Goldman Sachs has scored its first custodial client, hybrid registered investment advisory Steward Partners, following its acquisition of Folio Financial’s technology in May 2020.
The Wall Street firm has been quietly building out the custody business, poaching top executives from some of the largest RIA custodians in the country. And while Goldman has made no formal announcement around its RIA custodial service, industry observers say it's a smart strategy; there’s room for Goldman and other smaller custodians to pick up market share from some of the larger, rapidly consolidating players; for instance, some advisors have complained of subpar service levels at Schwab in the midst of its integration with TD Ameritrade, though that has yet to be completed.
The Goldman brand has a certain cachet among the high-net-worth and ultra-high-net-worth, with its history of providing structured investment products. The firm is traditionally known for its asset management, investment banking and capital markets desks. To many, it also represents stability, which could be a positive thing for risk-averse clients looking for a place to park their assets.
But for many independent advisors, Goldman represents just another large Wall Street firm, the antithesis of the business model they say appeals to them and their clients.
The onboarding of Steward Partners, a $23 billion hybrid RIA affiliated with Raymond James, as its first client is a vote of confidence and aids the development process.
“Their years of experience allow them to provide us with invaluable feedback as we expand our technology and product offering," said Cameron Brien, co-head of Goldman Sachs' custody business along with Adam Siegler, in a statement.
"Steward is a natural fit for our first large-scale relationship since deciding to enter the RIA custody business,” said Siegler. “Their track record of success and growth focus pair perfectly with the holistic platform that we are delivering.”
Steward Partners, which has 170 advisors across 27 offices, recently secured a second and permanent capital backer, The Pritzker Organization, the investment bank for the Pritzker family, heirs to the Hyatt Hotel fortune, to further advance its growth trajectory. Goldman, coincidentally, advised Steward on the deal. Private equity firm Cynosure Group is also an investor in Steward.
While Raymond James has provided custodial services for Steward, the RIA announced plans recently to move to a multicustodial model.
“Their commitment to technology will benefit our advisors, staff and clients,” said Hy Saporta, president and COO of Steward Partners, in a statement.
Steward Partners CEO Jim Gold said the firm chose Goldman for its “intellectual capital and investment platform.”