Some financial advisors at Goldman Sachs Personal Financial Management continue to head for the doors in the wake of the $29 billion AUM unit’s sale to Peter Mallouk’s Creative Planning, slated to close in the coming months. Prime Capital Investment Advisors, Farther and Triad, which have already benefitted from the advisor exodus, picked up even more advisors in the latest round.
One advisor who recently left, and would only speak on the condition of anonymity, said his decision was directly motivated by the sale to Creative Planning. Over the past few years his practice won over a handful of clients from Creative Planning, among the largest independent registered investment advisory firms in the country. It seemed like Creative Planning had too many clients, he said, and they were dissatisfied at that firm's "low-levels of service."
Spokespeople for Creative Planning and Goldman Sachs declined to comment.
Before Goldman Sachs bought the firm in 2019, the network of 90 United Capital offices operated with some levels of independence, with groups responsible for their own profit and loss statements, hiring and firing, and culture, this advisor said. That independence was lost after the Goldman acquisition, and it's unlikely to be found again under the new owner, he said.
“Goldman came in with a very micromanagement style of overseeing advisors that had been doing their job for decades as a fiduciary, and then were pretty much being told that they had to get pre-approval for everything they did and that was definitely really hard,” he said. “So when the idea of us being sold took place, there was a lot of excitement because a lot of the potential buyers were just independent RIA aggregators. They weren’t necessarily heavy-handed, overseeing the culture side.
“For me it was very hard when they announced who the acquiring firm was, knowing I had spent quite a bit of time over the last couple of years talking to clients that were leaving Creative Planning,” he said.
To be sure, advisors who stay through the Creative Planning acquisition will not simply be rolled up into the existing organization, executives there have repeatedly said. The firm plans to keep most of the United Capital structure the same. It will operate as a separate company, owned by a holding company of Creative Planning. That entity will be headquartered in Irving, Texas, and already has its own C-suite in place; Jim Rivers, region head of Personal Financial Management for the Americas West Coast region at Goldman Sachs, will be the CEO. Rob Mlenek has been appointed chief financial officer, and Marie Campion "chief people officer," according to published reports.
The employment agreements at Creative Planning will mimic Goldman’s, with the same compensation and same non-compete and non-solicitation terms. Additionally, the advisors will have more independence and access to a broader array of investment options and client services from what they had at Goldman, the executives have said.
“The thesis is if you take these independent advisors and you give them more investment options and more services and you move them from an investment banking background, they’re going to thrive,” said a source close to the company, who also declined to be named.
The advisor fretting over the move to Creative Planning also chafed under management at Goldman, he said, referencing a specific initiative to move some client assets into Goldman asset management products; if a June 30, 2023 deadline to move the assets was missed, the firm would withhold revenue from the advisor, he said. That was later extended to Sept. 30.
“They wanted every individual bond to be under Goldman Sachs’ individual bond strategy by June 30 across the firm, or any registration that held even a single corporate bond—their revenue would’ve been withheld,” he said. “It was an arduous process due to the fact that everyone required a client signature, paperwork.”
A source familiar with Goldman Sachs said the June 30 date was a regulatory deadline for PFM advisors to transition to the firm’s investment management agreement, not a requirement to use specific products.
Goldman Sachs has filed multiple arbitration claims against former PFM advisors to enforce non-compete agreements these advisors signed.
“PFM advisors made a number of commitments to the firm when they signed their employment contracts, and we intend to hold them to those commitments,” a Goldman Sachs spokeswoman said in an earlier statement. “We take these matters seriously and will take appropriate action against any adviser who attempts to violate their contractual obligations.”
But the recently departed advisor said he was not under any non-compete or non-solicit agreement, because he never signed an employment contract with Goldman Sachs. Goldman asked advisors to sign contracts, and offered substantive retention bonuses, shortly after the 2019 acquisition, and did so again in early 2023, he said. Still, many advisors didn't sign and are technically still under less-restrictive United Capital-era contracts, the advisor said. That includes many who have recently left for other firms without legal challenges from Goldman.
“You’d be surprised how many people turned down six- and seven-figure retention bonuses to not sign anything with Goldman,” he said.
PCIA, a $22.5 billion RIA based in Overland Park, Kan., a neighbor to Creative Planning, recently brought on Michael Duncan, a former vice president at Goldman Sachs, as a partner and financial advisor in Paramus, N.J., according to publicly available regulatory filings.
Stan Dyl, a former head of office and vice president at Goldman, and Kimberly Chmielewski, a former wealth advisor and vice president at Goldman, have joined PCIA in Charlotte, N.C. as partner and advisor, respectively. And Joanne H. Nguyen, a former Goldman vice president, moved to PCIA as an advisor in Houston.
Duncan, Dyl, Chmielewski and Nguyen did not return requests for comment prior to publication, and neither did a PCIA spokeswoman.
WealthManagement.com recently reported that private equity-backed PCIA recruited two Goldman Sachs PFM advisors in Fargo, N.D.
Farther is another RIA beneficiary of the PFM sale to Creative Planning, adding Tyson Lokke, a former wealth advisor at Goldman, in Reno, Nev., and Robert Davenport, a former Goldman vice president, in Las Vegas, according to regulatory filings. Michael Desantis, a former relationship manager at Goldman PFM, also joined Farther as a client experience manager, according to his LinkedIn profile.
Farther spokeswoman Grace Hsieh declined to comment for this story.
A "tech-enabled" wealth management firm, Farther recently raised $31 million in a Series B round, bringing it to a total of $53 million in funding since it launched in 2019.
In addition, Kevin Woodcheke, a former vice president at Goldman Sachs PFM, is in the process of moving to Triad Advisors, according to regulatory filings. Triad is one of the broker/dealers owned by Osaic, which was reportedly in talks to buy Goldman's PFM business, but that deal fell through. Woodcheke did not return a request for comment by press time.