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Goldman Sachs commits resources to growing its wealth business serving the ultra-high net worth. A disappointing adventure for consumers bank executives said at the bank’s investor day on Tuesday.
“We have a lot of opportunities for growth and we intend to continue growing in the high-end and ultra-high-end,” said Mark Nachman, global head of the bank’s Asset & Wealth Management division, in a live presentation. – Stream online.
According to Nachmann’s, the investment bank accounts for about 8% of the U.S. ultra-high net worth wealth market and about 1% of the high net worth market. slide show.
Nachmann said Goldman’s AWM division restructuring The bank announced last October that it will achieve “high single-digit” revenue growth over the next three to five years by growing organically from the management fees it charges clients and income from private banking and lending. Predicted.
Further, Nachmann said he expects to achieve pre-tax margins in his “mid-twenties” and, as a result, return on equity in his “mid-teens.”
“This is an area where we have the most significant growth opportunity and where we already operate at scale,” a company spokesperson said of AWM in an email.
In the long term, “the goal is to organically outperform the industry,” Nachman said.
he outlined three Strategy to achieve its organic growth: Expansion of wealth management business. Double down on industry-leading positions in established alternative businesses. We provide special investment “solutions” that our clients cannot easily find elsewhere.
Such bespoke solutions include Goldman’s outsourced Chief Investment Officer services. It’s already the market leader in the US and number two globally, according to Nachmann, and the company plans to expand in North America and Europe. and direct indexing. Goldman is his provider, number two in the insurance industry and number one in SMA.
“We have embraced client demands for customization and flexibility,” says Nachmann.
The firm is betting on squeezing those relationships for more revenue streams by catering more to its wealthiest clients, who tend to have longstanding relationships with private wealth advisors. Investment banking giant Goldman, for example, wants to refer advisers to wealthy individuals involved in investment banking transactions.
At the event, Dan Dees, Co-Head of Global Banking and Markets, said, “We are just getting started on the possibility of opening up these trusted advisor relationships to the company. said that there were “hundreds of referrals between GBM and AWM and vice versa.”
The referral system is part of the bank One Goldman Sachs New Strategy It integrates efforts across different departments of the bank, essentially cross-selling products and services to previously siled customers by bankers.
Goldman the current has over 16,000 wealth clients worldwide through its signature private banking channels. A customer has been with the company for an average of 10 years and has an average of $60 million in his account. Private wealth management businesses typically serve clients with at least $10 million in investable assets.
The bank manages a total of $1 trillion in client assets across its wealth management business units. younger Workplace and Personal Wealth Management and Personal Wealth Management Unit.
Goldman has more than 1,000 financial advisors, each with an average tenure of 15 years or more, serving the bank’s ultra-high net worth clients. The company declined to share via email the number of advisors it plans to employ to meet its growth targets.
Nachman said the ultra-high net worth market “remains very fragmented.” This leaves plenty of room to further expand the franchise and gain market share in the U.S. and internationally. ”
I was asked by Morgan Stanley analyst Betsy Grassek to describe what the geography of that expansion might look like.