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Goldman (GS) Considers Selling PFM, Will Focus on Ultra-Rich (Revised)

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The Goldman Sachs Group, Inc. (GS - Free Report) is planning to sell a part of its wealth management business. Per a Reuters article, the company is scaling back its ambitions to serve the mass consumers and deciding to focus on serving the ultra-rich.

GS stated that it was evaluating alternatives for its registered investment adviser (RIA) unit, named Personal Financial Management (PFM).

Goldman had acquired the RIA unit which was formerly known as United Capital Financial Partners, Inc. in an all-cash deal valued at $750 million in May, 2019. At the time of acquisition, United Capital had $25 billion of assets under management and over 220 financial advisors. The transaction was aimed at broadening its clientele beyond the ultra-rich and expanding its geographic footprint.

PFM is a very small component of the firm’s overall wealth management business. The unit has contributed little to the overall growth of GS’ business.

Besides this restructuring move, Goldman has been looking for bidders for the sale of its consumer lending platform, GreenSky. GS has been refocusing its business on its core strengths of investment banking and trading, while reducing its retail footprint. These major business restructuring initiatives are in sync with the strategic overhaul.

Once the proposed plan is fulfilled, Goldman would be focusing on its ultra-high-net-worth clients and growth of its core wealth business. These are more stable sources of revenues compared with income from investment banking and trading.

Goldman’s shares have lost 12.4% over the past six months compared with the industry’s decline of 13.4%.

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GS presently carries a Zacks Rank #3 (Hold). You cansee the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Restructuring Efforts by Other Banks

Last month, Mitsubishi UFJ Financial Group, Inc. (MUFG - Free Report) and Morgan Stanley (MS - Free Report) announced plans to deepen their 15-year alliance by merging certain operations within their Japanese brokerage joint ventures.

The partnership, originating from MUFG's $9 billion investment in Morgan Stanley during the 2008 financial crisis, will see combined Japanese equity research, sales and execution services for institutional clients at Mitsubishi UFJ Morgan Stanley Securities and Morgan Stanley MUFG Securities.

Additionally, their equity underwriting business will be rearranged between the two brokerage units. The implementation of this expanded alliance is scheduled for the first half of 2024.

(We are reissuing this article to correct a mistake. The original article, issued on August 22, 2023, should no longer be relied upon.)

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