- Goldman Sachs is expanding its wealth businesses with a significant wealth transfer underway.
- As it looks to cater to the next generation, Marcus and new tech are key parts of that strategy.
- The bank’s private wealth co-heads described their strategy to Insider in an interview.
- See more stories on Insider’s business page.
For the ultra-rich clients who qualify for Goldman Sachs’s private wealth management division, where the average account size is $60 million, the bank wants to keep it in the family.
Older generations, primarily baby boomers, are expected to pass some $15 trillion to younger generations globally by the end of this decade, according to a 2019 report by data and analytics firm Wealth-X.
“Over half of our clients have been with us for over a decade. We’re not complacent about that, though,” John Mallory, who along with Meena Flynn co-leads the bank’s private wealth business, told Insider. “So we understand that in that transfer, we’re going to have to earn our keep all over again with the next generation.”
It’s not a challenge unique to Goldman as a wealth manager, but the firm is in a unique position. Goldman, a firm synonymous with enormous wealth, has in recent years tried to reshape itself as a bank that can count someone with just $1,000 to invest as a client just as it has long done business with large companies and the very wealthy.
As part of that push to resonate with Main Street, it introduced Marcus, its consumer-banking business, five years ago. It launched Marcus Invest, a robo-advisor with a $1,000 minimum, earlier this year. And it has reorganized how its wealth businesses are situated entirely, creating a new internal consumer and wealth management division that went into effect at the start of this year. Goldman has some 800 advisors within private wealth globally.
Flynn, previously global head of the firm’s markets solutions group, and Mallory, previously head of private wealth management for the Americas, have co-led global private wealth management since the start of this year. The firm on Wednesday reported $637 billion in assets under supervision within its wider consumer and wealth management division at the end of March.
Mallory said digital tools like Marcus have been additive to the ultra-high net worth business because it gives family members an “accessible” entry point to start engaging with the bank early.
‘There are clients of ours who’ve come to us and said they really liked the fact that – whether it’s family members of their grandkids level or other friends and family – that they know that they now have a relationship with us,’ said Mallory. “It’s really been additive to our overall franchise that way.”
It can be as simple as having access to mobile check deposits on the app, he added.
‘Those are the kinds of things the next generation are just going to assume are going to be a part of the relationship,” he said. “We need to make sure that we’re at the front end edge of those trends with our offering. It’s something we talk about a lot.”
As the firm strategizes around catering to multiple generations, the demographics that play into the looming wealth transfer are “not lost on the industry,” Flynn said. She noted figures that fit into financial planning like women often living longer than men, and some 70% of women tending to change advisors after a partner dies.
“There’s going to be a big wealth transfer to women over the next decade,” she said.