Goldman Sachs President and COO John E. Waldron reiterated the firm’s commitment to courting the RIA community as a client base at Bernstein’s 40th Annual Strategic Decisions Conference on Thursday. Waldron sees a significant opportunity to do this by offering RIAs access to alternative investments in open-end fund wrappers as the firm scales up its fundraising business.
Waldron said Goldman remains underrepresented in the asset and wealth management space at the moment. It would like to grow the business to margins in the mid-20%, with mid-teen returns. For Goldman's in-house wealth management business, which is focused on ultra-high-net-worth clients, some of that growth will come from offering greater customization.
“Our clients … want more SMAs, they want more direct indexing, they want active ETFs in a structured form, they want tax solutions,” Waldron said. “And what I feel good about here is we’ve actually spent a lot of time over the past nine years building these capabilities, building customized investing and customized solutions. One major example would be our outsourced CIO platform.”
Goldman also plans to expand its alternatives product line, making it available to the broader wealth channel through the wirehouses, brokerage platforms and relationships with RIAs. The firm recently closed a $21 billion private credit fund and a $14 billion secondaries fund. It will begin raising capital for a fund focused on private equity “imminently,” Waldron noted—the firm plans to raise between $40 and $50 billion for alternative funds this year. In the first quarter, those fundraising efforts already reached $14 billion.
The firm has raised $265 billion for investment in alternatives since 2019, and about 40% of the capital for those funds came from Goldman’s own wealth management business, where clients have both the appetite for the product type and the finances to deal with limited liquidity. But the firm is also putting its products on other banks’ wealth management platforms, Waldron noted.
“You are going to continue to see us put our products on other people’s platforms across wealth, which I think will be a much bigger contributor to our growth over time, alongside our own wealth channel, which will continue to be a very big contributor,” he said.
Waldron mentioned the firm would like to offer a wide array of alternative options to protect itself from the challenges that will inevitably come with the turn of market cycles. However, he views allocations to alternatives as a long-term secular trend.
“The growth rate will wax and wane over time, but you are going to see pretty persistent growth well above inflation,” he noted.
