Goldman Sachs Group Inc. (GS) is coming to Main Street in the form of digital wealth management. The investment bank, which has long-served clients on Wall Street, is planning to launch a robo-advisor next year to help serve clients with as little as $5,000 in financial assets to invest, according to a recent article in the Financial Times. 

Key Takeaways

  • Goldman Sachs reported to launch robo-advisor in 2020
  • Services will provide solutions to clients with as little as $5,000 in assets
  • Platform to headed by Joe Duran of United Capital, now a part of Goldman

What it Means for Investors

The team at Goldman behind the launch of the new robo-advisor service is being headed by Joe Duran, founder of United Capital, the wealth management firm that Goldman purchased back in May for $750 million. Duran brings experience in digital financial technology (fintech) with United Capital’s FinLife CX, a digital platform helping independent advisers grow their businesses and to build stronger ties with their clients.

The launch of a robo-advisor would help Goldman reach less traditional clients, ones with far fewer assets than the bank is used to serving. While the exact minimum investment has yet to be determined, Duran said that the service would provide solutions for clients with as little as between $5,000 and $15,000 to invest. The service would initially target clients “with low complexity, not that much in assets”, he said.

When the purchase of United Capital was announced in May, Goldman Chair and CEO David Solomon said that the bank’s long-term strategy was to provide solutions to clients across the wealth spectrum. “United Capital will help accelerate this strategy by broadening our reach, allowing more clients to access the intellectual capital and investment capabilities of Goldman Sachs,” he added.

A robo-advisor would be a complement to Goldman’s digital bank Marcus, developed just three years ago. It also reflects the bank’s push into more automated adviser services, as evidenced by its investments in Nutmeg, the British digital wealth adviser.

Looking Ahead

While most affluent clients may still prefer financial advice from a real human, automating the service will help to cut costs and provide cheaper alternatives to less wealthy clients. A robo-advisor would perhaps be Goldman’s first serious push into offering wealth management services to the masses, not just the super rich.