Goldman Sachs Asset Management has struck an agreement with TAMP firm GeoWealth to build open-architecture custom models for its RIA clients. The models will be implemented in single accounts using GeoWealth’s UMA platform.
The custom models will incorporate SMAs, ETFs, direct indexing mutual funds and alternative investments. The RIAs using the platform will also be able to personalize the models to fit individual investors’ wealth management objectives, tax situations and other preferences. The products will be rolled out in phases, with mutual fund and ETF custom models available for use by RIAs, as of today. Those involving equity and fixed-income SMAs, evergreen alternative funds and direct indexing will be rolled out over the coming quarters.
A survey released earlier this year by market research firm Cerulli Associates found that RIAs are displaying a growing preference for custom model portfolios and asset managers have made it a priority to offer them.
Goldman Sachs executives spent the past two years talking to RIAs about their ambitions and pain points in growing their business, and what they found is that “fast-growing RIAs, particularly the ones who are more acquisitive, are really desirous of having these capabilities, which will enable them to scale their platform by providing this single account and single set of paperwork to their clients that encompasses the entirety of their 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 been hearing from our clients is a major pain point.”
The custom models are also meant to help RIAs compete for high-net-worth clients through greater personalization and incorporation of alternatives, in addition to achieving scale and reducing operational complexity, according to Greg Weiss, head of wealth customized solutions at Goldman Sachs Asset Management.
“We discovered that we can help augment the CIOs of these RIAs to help build custom models with their fingerprints, their preferences, their views and their brand on top, and help them power it with each of these high-net-worth solutions,” Weiss said. “But to do that at true scale, the partnership with GeoWealth will now allow them to implement it in one account, one proposal and one white-label UMA, and we’ll subsidize the cost for those RIAs.”
Goldman Sachs Asset Management’s multi-asset solutions team already offers flagship model portfolios on the GeoWealth platform. For some time, Goldman Sachs has been focused on building out technology capabilities for its RIA clients, creating API integrations with 42 technology vendors as of March 2024. The bank has been trying to create “value-added” products for the RIA community, filling 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, innovative UMA technology lets advisors create their own models and combine them with multiple managers in a single account. This advanced ‘sleeving’ capability makes capitalizing on the flexibility of UMAs more efficient by streamlining operational complexity and enhancing peace of mind.”
Earlier this year, GeoWealth received $18 million in growth investing funding from sources including BlackRock, J.P. Morgan Asset Management and Kayne Anderson Growth Capital to accelerate new product development.