Goldman Sachs Asset Management has struck a deal with TAMP firm GeoWealth to build custom open-architecture models for its RIA clients. Models will be implemented on a single account using GeoWealth's UMA platform.
Custom models will include SMAs, ETFs, direct index mutual funds and alternative investments. RIAs using the platform will also be able to customize models to fit individual investors' wealth management objectives, tax situations and other preferences. The products will be rolled out in phases, with custom mutual fund and ETF models available for RIA use, starting today. Those involving equity and fixed income SMAs, alternative evergreen funds and direct indexing will roll out over the next few quarters.
A study published earlier this year by market research firm Cerulli Associates found that RIAs are showing a growing preference for custom model portfolios and asset managers have made their provision a priority.
Goldman Sachs executives spent the last two years talking to RIAs about their ambitions and pain points in growing their business, and what they found is that “high-growth RIAs, especially those that are more acquired, they really want to have these capabilities, which will enable them to extend their platform by offering this single account and a single set of documents to their clients that spans their entire portfolio, said Padideh Raphael, global head of third-party wealth at Goldman Sachs Asset Management. “It's very much in response to what we've heard from our customers is a big pain point.”
Custom models also aim to help RIAs compete for high-net-worth clients through greater customization and inclusion of alternatives, in addition to achieving scale and reducing operational complexity, according to Greg Weiss, head of custom wealth solutions. at Goldman Sachs Asset Management. .
“We found that we can help add the CIOs of these RIAs to help build personalized models with their fingerprints, their preferences, their views and their brand on top, and help them they power each of these high net worth solutions. Weiss said. “But to do this at true scale, the partnership with GeoWealth will now allow them to implement it in an account, a proposal and a white-label UMA, and we'll subsidize the cost for those RIAs.”
Goldman Sachs Asset Management's multi-asset solutions team already offers leading model portfolios on the GeoWealth platform. For some time, Goldman Sachs has focused on building technology capabilities for its RIA clientscreating API integrations with 42 technology vendors as of March 2024. The bank has been trying to create “value added” products for the RIA communityfilling the gaps left by other industry service providers.
“We are excited to bring the institutional investment capabilities of Goldman Sachs Asset Management to our client base as we enter our next phase of growth,” said Colin Falls, CEO of GeoWealth, in a statement. “Our flexible and innovative UMA technology allows advisors to create their own models and combine them with multiple managers in a single account. This advanced throttling capability makes capitalizing on the flexibility of UMAs more efficient while improving operational complexity and increasing peace of mind.”
At the beginning of this year, GeoWealth received $18 million in growth investment funding from sources including BlackRock, JP Morgan Asset Management and Kayne Anderson Growth Capital to accelerate the development of new products.