The number of independent wealth managers using Goldman Sach's securities-backed loan platform has quietly doubled over the last year. More than 50,000 advisors at over 100 independent broker/dealers and advisory firms have now partnered with the bank according to Whit Magruder, a managing director at Goldman Sachs and the head of GS Select.
Magruder declined to share the size of the loan book but said its growth is picking up as the number of advisors offering clients lines of credit guaranteed by their securities grows. More than half of the 50,000 advisors able to offer the loans have been added in the last six months, he told WealthManagement.com.
In March of last year, LPL Financial announced the program was available to its more than 15,000 advisors. At the time, the IBD was one of only 40 firms using Goldman's platform, the bank said.
Most firms have not formally announced they are using the platform or commented on whether they do or not. That decision is up to the firms and driven by their policies on sharing information, Magruder said.
On Tuesday, Kestra Financial, an independent broker/dealer with more than 1,800 advisors managing $24.5 billion, became the latest firm to make the platform available to its advisors. The platform's integration with Fidelity, Kestra's custodian, and its user experience for advisors and investors was an improvement over existing options, Kris Chester, chief operating officer at Kestra, said.
Clients too can borrow between $75,000 and $25 million against the value of their securities—including stocks, bonds, mutual funds or exchange traded funds—and the loans can be used for any purpose, such as home renovation, to cover tax obligations or travel. Unlike other securities-backed lending solutions, GS Select’s technology enables speedier loan processing that, from start to finish, takes less than 24 hours. There is little-to-no paperwork involved. The record approval time for a loan is about 35 minutes, but most take a little longer, Magruder said.
Kestra is not replacing the existing securities-backed lending solutions it offers, but their advisors are excited about the new platform, executives said. An increasing focus on giving holistic advice to clients on both their assets and liabilities, including their loans, helps advisors retain clients, Kelly Edwards, vice president of operations at Kestra, said.
It's a revenue-generator for the firms doling out the cash and wealth managers, including Goldman Sachs and Morgan Stanley, have said they see growth opportunity in lending more money to clients.