Goldman details plans to capture mass affluent clients

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Goldman Sachs might be the next financial services powerhouse to jump into robo advisory.

The Wall Street giant is eyeing deep collaborations with partner firms to help launch its upcoming wealth management platform and is already halfway through the development process, according to executives in the company's quarterly earnings call. The firm will offer the services to customers of its nascent consumer banking business.

Goldman’s investment platform will likely include both digital capabilities and the ability to interact with human beings, said Chief Financial Officer Stephen Scherr during the earnings call. “This is a very large market, with $9 trillion in mass affluent customer assets across more than 20 million U.S. households,” Scherr said.

The announcement represents the latest example of the firm looking for growth opportunities outside of its traditional base of ultrawealthy and corporate clients.

Goldman’s wealth management service will be part of Marcus, the consumer banking platform the New York bank launched in 2016. U.S. consumers currently use that platform to make deposits and get personal loans. A credit card that will be integrated with Apple’s iPhone is expected to be launched this summer.

Goldman Sachs indicated that its strategy in the mass affluent wealth management business will be built around partnerships with employers. Since 2003, Goldman has owned Ayco, which works with companies to offer financial counseling to corporate executives.

Scherr noted that Ayco has relationships with 60 companies in the Fortune 100, as well as 220 of the top 1,000. “Ayco has the potential to carry us deep into these organizations to facilitate the growth of meaningful mass affluent business,” he added.

Goldman has established an ambitious long-term vision for Marcus. Mortgages, auto loans, life insurance and retirement savings products were all listed in a company presentation from May 2018.

Cupertino, California-based Apple announced plans to launch its new credit card with Goldman last month.

The Apple partnership and the wealth management offering for the mass affluent share certain elements with other major strategic growth initiatives at Goldman, CEO David Solomon said Monday.

“These elements include: reimagined products that address pain points for corporations, institutions and consumers; new technology unburdened by legacy systems that often slow down innovation; digital delivery mechanisms that produce scale and efficiency; and access to large customer populations,” Solomon said.

Goldman reported net earnings of $2.25 billion in the first quarter, down from $2.83 billion in the same period a year earlier.

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Wealth management Robo advisors Digital banking Consumer banking David Solomon Goldman Sachs