United Capital Advisors Are Saved from the Grip of Goldman’s Failed Platform
David Solomon’s leadership raises concerns about Goldman Sachs’ strategy and future. Or, With the sale of United Capital, Is everything coming undone at Goldman Sachs? Once synonymous with Wall Street prowess and financial excellence, it can’t seem to find its footing under the leadership of David Solomon. Recent moves, including the announced sale of United Capital, and shifts in business strategy, have raised questions about the firm’s direction and competence as a viable wealth management platform. As the financial landscape evolves, financial advisors at the firm might find it prudent to explore alternative options for their practices.
The Decline of United Capital
One of the key markers of Goldman Sachs’ changing strategy is the impending sale of United Capital, a wealth management company that the firm acquired in 2019. United Capital was known for its focus on serving the middle market mass affluent, a segment that was seemingly aligned with Goldman’s expansion plans at the time. Advisors at United served a niche that seemed an opportunity for growth, who did a superb job with financial planning as traditional RIA’s typically do. It was a mismatch on day one. Advisors who were used to being paid anywhere between 50- 60%+ were eventually cut to 30% (10% of that in deferred GS stock) just for the honor of using Goldman’s platform. United assets certainly didn’t flourish under Goldman as reports indicate that the AUM of United Capital has dwindled from $25 billion at the time of acquisition to a mere $13 billion. This drastic decrease raises questions about Goldman’s ability to effectively manage acquired assets and cater to the needs of the clients United Capital and even its legacy advisors.
Advisors in transition look to advisor consultant Roger Gershman of The Gershman Group for guidance in such times who has particular expertise with Goldman Sachs. Mr. Gershman has counseled countless advisors in buyouts with First Republic Bank, Barclays, Deutsche Bank, Alex Brown, and also many RIA’s. He had this to say about the sale, “we’ve been talking about the identity crisis at Goldman for years now, I’ve spoken to many in-house advisors who are assessing their next moves, and now for United Capital advisors, assessment has been forced upon them. Just like past transactions, there will be a bidding war for these advisors though advisors will need an added layer of legal advice with Goldman’s stringent employment contract. Advisors need to get a jump on this, fast.”
Shifting Strategies and Leadership Changes
David Solomon’s tenure as CEO has been marked by significant shifts in business strategy. Under the stewardship of his predecessor, Lloyd Blankfein, Goldman Sachs had been exploring the potential of disruptive finance, particularly in the context of robo-advisors. Solomon’s ascension to the CEO role saw a renewed focus on attracting millennials and projecting a more contemporary image. His background as a DJ, while novel, has raised questions about whether his leadership is primarily centered on public relations and optics, rather than sound financial strategy. The problem is for Solomon that when the music stops playing now, advisors and clients at the firm are unclear where they stand, no position to be in for the UHNW.
Furthermore, the recent announcement of the completion of the third restructuring in four years raises concerns about a lack of coherent direction at the firm. These frequent restructuring efforts which have included an attempt to manage wealth management like the investment bank given investments bankers now run the division in the restructuring raise eyebrows and prompt questions about potential merger and acquisition activity.
Financial Advisors’ Dilemma
The turmoil surrounding Goldman Sachs’ strategic decisions and leadership under David Solomon has implications for the financial advisors at the firm. The changing landscape could potentially impact career prospects, compensation, and overall job satisfaction. With United Capital’s decline and the shifting focus towards a B2B RIA custody model, advisors might be left wondering if their long-term interests align with the firm’s direction. Why remain at the firm for 20% cash payout when you could be paid 50-70% with the very same access to the platform and more autonomy, and certainly an advisor could be clearer as to the long-term strategy vs. the cannibalization of in-house teams.
Goldman Sachs, once regarded as an epitome of financial prowess, is facing a series of challenges under the leadership of David Solomon. The impending sale of United Capital, dwindling AUM, and frequent strategic shifts are raising concerns about the firm’s competence, strategy, and ability to navigate the evolving financial landscape. Financial advisors within the firm are wise to reflect on goals and what might serve their practice the best, and of course, proper remuneration for the work they perform.
