loss-making consumer business.

“This is part of the overall restructuring of the company, back to its roots,” said Stephen Biggar, an analyst at Argus Research.

“They haven’t been able to blaze a path of profitability and scale” for RIA, which served high-net-worth individuals in mass markets outside of Goldman’s core, ultra-wealthy clientele, Biggar said.

Goldman declined to comment on PFM’s earnings.

Shares of the company fell 1.2% in morning trading, compared with the S&P index of bank stocks. (.SPXBK)which fell 0.6%.

Goldman’s wealth business has lagged behind rivals, including Morgan Stanley (MS.N)where CEO James Gorman created the wealth management arm through a series of acquisitions that generate steady income from commissions.

Solomon has been under pressure to turn around Goldman’s fortunes after his profit sank 60% in the second quarter as writedowns at its consumer and investment property businesses weighed on earnings.

The bank plans to grow its core wealth business by serving very high net worth clients, reiterating aspirations since its investor day at the end of February. Other core wealth businesses include workplace financial planning through Ayco and Marcus savings, Goldman said.

US banks compete to serve ultra-rich clients by providing brokerage, mortgage and other services, as well as estate and tax planning. Those activities tend to generate more stable income than Wall Street’s volatile operations, such as investment banking and trading, which are heavily tied to economic activity.

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