Following yesterday’s news (16th April 2019) that Goldman Sachs aim to expand their wealth management services to the mass affluent through a technology and human influenced investment platform
Sergel Woldemichael, Wealth Management Analyst at GlobalData, a leading data and analytics company, offers his view on the future expansion:
‘‘With competition increasing, and Q1 2019 net revenues in investment management 12% lower than Q1 2018, the investment and financial service powerhouse Goldman Sachs is aiming to combat this by targeting the masses and introducing new fintech initiatives, the Apple Credit Card being their latest example.
“New technology in the wealth space provides a gateway to the mass affluent, a lucrative demographic that previously was neglected in the industry. However, in today’s competitive climate, *59% of global wealth managers agree targeting this demographic would make it easier to grow business, therefore, it is no major surprise that this is the next venture for the company.
“For players well known to cater to the wealthy, it has proven to be challenging going down market via a robo-advice offering. UBS closing down their SmartWealth robo-advisor is testament to this. Hence, Goldman Sachs must step out of their comfort zone, and tailor a package of services that can offer value to clients as well as leverage their reputation as one of the premier banks of Wall Street. Their Marcus brand has shown they can attract deposits from the masses, and so, we expect their future investment platform to be as successful in economically teasing out investment from the same segment.
“According to GlobalData’s Wealth Market Analytics, in 2017 the mass affluent sector of the US held $27.8tn worth of liquid assets, almost $7tn more than the high net worth. This proves that the size of the prize is large, and worthwhile to target.
“Private wealth managers have historically focused on the upper echelons of this world but technological change is encouraging a shift. Targeting the masses could bring in billions in AUM, but, it will depend on how much value can be delivered to this segment.”
(*) Information based on 2018 Global Wealth Managers Survey and Wealth Market Analytics