December 5, 2023

Goldman Sachs could add big consultancy Creative Planning to the RIAs it chooses to host investor assets.

Overland Park, Kansas-based Creative Planning announced Monday that it has selected Goldman Sachs Advisor Solutions for a “multi-billion dollar” managed deal.Securities and Exchange Commission Regulating the Consulting Industry Registered Investment Adviser Required For example, Creative Planning holds stock and other client assets with banks, brokerage firms, or other third-party custodians to provide additional oversight and avoid conflicts of interest.

Creative Planning manages $210 billion in assets through the end of 2022 and currently has custody agreements with Charles Schwab, TD Ameritrade Clearing, Fidelity and Pershing.

The addition of Goldman Sachs will allow Creative Planning to leverage the investment banking giant’s capabilities in alternative investing, electronic lending and advanced analytics, said Jim Williams, Creative Planning’s chief investment officer. Williams said Creative Planning has no plans to end any of its current hosting relationships.

Goldman stands out because it offers services that are particularly suited to high-net-worth clients, he said.

“A good example is the ability to borrow against illiquid or private investments,” he said. “This is very constrained in the current economic climate. Goldman Sachs will provide lending solutions for private or illiquid investments that do not exist across the industry.”

read more: UBS eyes strengths as ultra-high-net-worth population grows

Still new to the custody business, Goldman Sachs entered the space in May 2020 by acquiring Folio Financial, a self-clearing custodian with $11 billion in assets.Goldman Sachs was quick to tout its managed service as a way to serve advisory clients Access to its extensive ‘One Goldman’ banking and financial services menu.Other large RIAs that have chosen Goldman Sachs Advisory Solutions as custodian include Prime Capital Investment Advisors, also in Overland Park.

Doug Fritz, founder and chief executive of wealth-tech advisory firm F2 Strategy, said Goldman’s managed option may be most attractive to advisers and advisory teams coming to creative planning from wire firms.

“I think the fact that Goldman can offer standard banking products — loans, lines of credit, mortgages — that other custodians can’t offer should be more attractive to disengaged bank advisers,” he said.

Goldman Sachs managing director Richard Lofgren said increasingly affluent clients often found they had new financial needs. Goldman’s role as custodian is to add to the list of services an advisor can provide, he said.

“RIAs are responsible for determining which solutions and technologies are best for these customers,” Lofgren said. “For us to enter this space as custodians, we are the ones who provide the options, and the RIAs are the ones who decide what is the best fit.”

Goldman Sachs is in the midst of a transformation aimed at relying less on standard investment banking such as mergers and acquisitions and more tied to the wealth management industry. released its second-quarter earnings last weekthe Wall Street giant managed $2.71 trillion in assets, a record for an otherwise difficult quarter.

Creative Planning operates in 65 countries It also received minority backing from private equity firm General Atlantic. Its Form ADV was filed with the SEC on March 31 1,165 non-civilian staff are listed, of which 1,086 perform advisory functions.

In February, the SEC made the first changes to its custody rules in more than a decade, calling on advisers to hold alternative investments such as cryptocurrencies, real estate and derivatives through registered third-party custodians.The proposal, currently awaiting official approval, has drawn a lot of attention Criticism from industry groups.

read more: SEC’s RIA Code of Ethics Rules Explained

Of particular concern is a rule requiring so-called discretionary accounts, whose assets can be traded by advisors without the client’s permission, to be held by third parties. Critics argue that the rule would require companies to force custodians to enter into detailed contracts promising to provide records of investor assets upon request and to hold assets in separate funds that are not protected from creditors.

Creative Planning’s selection of Goldman Sachs as custodian has little to do with the SEC’s latest proposed reforms, Williams said.

“We only focus on things that bring immediate benefit to our clients, combined with creative planning for operational efficiency,” he said.