Goldman ditches its robo-advisory biz as it breaks up with consumer banking
Under new management… Goldman Sachs is pulling the plug on its robo-advisory biz. The investment-banking giant agreed to send its Marcus Invest clients (and their assets) to the digital investment company Betterment. The transfer, expected by the end of June, is another win for Betterment. The $45B wealth manager established its Wall Street cred with socially conscious robo-investment products, roughly doubling its assets since 2020. For Goldman, the rollover’s a rollover in defeat — aka another concession its consumer-banking foray was (mostly) a failure.
Indirect deposit… Goldman launched Marcus Invest in 2021, with Marcus joining a suite of consumer-facing products that included credit cards, CDs, and savings accounts. The goal: lure lower tax brackets (accounts as low as $1K) to ritzy Goldman. But last year the asset manager pulled a 180, saying its retail-banking biz had hemorrhaged $3B in about two years. It started to offload Marcus loans at a loss of nearly $500M. Goldman is still looking to back out of its credit-card partnerships with Apple and GM.
Bright spot: Goldman said it planned to double down on its deposits business, which has accrued $110B+ in deposits.
Why bother? Investors want Goldman’s revenue to be less reliant on dealmaking (IPOs, mergers) because it’s less consistent than, say, savings accounts. Rival Morgan Stanley’s earnings have been propped up by its growing asset-management biz.
Dead branches weaken the whole tree… and Goldman’s got the pruning shears out. In February, Goldman said it planned to trim $1B off its balance sheet. To that end, the i-bank is cutting weak limbs while focusing on the strongest parts of its biz. Picture: scaling back its mass-market push and refocusing on the 1%. Goldman is also said to be increasing its lending to private-wealth clients with accounts that hold an average of $60M each.