Goldman Sachs just made its biggest acquisition in nearly two decades in a move that highlights the bank’s increased desire to diversify its revenue streams under new CEO David Solomon. The $750 million purchase of wealth manager United Capital will expand Goldman’s brokerage business to include 220 new financial advisors and their mass market customer base. While United Capital employees are likely grinning ear-to-ear as they look forward to their new Goldman-embossed business cards, current private wealth managers at the New York bank may be feeling like their elite title and status are being watered down.
Mindy Diamond, president of financial-adviser recruitment firm Diamond Consultants, told Business Insider that, while the deal will widen Goldman’s wealth management footprint, the bank faces the risk of merging two distinct cultures. "Now you will bring in a mass affluent, downstream, down market alternative and if I am a Goldman adviser and positioning myself as the elite, I'm not sure how good I'm going to feel about that," Diamond said.
While “diluting” an elite culture may sound like a rich person’s problem, it’s one that Goldman has taken seriously in the past. The Wall Street Journal says this exact cultural fear, along with the potential pollution of its in-house technology, has been a major reason Goldman has made so few acquisitions in recent years.
The acquisition also comes on the heels of a series of defections from the bank’s private wealth management (PWM) team. Late last year, Diamond told RIABiz that nine PWM teams had left Goldman over the previous year – expensive losses considering the average account size for private wealth management clients is around $50 million, compared to roughly $300k at United Capital. "It was very rare. If a team a year left, that was a lot," Diamond said. Of course, the acquisition could go off without a hitch – both groups will likely continue fishing from different ponds – but Goldman Sachs is certainly stirring up the punchbowl a bit.
The firm will now serve three different swaths of customers: everyday consumers through its online bank, Marcus, mass affluent clients of United and ultra-high-net worth individuals as part of its white-glove PWM group. While Goldman has plenty of plans for Marcus, including leveraging United clients to try and build up its customer base, the bank is pulling in the reigns on personal loans. Marcus had about $4 billion in outstanding loans at the end of last year and Goldman is becoming weary of the potential of defaults – a good reason to bolster its consumer business with new clients that have $300k set away. United financial advisors are also expected to help serve Goldman’s Ayco business, which provides financial planning and advice to corporate executives. Let’s just hope they all get along.
Elsewhere, a high-frequency trading firm is asking for resumes to fill a very important job: climbing up 1,000-foot ladders with hundreds of pounds of equipment. Chicago-based Jump Trading is looking for field engineers to maintain microwave-based telecommunication towers it uses to transmit buy and sell orders in milliseconds. Outside of the climbs, you’ll need to be strong enough to lift loads of up to 1,500 pounds with hoists and winches and may need to spend some time in the U.K. Jump Trading is known to pay well if you happen to enjoy a nice view.
Once the darling of every prospective engineer’s eye, Facebook is now struggling to recruit following a litany of scandals. In late 2016, roughly nine out of ten software engineering candidates accepted offers. That number has fallen to almost 50% as of early 2019 as candidates have begun pushing Facebook on its approach to privacy. (CNBC)
Citi, RBS Barclays, J.P. Morgan and Mitsubishi Financial have agreed to pay a combined $1.2 billion in fines after its traders were found to have colluded in online chats on trading strategies. (Bloomberg)
Prominent Deutsche Bank investors have yet again called for the German lender to further scale back its investment bank. One major investor is said to have pushed Deutsche Bank to promise additional cuts before its annual meeting, when investors can issue a vote of no confidence over the bank’s management. Earlier this week, Citi analysts said that a restructuring of Deutsche Bank’s investment bank is its only recourse. (Reuters)
Boston-based hedge fund Cambridge Square Capital is closing its doors after just two years. The fund, which has delivered a roughly flat performance since opening, had about $600 million in assets, a third of which come from Harvard University. (WSJ)
BMO Capital Markets is said to be making “fairly substantial” job cuts, according to a new report. As much as 5% of headcount could be cut across the entire investment bank. (Dealbreaker)
Former J.P. Morgan managing director Catherine Leung has been charged by Hong Kong authorities for allegedly promising the chairman of a logistics company that she could get his son a job with the bank if he selected J.P. Morgan for its initial public offering. J.P. Morgan settled the case in 2016. (Bloomberg)
Point72 founder Steven Cohen has sold his West Village condo for $30 million, roughly 10% below asking price, after just a month on the market. Meanwhile, Cohen’s midtown penthouse has been on the market for six years. Its asking price has dropped from $115 million to $40 million over that time. (Bloomberg)
Sonny Kathpalia, a senior index trader at Barclays, is joining Deutsche Bank as its head of credit-swaps index trading in the U.S. He will help fill the shoes of Tian Zeng, a senior credit-index trader seen as a rising star who left Deutsche Bank in February. (Business Insider)
Deutsche Bank has doubled headcount within its anti-financial crime unit over the last two years as it looks to steer clear of additional legal troubles that have resulted in billions of dollars in fines. (Financial News)
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