February 23, 2024

As competition among registered investment advisors heats up, Catering to the ultra-wealthy clientele Demanding a bespoke service, Goldman planted another banner in the fast-growing market of RIAs serving the affluent.

Prime Capital Investment Advisors is an RIA based in Overland Park, Kansas. Announce On Wednesday, it picked Goldman Sachs Advisor Solutions, Former Folio Financialas an additional hosting provider.

Goldman Sachs is much smaller in the nascent market of financial institutions that “custody,” or manage, assets and trades for RIA clients, with the goal of overseeing more than $1 billion in RIA assets on behalf of PCIA clients. As of April, PCIA had more than $20 billion in assets. Statement of Publication Arrangementsand use multiple custody providers, including giants Charles Schwab, Fidelity Investments, Pershing and LPL Financial.

New clients are an alternative for Goldman.

Not only has the Wall Street investment bank gained momentum in the red-hot RIA market, but it has also carved out a presence among ultra-high-net-worth clients, often the larger RIAs, which include many former top wirehouse advisors.Escrow arrangements allow Goldman Sachs Opens up its cross-bank offerings to RIA clients Through the new One Goldman Sachs program – further goldman sachs goal Making headway in the ultra-high net worth space.The bank declined to say how many RIAs counted as custody clients, but disclosed in a February report that 8% Wealth management assets in key UHNW markets in the Americas.

hosting foothold
Independent advisors are required to “custody” client assets, which means holding a bank, broker-dealer, according to the rules Set by the SEC.

RIAs are growing faster than any other type of wealth management firm in the U.S., with an annual asset growth rate of 12% since 2016, compared with an average of 7% for all other traditional advisory businesses. 2021 McKinsey Papers. By riding the wave of RIA expansion through managed services, Goldman can also expand its influence in the eyes of its wealthiest clients.

“Our solutions are designed with an understanding of where the advisory industry is going, not where it has been,” Cooper Rey, head of RIA sales and trading at Goldman Sachs Global Banking and Markets, said in an email. Advisors expect more from their custodians, so our move away from legacy technology systems that often impede innovation and growth will be one of our core competitive advantages.”

Some traditional large broker-dealers such as wirehouse Wells Fargo, under criticism Because they delayed the escalation of consultant technical services. Advisors often cite a powerful technology platform (including hosting) as a key selling point to clients.

In a press release announcing Prime Capital’s decision, PCIA CEO Glenn Spencer said: “GSAS provides the services, technology and support to serve an important and growing segment of our client base with greater care and focus.”

Scott Duba, PCIA Chief Investment Officer and Managing Director of Wealth Management, said in comments Investment information Goldman’s alternative investment products are attractive to clients. PCIA did not respond to FP’s repeated requests for comment.

“Our clients have a wide range of investments in alternative assets, and we needed a custodian capable of handling these investments with the level of service our clients expect,” Duba said, adding that GSAS’ robust digital platform features a “sophisticated service tracker and live chat features” and the appeal of direct contact with the service team.

PCIA will use its newest custody provider to meet the needs of its ultra-high-net-worth clients through Goldman Sachs’ offerings in areas such as alternative investments. Goldman’s managed services are “targeted to PCIA’s largest and most complex clients,” the release said.

Goldman Sachs Report earlier this month shows that clients of ultra-high-net-worth family offices invest an average of 44% of their portfolios in alternative investments.Ultra-high-net-worth investors, typically defined as having at least $30 million in investable assets, with investments outside the family office realm of up to 20% to 25% replacementGoldman Sachs said in a release about the report.

The “Tiffany” of custody
While Goldman’s custody business is still young — the white-glove bank landed its first RIA client, Steward Partners, 2021 – According to industry recruiter Michael King, its brand cachet gives it an added edge in the market that established players such as Pershing, LPL and Fidelity don’t have.

“Goldman Sachs is the Tiffany of brokerage firms. When people hear things like, ‘Oh my god, you’re with Goldman Sachs, you must be a really good firm,'” King said. For a small company like an RIA, reputation matters to customers, he added.

“Other regulated firms like LPL, Schwab, Pershing, Fidelity, resonate differently with customers.”

For example, Fidelity, with its mass-market brand image, was a non-entity to one advisor’s high-end clients, and King had been helping him get his act together. “They don’t know what Fidelity is,” he said of clients. “Clients wouldn’t say a word if they had Goldman Sachs.”

Prime Capital, formerly known as Lawing Financial, founder Kerry Lawing 2017 To insiders who later renamed it PCIA, developments have grown rapidly in recent years, including through series of acquisitions. less than ten years ago, Year 2014the former Law Financial reported assets under management of more than $3 billion, meaning its books have grown nearly sevenfold since then.

Over the past 18 months, PCIA has added 43 consultants.It has ambitions to compete with ‘largest private banks and wire transfer platforms’, Dubar says release.

According to one of the brochures, the company lists Fidelity, LPL, Pershing, Schwab, TD Ameritrade and Northern Trust Corporation as its approved custodians. SEC records.

“Prime Capital’s addition to GSAS is representative of the broader need for RIAs to pursue a more holistic customer experience that we’re seeing across the industry,” Scott Wetzel, CEO and Co-Founder of Investment Bank Skyview Partnerssaid in an email. sky viewwhich is also a specialty lender that specializes in working with independent advisors and RIAson M&A.

Wetzel said he has noticed RIA demand “particularly as it pertains to ultra-high-net-worth clients and their banking needs beyond the FDIC’s standard deposit insurance limit of $250,000.” Banking Crisis This Spring“As a result, we are assisting more RIAs to find fully FDIC-insured solutions, up to $150 million per depositor, because Silicon Valley bank collapses