Goldman Wealth Mgmt Unit Posts 6% Revenue Growth YoY

By Alex Padalka October 15, 2020

Goldman Sachs says its consumer and wealth management business made up a bigger share of the firm’s overall revenue as rising assets under supervision in the third quarter contributed to healthy revenue growth in the unit.

The share of revenue brought in by the consumer and wealth management unit rose to 14% in the third quarter, up from 10% in the second quarter. The unit posted $1.49 billion in net revenue in the third quarter, which was 10% higher than in the prior quarter and 13% higher year-over-year, according to Goldman’s third-quarter earnings report. Wealth management net revenues in the third quarter were $1.17 billion, up 6% year-over-year, due to higher management and other fees, driven by higher assets under supervision and higher volumes of transactions, Goldman says. 

The consumer and wealth management unit’s revenue was offset in part “by a lower average effective management fee due to shifts in the mix of client assets and strategies,” according to Goldman.

Assets in the consumer and wealth management segment stood at $575 billion at the end of September, up 3% from the prior quarter and 14% higher than in the third quarter of 2019.

Goldman also posted lower credit losses year-over-year, which the company says reflects reserve reductions due to paydowns on consumer installment loans, in part offset by credit card loan growth. 

The unit’s operating expenses, however, rose 3% during the third quarter, to $1.4 billion, which was also 14% higher year-over-year. Goldman says the growth was due primarily to compensation and benefits expenses. 

Goldman has been focused on building out its wealth management operations, particularly since its acquisition of United Capital, which had 220 advisors when Goldman acquired it in May of last year. Goldman at the time had 450 private bankers managing around $480 billion. 

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