Goldman Sachs to speed up push into US wealth management

Goldman Sachs will use newly acquired United Capital to speed up its assault on middle America’s wealth management market, deploying an army of investment advisers to target the employees of corporate clients.

The bank recently agreed to pay $750m for California-based investment adviser United Capital, as new chief executive David Solomon diversifies Goldman from the trading and investment banking powerhouse he inherited.

The new business will operate alongside Ayco, the workplace financial counselling service Goldman had been using to target mass-market wealth management. “United Capital ramps up our growth plan by five years,” Ayco chief executive and Goldman Sachs partner Larry Restieri told the Financial Times in an interview.

“There’s a huge base of clients that need financial counselling that we think we can serve. We haven’t even scratched the surface.”

Goldman manages about $40bn of the estimated $28tn in assets held by the US’S “mass affluent”, a term that describes individuals or households with between $500,000 and $10m in investable assets.

The expansion into this market puts the bank in direct competition with brokerages such as Charles Schwab, as well as its traditional trading house rival Morgan Stanley. Asked about the prospect of more competition from Goldman on the sidelines of his bank’s annual general meeting last week, James Gorman, Morgan Stanley’s chief executive, told the Financial Times: “It doesn’t bother me at all.”

“It just reaffirms what I’ve believed for 20 years, which is that wealth management is under-appreciated in terms of its stability and importance to global financial institutions,” he added.

Mr Gorman described the deal as a competitor buying a “small firm” relative to the $2.5tn his bank manages at its wealth business. United Capital’s assets under management are about $25bn.

Ayco has provided a full wealth advisory service to the most senior layer of executives at the 425 companies it counts as clients. Last year it began trialling a broader wealth management offering for mid-level employees and has a smaller digital-only service.

Mr Restieri said he planned to use United Capital’s 220 advisers to enable Goldman to offer “widespread wealth management” to the employees of corporate clients.