US banking giant Goldman Sachs has confirmed selling part of its wealth business. The sale was made to an independent wealth management firm, Creative Planning. The sale is part of the bank’s strategy that has seen it exit some businesses.

Goldman Sachs sells part of wealth business to Creative Planning

The sale comes around a week after Goldman Sachs said it was evaluating alternatives for this unit that had $29 billion under management at the end of 2022. The terms of the sale have yet to be determined. The deal will close during the fourth quarter.

Last year, Goldman Sachs’ CEO, David Solomon, reorganized the company into three divisions. The executive also announced scaling back plans for its customer business, hit by a $3 billion loss in the past three years.

The global head of Asset & Wealth Management at Goldman Sachs, Marc Nachmann, commented on the development, saying that the current strategy was to invest more in the bank’s core businesses, including the ultra-high net worth and workplace growth strategy. Proceeds of the sale will go towards supporting these divisions.

Nachmann also noted that there was much space for the bank to grow, adding that the plans would not succeed without a potential acquisition. The bank will serve high net-worth investors via RIA and other wealth management clients, including Creative Planning.

This offering will improve on the current offerings available at Creative Planning. The company has over 2,100 employees and has $245 billion in assets under management. The deal will expand the wealth management offerings by the firm.

Goldman Sachs shifts to a new strategy

The purchase deal is part of a new strategy by Goldman Sachs to locate steady revenue streams that do not involve the volatility of the capital markets. The offering will foster the growth of the wealth management and consumer lending businesses.

Goldman Sachs is now working on reducing some components of these business divisions. One main area where the bank plans to cut costs is consumer banking, as it narrows its focus to serve the ultra-rich.

Nachmann opined that the transaction was a step forward by the bank to meet the goals and the targets it had outlined during its investor day in February. The executive opined that the offering will improve its current products and services.

The asset and wealth management business division at Goldman Sachs has around $2.7 trillion in assets under management. The private wealth division at the bank is in charge of $1 trillion worth of assets, and it also runs a workplace financial planning platform known as Ayco, Marcus Savings, and a private banking and lending division.

Goldman Sachs is also working on the sale of its fintech firm, GreenSky. Another change adopted by the bank is the bulk offloading of unsecured consumer loans after suspending such lending activities last year.