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screenshot of Goldman Sachs trader from AP (Photo: AP)

Goldman Sachs plans to buy fintech platform and custodian Folio Financial for an undisclosed amount, according to a letter Folio sent to clients. The asset manager confirmed the deal, according to a Reuters report, and expects it to wrap up by Oct. 31.

“The acquisition represents the culmination of discussions that started in 2019 and the closing, while subject to regulatory approval, is expected in the third quarter of 2020,” Folio CEO Steven Wallman said in the letter.

Folio has 160 employees and $11 billion in assets under custody for RIAs. Goldman Sach’s Consumer and Wealth Management unit has about $510 billion of assets under supervision.

Thursday’s developments comes one year after news broke that Goldman was moving to acquire United Capital, a firm founded by Joe Duran with both a network of RIAs and its white-label wealth management platform used by RIAs, for $750 million.

It also comes less than a month after online broker Motif Investing closed its doors and announced it would transfer its client accounts to Folio Investing, which had been in talks with Goldman about a merger for the past year.

Shortly after the Motif-Folio news broke in April, Goldman said it was “in discussions with Motif to assume the role of index provider” for a set of ETFs the two firms had developed. Next, Charles Schwab moved to buy Motif’s technology and intellectual property and also to hire many Motif employees, including founder and CEO Hardeep Walia.

‘The Last Piece’

“When combined with last year’s acquisition of United Capital and its Marcus, Ayco and Private Wealth Management units, the acquisition of custodian Folio Investing fills in the last piece of the wealth management ecosystem puzzle for Goldman Sachs,” said Gavin Spitzner, head of Wealth Consulting Partners.

“Once integrated, they will have a full end-to-end stack for both their own advisors in the rebranded Personal Financial Management group, as well as for unaffiliated RIAs that use its FinLife CX platform” acquired from United Capital, Spitzner explained.

The consultant detailed his “back of the napkin” analysis of these Goldman deals in this graphic:

Goldman Folio industry chart

For Folio, “this transaction is another landmark event … , as it will further enhance our innovations and bring scale to our business, particularly in the execution, clearing and custody space,” Wallman added.

The deal “fulfills Folio’s long-term goal of partnering with a preeminent financial services firm to increase the reach and impact of the investment technology and services that many hundreds of people over the last two decades have dedicated their lives to creating,” he said.


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