- Goldman Sachs’ private wealth management business is bustling, adding $17 billion in long-term assets in 2017.
- The firm’s 700 wealth advisers each generate a staggering $4.5 million in revenue on average.
- CEO Lloyd Blankfein expects the business to keep growing as the world continues to churn out more millionaires.
- “The world seems to be growing rich people faster than we can grow advisers to cover them,” Blankfein said.
Business is good if you’re a wealth adviser at Goldman Sachs, as millionaire clients are popping up quicker than the bank can keep up with.
Business is humming in general at Goldman Sachs — the firm reported a healthy $32.1 billion in revenues last year — apart from the firm’s fixed income trading business, a former profit center whose recent struggles have been well chronicled.
But the firm’s private wealth management business is especially bustling, adding $17 billion in long-term assets in 2017, up from the $12 billion it added in 2016, according to a presentation given by CEO Lloyd Blankfein Tuesday at the Credit Suisse Financial Services Forum.
“Wealth creation is expanding at a fast clip, and given the strength of our offering and brand, we haven’t seen the limits of where this segment of the market can grow,” Blankfein said at the conference.
The investment bank has just over 700 private wealth advisers who brought in a staggering $4.5 million in revenue each on average — which is “much higher than our large bank competitors,” Blankfein added. That works out to more than $3.1 billion in revenue driven by advisers.
Rival Morgan Stanley generates far more absolute revenue from wealth management — about $16.8 billion in 2017 — though it takes an army of more than 15,700 advisers who serve a much broader and less affluent client base. The bank reported $1.1 million in annualized revenue per adviser last year.
Goldman Sachs focuses its efforts narrowly on uber-wealthy clients. Though the bank has branched out to the masses with its Marcus brand, the minimum investment needed for its private wealth management services is $10 million. Its typical client has at least $50 million.
Fortunately for Goldman Sachs, the world is minting more multi-millionaires than the bank can keep up with. There are roughly 36 million millionaires today, according to the Global Wealth Report by Credit Suisse, up from 27 million a decade ago. The tally is expected to grow to 44 million by 2022.
“The world seems to be growing rich people faster than we can grow advisers to cover them,” Blankfein said.
To keep up in the game of millionaire client whack-a-mole, Blankfein says Goldman Sachs expects to increase its adviser ranks by 30% by 2020.