Goldman’s Robo Will Be Retrofitted for Its Advisors

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Goldman Sachs launched its new automated investment advice platform, Marcus Invest, this week, for clients with as little as $1,000. But the firm is working on a version for its in-house advisors, said Joe Duran, head of Goldman Sachs Personal Financial Management, which now encompasses the United Capital business Goldman acquired in 2019 and its Ayco RIA business.

Of course, the unit’s 400 advisors can refer clients to Marcus Invest today, but they don’t get the personalization and human touch within the robo application. And the advisor currently doesn’t have visibility into the platform.

“There are plenty of our clients who have kids with $5,000 that we can’t do very much with,” Duran said in an interview with WealthManagement.com. “It’s not built to contemplate an advisor connection. It’s direct for the consumer, so that’s how we would use it today.”

The company is currently working on putting pipes into the platform so that PFM advisors can get visibility into it, but Duran could not provide a time line for when an advisor version would be completed.

“How would it work so that it can be advisor-facilitated, rather than just exclusively by the clients? We’re not there yet,” he said.

Duran said the firm is contemplating what layers they would want to add to the robo, such as MoneyMind and HonestConversations, games that help clients determine how they make financial decisions, to harmonize it more with the PFM experience.

Marcus Invest is part of Goldman’s efforts to have different service models based on where the client is along the wealth spectrum, Duran said.

“There’s this segment—the mass market, which Marcus Invest does very, very good work with now,” Duran said. “Is there somebody at $250,000 up to $1 million or $500,000, whatever the right threshold is, where you can deliver an efficient service with an advisor? And that is something we’re doing a lot of work on. Is there a national support team?”

Duran said his advisors get a lot of referrals from Ayco’s corporate clients that are employees of the companies Ayco works with. But many of them are emerging affluent in their late 30s or early 40s; they have good incomes, but not much in investable assets. Eventually, they would be good prospective clients.

Joe Duran

Joe Duran, head of Goldman Sachs Personal Financial Management

An advisor-oriented version of Marcus Invest could be a good way for PFM to work with those people without taking capacity from their local offices.

“How do we create—for everybody no matter what stage they are—a way for them to experience Goldman Sachs in the most appropriate way?” Duran asked.

Tim Welsh, CEO and founder of Nexus Strategy, said the traditional institutional players realize that margins are much better in retail advice than they are dealing with big banks and pension funds.

“To me, this is a natural evolution,” Welsh said. “They know that there’s much more opportunity in retail as the wealth grows, and traditional players like banks are being disrupted by everybody. Why not join the party? Because you’ve already got all the tech pipes you need to do it. Goldman’s always been a technology shop. They’ve always had a lead in tech, even back in the trading days.”

And Marcus, rather than Goldman, is a much more retail-friendly brand, he added. Marcus Invest could be the future of a turnkey asset management platform the firm offers their advisors, or be turned into something like Betterment for Advisors or Schwab Institutional Portfolios.

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“Investing’s commoditized, so why not let the robots do it?” Welsh said. “You can be the support platform underneath it, and then let these advisors gather all these assets for you. Classic distribution play. Classic technology play.”

There are also plans to offer Marcus through FinLife Partners, the firm’s white-label technology platform that is used by outside advisors.

Goldman Sachs is also building out a custodial service, via its acquisition of Folio Financial last year.

Duran said PFM remains multicustodial and does very little business with the in-house custody platform. His division has billions of dollars with Fidelity and Schwab and doesn’t want to put those relationships at risk.

That said, “I don’t exclude that we might one day use them in some capacity,” he said.

Goldman is currently working on how to custody assets that the big custodians don’t hold today, such as structured notes, for example, Duran said.

https://www.wealthmanagement.com/technology/goldman-s-robo-will-be-retrofitted-its-advisors

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