Creative Planning is a registered investment advisor boasting a workforce exceeding 2,100 individuals. It overseas $245 billion in AUM.
On Monday, August 28, banking giant Goldman Sachs announced its decision to sell its personal financial management unit to another competitor – Creative Planning.
The transaction will settle by the fourth quarter of the year 2023 and “result in gain” said banking giant Goldman Sachs. However, the banking giant hasn’t disclosed the sale price for its PFM business. In May 2019, Goldman Sachs acquired a team of approximately 220 financial advisors who managed $25 billion in assets. This move was part of the $750 million acquisition of United Capital Financial Partners.
Back then, CEO David Solomon called this unit acquisition a strategy to expand the services of Goldman Sachs beyond its traditional ultra-wealthy client base to individuals with substantial but not ultra-high net worth, typically with a few million dollars to invest.
However, as part of Solomon’s efforts to divest or close down businesses associated with a previous retail banking initiative, the Personal Financial Management (PFM) business was relatively small in relation to Goldman’s broader goals in the wealth and asset management sector.
In February, Goldman revealed that it held only about 1% of the high net worth market, which comprises individuals with investable assets ranging from $1 million to $10 million. Commenting on the development, Marc Nachmann, global head of asset and wealth management at Goldman, said:
“This transaction is progress toward executing the goals and targets we outlined at our investor day in February. The sale allows us to focus on the execution of our premier ultra-high net worth wealth management and workplace growth strategy.”
Nachmann added that the banking giant would continue to support high-net-worth clients via a strategic partnership with Creative Planning.
Why Selling the PFM Business Is Good for Goldman Sachs?
In a research note on Monday, Jefferies analysts, led by Daniel Fannon, stated that the divestiture of the PFM business will contribute to enhancing profit margins within Goldman Sachs’ asset and wealth management division. Fannon added that “with the offloading of Marcus installment loans completed in 2Q23, the GreenSky sale process in motion, and the continued reduction of legacy balance-sheet investments,” the bank is “getting closer to becoming the more durable and profitable business it outlined at investor day”.
Headquartered in Kansas, Creative Planning is a registered investment advisor boasting a workforce exceeding 2,100 individuals and overseeing assets under management and advisement totaling $245 billion.