Goldman Sachs agreed to sell a division of its Personal Financial Management Division as David Solomon, the chief executive continues to unravel a failed foray into Consumer Banking.
Creative Planning, a retirement and investment adviser, will purchase the unit. It has around 200 employees. The division provides financial planning for well-off clients who are not super rich, and services individuals with accounts ranging from hundreds of thousands of dollars to millions of dollar.
Goldman didn’t disclose the details of the deal, which is expected to be completed in the fourth quarter, but it said that it would record a profit on the sale. had previously reported Goldman was “evaluating alternative” for the unit. The unit encompasses Goldman’s registered investment adviser operations, and oversees approximately $29bn of assets. This deal represents approximately 1% of Goldman’s $2.7tn assets under management.
Goldman’s stock rose by 1.8 percent on Monday.
Goldman will continue to provide financial planning services to clients with an average account value of $60mn. Goldman will continue to sell funds and investment products through Creative Planning, an outside financial adviser, for less wealthy clients.
Marc Nachmann is the wealth management chief at Goldman Sachs. He said, “The transaction allows us to focus on the ultra-high-net-worth business where we have long-term track records.” “We see many opportunities for growth, both in the United States and abroad.”
Creative Planning is a wealth-management firm with assets of $245bn. Its chief executive, Peter Mallouk has written several books on personal finance, including The Path: Accelerating your Journey to Financial Independence.
Mallouk uses the social media platform X (formerly Twitter) to give advice to his more than 37, 000 followers. He co-authored several books with Tony Robbins who was previously the chief of investor psychology for Creative Planning.
Goldman’s business that is being sold grew from United Capital, an investment adviser based in California which it purchased for $750mn back in 2019. Goldman owned the unit, which grew by 20 percent under its ownership. However, it was never integrated with the rest of Goldman’s wealth management division.
This is the second Solomon-executed deal that has been unpicked. This year, the bank put GreenSky up for sale, its online lending business acquired in 2021. However, a deal is yet to be announced.
Solomon is facing the most difficult period in his five-year tenure. Solomon has been under pressure due to the losses he suffered from the move into mass-market banks. Solomon has retained the support of Wall Street’s bank directors and top shareholders, but faces internal backlash due to his blunt leadership style and critical news articles.