Goldman Sachs slashing consumer services after dismal year

The nascent reorganization of Goldman Sachs is going through a rocky phase in which the company is cutting back its digital consumer bank after absorbing billions of dollars in losses.

With the release of its fourth-quarter earnings on Jan. 17, Goldman disclosed its largest miss below Wall Street's expectations in a decade and confirmed that the megabank is slashing its employee headcount by 6%, or roughly 3,200 people. 

Last week, Goldman released data revealing that its newly constituted Platform Solutions segment had lost nearly $3 billion in the last three years. By the afternoon, the value of Goldman's stock had plummeted by 6%. 

In prepared remarks on a call with analysts, CEO David Solomon described the company's results as "disappointing" and "not what we aspire to deliver to shareholders." He placed much of the blame for the losses on Goldman's digital consumer bank Marcus and other aspects of its push to expand into a wider base of clients from its traditional business as an investment banking and trading firm. 

Goldman "tried to do too much too quickly" and didn't have "all the talent that we have needed to execute the way we have wanted," Solomon said. 

In the shuffling announced in October, Goldman merged its asset and wealth management units, combined the investment banking and global markets divisions into one and set up Platform Solutions as the home of its financial technology platforms. The megabank is dividing Marcus across the last two segments. 

Its wealth arm — which includes the Private Wealth Management division, workplace retirement plan services and self-directed investing — showed some of the few gains amid losses elsewhere at the bank. Solomon cited wealth and asset management as among the firm's main strategic priorities as it strives to "create a more cogent path forward."

"We look at things and we pivot. We are not married to things. We are willing to change," Solomon said, according to a transcript by Seeking Alpha. "We have accomplished and have executed on the vast majority of things we have laid out. That doesn't mean there is not more work to do. But, you know what, we didn't execute perfectly on some. So, we have taken a hard look at those and you make adjustments." 

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For the main takeaways for financial advisors and other wealth management professionals from Goldman's fourth-quarter earnings, scroll down the slideshow. To see coverage of the megabank's third-quarter earnings, click here. And, for a look at Goldman's earnings from the second quarter, follow this link.

Note: The company doesn't break out most specific metrics for its wealth management business, including the number of financial advisors and client assets at the former United Capital and the level of custodial holdings in the unit once called Folio Financial. Unless otherwise stated, the metrics below relate to Goldman's Asset & Wealth Management segment.