Goldman Sachs is weighing in on selling part of its wealth business

NEW YORK (Reuters) – Goldman Sachs said on Monday it is considering selling part of its wealth business, as it shifts its focus back to catering to the ultra-rich and away from the lofty. High net worth clients in large markets.

The Wall Street bank said in a statement that it is evaluating alternatives to its registered investment advisor (RIA) unit, called Personal Financial Management (PFM), which manages about $29 billion.

The move comes as Goldman is rolling back its consumer operations, which have lost $3 billion in the past three years, and is moving ahead with the sale of its fintech company, GreenSky.

Goldman bought RIA, formerly United Capital Financial Partners, for $750 million in 2019 when it managed about $25 billion in funds. The purchase aims to expand Goldman’s client list beyond the ultra-wealthy, but the unit has remained a small part of the bank’s wealth business.

Goldman’s private wealth arm oversees $1 trillion in assets for ultra-high net worth clients.

Citywire RIA first reported the potential sale.

The potential divestment comes after Chief Executive Officer David Solomon reorganized the company into three units last year and trimmed its ambitions in its loss-making consumer business.

“This is part of the company’s overall restructuring, returning to its roots,” said Stephen Biggar, an analyst at Argus Research.

“They were unable to carve a path to profitability and scale” for the agency, which caters to high-net-worth individuals in mass markets outside of Goldman’s core wealthy clients, Biggar said.

Goldman declined to comment on PFM’s earnings.

The company’s shares were down 1.2% in late morning trading, compared to the S&P Banking Stocks Index (.SPXBK), which was down 0.6%.

Goldman’s wealth business has lagged behind its rivals, including Morgan Stanley (MS.N), where CEO James Gorman has built its wealth management arm through a series of acquisitions that generate steady fee income.

Solomon has been pressured to turn around Goldman’s fortunes after its profits plunged 60% in the second quarter as writedowns in its consumer business and real estate investments hit earnings.

The bank plans to grow its core wealth business to serve ultra-high-net-worth clients, echoing the aspirations of its Investors Day in late February. Other primary wealth companies include workplace financial planning through Aiko and Marcus savings, Goldman said.

American banks compete to serve ultra-wealthy clients by offering brokerage, mortgage and other services, as well as estate and tax planning. These activities tend to generate more stable revenues than volatile Wall Street operations, such as investment banking and trading, which are closely related to economic activity.

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