Goldman strikes deal to sell unit that offers financial advice to the masses

Goldman Sachs (GS) found a buyer for a personal finance unit that serves the mass affluent as it tries to scale back ambitions for parts of its business.

The Wall Street giant said Monday that it had struck an agreement with Creative Planning, a wealth management firm based in Overland Park, Kan., to buy Goldman's Personal Financial Management (PFM).

Creative Planning has more than 2,100 employees and $245 billion in assets under management. Its CEO Peter Mallouk is the author of several books about investing, including two with motivational speaker Tony Robbins.

Goldman said a week ago that it had been "evaluating alternatives" for the unit, which managed $29 billion at the end of last year. Terms were not disclosed, but Goldman said the transaction is expected to result in a gain and close in the fourth quarter.

Goldman's stock was up 1.67% Monday in early afternoon trading while the KBW Nasdaq US Bank Index (^BKX) was up 1.52%. Year to date, Goldman has fallen 5.4%, underperforming rivals JPMorgan Chase (JPM) and Morgan Stanley (MS) but ahead of Citigroup (C) and Bank of America (BAC).

The sale was earlier reported by Bloomberg.

Goldman formed Personal Financial Management after acquiring Newport Beach, Calif.-based United Capital Financial Partners for $750 million in 2019.

The deal gave Goldman more than 200 financial advisers who provided financial planning for customers known within the industry as the "mass affluent" — those who are typically less wealthy than the clients Goldman has historically served.

The purchase was part of a bigger strategy to find steadier revenue streams away from the volatility of capital markets, pushing deeper into wealth management and consumer lending. Goldman is now retreating from some components of those businesses, especially consumer banking, as it tries to narrow its focus.

"This transaction is progress toward executing the goals and targets we outlined at our investor day in February," Marc Nachmann, Goldman's global head of asset and wealth management, said in a release, adding that it "allows us to focus on the execution of our premier ultra-high net worth wealth management and workplace growth strategy."

Goldman's asset and wealth management business has approximately $2.7 trillion in assets under management. Its private wealth division oversees $1 trillion in assets and includes workplace financial planning platform Ayco, a private banking and lending business, and Marcus Savings.

The purchase of United Capital Financial Partners in 2019 came during Goldman CEO David Solomon's first full year in charge of the firm.

Solomon is now under a microscope after reporting the firm's lowest quarterly profits in three years. He and the firm are wrestling with everything from job cuts and a global investment banking slump to reports of partner unrest.

Goldman is also retreating from a costly push into consumer banking. Solomon has said that Goldman will try to sell its consumer lending business GreenSky. The Wall Street Journal has also reported Goldman is now trying to end its partnership with Apple.

Gerard Cassidy, a bank analyst for RBC Capital Markets who covers Goldman, has said 2023 will be a lost year for the firm but that the second half is critical for showing how it can set itself up for a better 2024.

“Whether they do it in the third or fourth quarter, they need to make sure they clear the decks of any more write-offs, any additional problems they have,” Cassidy told Yahoo Finance last week.

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