There’s good and bad news for RIAs in today’s announcement that Goldman Sachs is buying United Capital for $750 million, according to United Capital founder and CEO Joe Duran and others who work in the wealth business.
First, “having a unified client experience that is unique and special is really, really important,” he said in an interview. “I believe it at my core, and Goldman Sachs is buying us for what we do for clients and how we built [the experience].”
Second, technology is king — to a point. “Having bionic, deeply embedded tech means you can get a robust multiple,” Duran said. “But it’s the combination of the human heart and the tech brains, the bionic combo that we have been a promoter of, for a decade, that matters [most].”
Third, United Capital will be able to grow with its new owner, as can other RIAs working with firms that have deeper pockets and other resources. “We will make this the dominant firm for RIAs [serving] the roughly $1 million to $15 million client … and the white-label [partner] for individual advisors …, who don’t have to go it alone.”
New Playing Field
These trends mean the competitive field for RIAs is becoming much more difficult.
Looking at United Capital, Carson Wealth and Edelman Financial Engines, “These franchises are going to become the big way to go,” said Craig Iskowitz, CEO of the consultancy Ezra Group. “It’s going to be harder and harder for small RIAs, with these franchises [taking in] all the assets.”
“Those building technology stacks around financial planning and client experience … are going to have a scale advantage on what is a very fragmented RIA market,” said consultant Gavin Spitzner.