Goldman Sachs Mulls About Selling Its Investment Advisory Unit
Goldman Sachs (GS) is reportedly thinking about selling its famous 'investment advisory unit' that it took over around 5-6 years ago. According to experts, the banking giant is now stepping back from its initial efforts to appeal to a wider customer base.
As per the reports, the banking giant is now looking at potential alternatives that can cater to those with high net worth.
Investment Advisory Unit Manages $29 Billion Worth Of Assets
A few years back, Goldman Sachs paid a total sum of $750 million to buy United Capital which offered services as an investment adviser. Available reports suggest that the unit, which is now owned by Goldman Sachs, oversees $29 billion worth of assets.
Initially, the reason behind the acquisition of the United Capital was to also focus on those clients who are not ultra-rich. However, it appears that the CEO (David Solomon) is now feeling the heat as the shift towards targeting the mass market has led to losses over the years.
In the 2nd quarter, the group reported a 60% slump in profits which was mostly driven by Goldman's writedowns in the consumer businesses.
Earlier this year, Goldman Sachs reiterated that it would focus more on expanding the services that are offered to ultra-rich clients. This will allow the banking giant to tap into stable revenue streams which are not affected by the economic cycles. For now, the divisions such as trading, investment banking, & similar ones can't be counted as stable revenue streams.
The bigger picture is that Goldman is now reverting back from its ambition to jump into the wider market. That's why the fintech division known as GreenSky is now also being listed for sale by the Goldman Sachs Group. In addition, the online retail banking service known as Marcus also faced a scale-down just a year ago.
Over all, it appears that Goldman Sachs didn't have much of a luck when it comes to targeting the wider market and now the bank is moving towards what it does best.