Goldman Sachs is building a robo-adviser to give investment advice to the masses.
Goldman Sachs is known for advising the world’s richest and most powerful. Now Goldman is building a so-called robo-adviser to appeal to a broader group of affluent customers.
The bank is looking at ways to broaden its customer base outside the super wealthy. They intend to make deeper inroads into new consumer-focused businesses.
The robo platform would sit within the bank’s rapidly growing investment management division. The investment management division posted a record $1.38 trillion in assets under supervision at the end of 2016. This is considered a jewel within the bank. Even so, Goldman has been trying to build out this unit in recent years to diversify its revenue base.
Their U.S. private wealth business typically advises clients with an account size of around $50 million. But Goldman has for years grappled with how to tap into the mass affluent segment without diluting its private wealth brand. That market is generally defined as those with less than $1 million in investable assets.
The robo-advice market was initially developed by startups such as Wealthfront and Betterment. They challenged the traditional financial advice sector. However, now large firms such as Charles Schwab and Vanguard have launched similar services.