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Industry Spotlight > RIAs

Goldman Expands United Capital's Tools to Its Advisors, and Beyond

By Jeff Berman

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What You Need to Know

  • Goldman bought United Capital, now called Goldman Sachs Personal Financial Management, in 2019 as part of a push to broaden its traditional high-net-worth client focus.
  • Ayco, which Goldman bought in 2003, can now offer planning tools created by United Capital to its corporate clients.
  • It's too early to say how Goldman's acquisition of Folio Financial will help expand Goldman Sachs' reach in the RIA market.

United Capital had been growing through acquisition before Goldman Sachs acquired it in 2019 and that business — now called Goldman Sachs Personal Financial Management — will continue to grow this year, according to Rachel Schnoll, head of FinLife at Goldman Sachs PFM.

However, “I think you’ll see more focus on organic growth from PFM and the linkages that we have” with sister PFM Group company Ayco, which focuses on company-sponsored financial planning and was purchased by Goldman Sachs in 2003, she told ThinkAdvisor in a recent interview.

“Ayco has a lot of corporate relationships and now, with the PFM advisors, we’re able to provide that personal financial planning service to more employees of the corporations that Ayco works with than we were ever able to provide before,” she said. “So I think you’ll see a lot more of that partnership and that will really fuel our organic growth.”

All PFM advisors, meanwhile, are now using the company’s FinLife wealth management platform tools created by United Capital, she said.

The company is also “starting to integrate other high-net-worth advisors at Goldman Sachs to use those” tools, including Ayco teams, she said.

Goldman Sachs PFM also has a “white-label version” of the FinLife platform that she said “saw 50% growth last year in terms of adding new, independent RIA firms.”

Tech Challenges

One challenge that advisors face today is that “digital is not optional anymore,” according to Schnoll. “The advisors that were able to engage digitally have had a much easier time of it than advisors that weren’t engaged digitally” during the pandemic, “pivoting from working in an office to working from home,” she said.

Schnoll recognizes that is challenging for at least some advisors because “people that became financial advisors did so because they care about investing and they care about helping people live the lives they want,” not because they wanted to get deeply involved in customer relationship management, financial planning software and other tech, she said.

“It’s a challenge of time and interest that advisors have to care about their tech stack now,” she said.

However, advisors don’t necessarily need to spend a lot of money on tech. “The nice thing is that there’s a wide array of technology right now to really fit the needs of almost any financial advisors,” Schnoll said. “There’s more sophisticated tools that cost more money and there’s less sophisticated tools that you can get for less money. And, as an advisor grows their practice, they might want to grow their tools with their practice.”

The FinLife suite of tools helps advisors overcome at least some of the tech challenges. “One of the things that’s great about United Capital and has gotten even better as they’ve become a part of Goldman Sachs is we’re a technology-first organization and so a United Capital client and now a PFM client has an app called Guide Center where they connect with their advisor,” she noted.

The tools that United Capital founder Joe Duran, now co-head of the Goldman Sachs PFM Group, and his team developed “help an advisor really understand where their client is coming from as it relates to money,” Schnoll said.

Those tools, including MoneyMind and Honest Conversations, made it easier for PFM advisors to “pivot from working” in their offices with their clients to working digitally, she noted.

Early this year, Goldman Sachs introduced Marcus Invest, a low-cost digital investing platform, that offers individual investors three different investment strategies populated by a varying mix of exchange-traded funds — core, impact and smart beta — adjusted for their risk profile, along with regular rebalancing.

A version of Marcus Invest was also in development for the 400 advisors at Goldman Sachs PFM, the company said.

Goldman also bought the fintech platform and custodian Folio Financial for an undisclosed amount last year. It was “too soon to tell” how that acquisition would help expand the reach of Goldman Sachs in the RIA market, Schnoll said.

The Significance of Life Planning

In addition to the growing importance of technology, the other major trend that Schnoll sees in the industry today is a growing shift to life planning by advisors, she said.

“I remember my grandfather talking to me in the ’90s and he said ‘I don’t know why, my stockbroker, he gave me, like, 50 stocks to own. Why do I need to own 50 stocks?’ He used to own 10 and he thought that was good,” she recalled.

That’s indicative of the shift from stockbrokers to investment advisors who provide more substantial, diversified portfolios and then the evolution to wealth managers and advisors doing “more and more financial planning, which was something that had really been the bastion of only independent financial planners” a few years ago, she said. “Now, even wirehouse firms are doing financial planning,” she noted.

What Duran and his team introduced at United Capital that “I think has been so earth-shattering is this idea of life planning,” she said. Life planning factors in what is important to not only the more financially oriented partner in a relationship but also the one who may be less financially oriented, she explained.

Duran realized that it was important to engage those less financially oriented clients by asking questions including what’s more important to them: spending more time with people they care about, making sure their child’s education is funded or living their lives without having to work, she noted. The advisor can then get into how to invest the clients’ money. It is “intended to be a relationship that lasts a lifetime,” Schnoll added.

Echoing what Duran has often stated, she said: “Every financial advisor helps you save money so you die rich. At PFM, we want you to live richly.”

Jeff Berman

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