Goldman Sachs (GS.N) said on Monday that it is considering selling a portion of its wealth business as it switches its focus back to servicing the ultra-rich and away from high-net-worth clients in broad markets.
According to a statement, the Wall Street bank is considering options for its registered investment advisor (RIA) subsidiary, Personal Financial Management (PFM), which oversees around $29 billion.
Goldman is retreating from its consumer businesses, which have lost $3 billion in the previous three years, and is moving forward with the sale of its fintech subsidiary, GreenSky.
In 2019, Goldman paid $750 million for the RIA, formerly known as United Capital Financial Partners, which managed around $25 billion in assets. The purchase was intended to diversify Goldman’s customer base beyond the ultra-rich, but the unit has remained a minor component of the bank’s wealth management division.
The private wealth branch of Goldman Sachs manages $1 trillion in assets for ultra-high net worth customers.
The prospective divestments come after CEO David Solomon reconfigured the company last year into three segments and pared back plans for its loss-making consumer sector.
“This is part of the overall restructuring of the firm, back toward its roots,” said Argus Research analyst Stephen Biggar.
According to Biggar, “they’ve been unable to carve a path of profitability and scale” for the RIA, which caters to high-net-worth clients in mainstream markets outside of Goldman’s core, ultra-wealthy customers.
PFM’s profits were not commented on by Goldman.
In early trading, the company’s shares fell 0.9% compared to the S&P 500 index of bank stocks (.SPXBK), which was relatively unchanged.
Goldman’s wealth management unit has lagged behind competitors like as Morgan Stanley (MS.N), whose CEO James Gorman created the wealth management arm through a series of acquisitions that provide consistent revenue from fees.
