Joe Duran's plan for Goldman Sachs advisers: Q&A

Goldman Sachs & Co. has plans to grow its Personal Financial Management unit via acquisitions and the division's CEO Joe Duran outlines how acquired firms can benefit from the referrals his firm provides, as well as its infrastructure and systems.

In January, Goldman Sachs brought together the Personal Financial Management unit and Ayco, the Goldman Sachs-owned corporate financial counseling division. Under one umbrella, the unit’s co-heads are Larry Restieri, who has led Ayco since 2018, and Duran, who built registered investment adviser United Capital before selling it to Goldman in a $750 million cash deal. 

Together, the divisions have room for more collaboration between strategy, tools and technology, said Duran. 

After it was acquired by Goldman Sachs in July 2019, United Capital became Goldman Sachs Personal Financial Management, combining the then-RIA’s emphasis on getting personal with its clients and Goldman Sachs’ 150-year legacy. Through the acquisition, PFM was given an instant footprint with the mass affluent market, serving clients ranging from $1 million to $10 million in assets.

Goldman Sachs has since built out its wealth management offerings to serve a wider breadth of investors. Most recently, Goldman finally introduced its robo-adviser, Marcus Invest, in February. The investment offering lives under Goldman’s existing consumer-facing banking app Marcus by Goldman Sachs, joining other offerings such as savings accounts, unsecured personal loans and budgeting software. 

Duran sat down with InvestmentNews to explain how the investment bank is leveraging acquisitions to better serve clients and expand access to Goldman Sachs products for more advisers. 

The strategy is an opportunity for a select group of advisers to join the PFM platform, supported by referrals not only from the firm’s ultra-high-net-worth offering, Private Wealth Management, but also the corporate relationships it has developed through its Ayco division, said Duran. 

As part of building this platform, PFM is focusing on acquisitions and prioritizing the expansion of its national footprint by adding value-add firms in priority locations. What follows is an edited version of Duran’s conversation with InvestmentNews.

Nicole Casperson: What are the goals you have for the Personal Financial Management and Ayco division now that these two sections are under one umbrella? 

Joe Duran: Our goal is to become the dominant national financial planning firm. By bringing together both the old United Capital and Ayco, we really can serve the full spectrum of folks that want a planning-lead relationship. By that, I mean that you're going to have a very consistent experience. 

We have the ability to serve the people who want to be self-directed, the people who want a life financial plan, the people who want to complete a comprehensive financial plan, and those who want the entire concierge of financial services. 

We've signed dozens of national corporate accounts to basically take advantage of the fact that we now have a national footprint. Ayco in the past did not have this many offices around the country, they had several, but not 100.

Our ability now is to serve everybody in the executive suite, all the way down to the person who's a receptionist at an office and deliver financial planning.

NC: How are you leveraging acquisitions to expand access to Goldman Sachs capabilities to more advisers? 

JD: On the acquisition front, we're really rethinking how we do that because in the past they were predominantly financial transactions, where advisers would join United Capital and take advantage of our platform. The difference now is that we have the ability to generate thousands of new clients. 

So we are literally getting billions of dollars in referrals, and our offices around the country are drowning in new opportunities. What we're needing to do now is actually do acquisitions and recruiting to expand our footprint and add advisers, which is very different than if you're looking to pick up revenues. 

Before, we had very limited lead generation abilities. So when we had an acquisition, we have to make sure that they were growing and could continue to grow. Today, like for our office in Charlotte, North Carolina that we just acquired, we're really buying out one of the folks who is looking to retire, that the next generation of advisers who are looking to stay, and they're not great rainmakers, but we have so many relationships in Charlotte, that they will be once they're integrated.

It changes the nature of the acquisitions that we'll do and the recruiting that we're doing. So we're looking to add many new advisers this year that are looking to grow, or acquisitions, when advisers are looking to retire that have an existing team that has capacity to take on new clients. 

So that's one of the exciting things we're working on is to keep expanding our capacity, because we expect this year to get somewhere in the range of $5 billion to $10 billion in referrals from PWM and our corporates to continue to expand our franchise. 

So I think we're attracting the kind of adviser whose early stage career in their late 30s, early 40s and has been in the business for 10 to 15 years, but isn't sure how to get new clients. That's probably the biggest challenge in our industry today is how do I get new clients when the marketplace is so competitive. 

NC: From a technology perspective, how is tech incorporated with this new acquisition strategy? What can advisers expect? 

JD: We have a level of technology these individual firms don't have. We have probably 100-plus engineers working just in our group, we're spending millions of dollars a year just on technology to help advisers be competitive, adding new functionality every day. 

We’re creating the capacity to work from everywhere and be video native, to have an app where the clients can communicate back and forth with you and schedule appointments, where you can send them a financial plan updated to their mobile app, and they can click on it and review it. Those kinds of functionalities are very hard for a standalone adviser to develop. 

But the other thing that we're looking at is, for example, taking the work out of the local office where we can do all the paperwork processing, we can do all the day-to-day cash flow distributions, so that the office becomes really a service center to meet with clients and work with clients, but all the back office functions don't need to be done at the local level. 

Geography is less important. So opening an office in Charlotte, we can expand. Regionality matters, it matters that you understand the local environment, but we can expand beyond just Charlotte, because people don't need to be within 30 miles of the office. We can expand to other neighboring cities fairly easily, so we can service people from Raleigh, North Carolina from our Charlotte office quite easily. So again, we're looking at a region and where we need to add a footprint so that when we go to any particular Fortune 1000 company, and they need our help to provide planning to their folks, that we have national coverage. 

NC: How many more adviser assets would you add on with this strategy shift?

JD: Advisers are more important to us than adviser assets because we need good advisers that we can train. If they have assets, great, but we're not looking for advisers who are maxed out already. 

We need really good advisers who are still on the growth part of that curve so they have capacity. We don't need a billion-dollar adviser who's already maxed out their growth, has plateaued and has no capacity. Ideally, if they are a large firm, they still have lots of room to grow. 

A lot more planning-centric work needs to be done, so that's the big difference. Ayco and PFM are planning led organizations because we know that our clients have big important decisions that can derail their entire financial life. That means that the folks who we are acquiring have a predisposition to planning — we're not interested in folks who are portfolio managers. Our real value as an advisory firm is to understand the clients and make sure they make really smart choices in a very personal way. 

Most advisers today, you either join independently, where you work under the shadow of a lead adviser, or you join a big brokerage firm, where you build your own book.

We think there's room in this industry to go back to the way the industry used to be, which is, you don't need to be the world's greatest salesperson, you just need to be a great adviser. We will coach you and train you and show you how to do this. If you've already been doing it for a decade, we're gonna show you how to do it even better, we're going to be business partners, we're going to bring you clients, and we're going to help you to get to the next level.