Selecting a custodian is one of the most crucial decisions when setting up an advisory firm. For years, the choice was fairly simple: Charles Schwab, Fidelity, or perhaps Pershing.
Now there’s another name that has quickly become part of the due diligence for every breakaway and established RIA. Goldman Sachs officially launched its custody business in 2020 and has been running red hot over the past couple years.
Goldman is signing billion-dollar teams at a clip of four or five per month. Yet another example, last week we helped an Ameriprise doing $14M team with $2.4 billion select Goldman when setting up their RIA. Our pipeline has never been larger with over 250M of T-12 production in various stages of due diligence.
Goldman has a reputation as one of the most elite firms on Wall Street, but you used to have to work there and be one of the industry’s top advisors, where small producers are doing $5 million in revenue, the average produces $10 million, and with many teams generating $30 million to $75 million-plus just to have access to the platform. And if you had the privilege to work there, you had low-end payouts of around only about 30%.
Now, a former wirehouse advisor managing even just a few hundred million in assets can tap into those same resources through Goldman’s custody division while receiving full 1099 income at 70%-plus with their own independent firm. Goldman brings top-of-the-line institutional capabilities to independent advisors who previously couldn’t access such resources.
Offerings include access to the most prestigious investment bank on Wall Street to serve business-owner clients. Goldman also provides its renowned trading desk, access to institutional research and analysts, sophisticated lending and outstanding technology solutions, including seamless account opening with a white glove service.
Advisors who have clients with large single-stock positions can park those assets at Goldman and have them hedged, monetized and diversified. Goldman’s asset management unit offers many differentiating investment solutions including tax advantaged traditional asset management solutions, high caliber institutional consulting services, and access to outstanding alternative investment solutions.
The Goldman brand is as appealing to ultra-high net worth clients as to their advisors. Clients access accounts through an intuitive app and see the Goldman name on their statements. This creates an unprecedented resource for advisors seeking both brand recognition and entrepreneurial resources.
Goldman’s momentum has accelerated with proof of concept. There was some initial hesitation among RIAs that Goldman could pull back if the custody play cannibalized its own advisor force. But that has not happened, and the advisors there are locked in by garden leave and other provisions that keep them from jumping the fence. Besides, they are running monster businesses servicing the world’s wealthiest families.
RIA custody represents the clear future for GSAM and is crucial to its plans to aggressively expand its asset management division appealing to a very wide net of traditional advisors at big banks and brokerages.
The firm is full speed ahead and should be on the radar for any breakaways who value brand name and prestige to help grow their business and client base.
As the Editor of The Gershman Group, a boutique financial services consulting firm, TGG brings expertise in financial analysis, strategic planning, and market research. With a keen eye for detail and a passion for helping businesses navigate complex financial landscapes, TGG delivers insightful, high-quality content to empower informed decisions. Backed by years of industry experience, TGG makes complex topics accessible through clear and compelling communication, shaping the firm’s thought leadership and commitment to excellence in financial services.
