Goldman Sachs Targets ‘Mass Affluent’ with Affordable Robo-Advisor

Goldman Sachs, which prides itself on advising the world’s richest clientele, is launching a digital wealth management service, called Marcus Invest for customers with a minimum of $1000 to invest.

The US investment banking giant is targeting small investors for the first time in its 150-year history through an offshoot that will offer proprietary investment strategies to this group of consumers.

Marcus Invest will offer algorithm-based investment products to retail customers. The service recommends a portfolio of stock and bond exchange-traded funds from Goldman Sachs and other financial institutions based on the customer’s risk level and timeline. The robo-adviser service is designed to manage those portfolios based on models designed by wealth managers at Goldman Sachs Group.

The passive investment features will be integrated with existing financial tools and trackers available from its digital service for high-yielding savings accounts and consumer loans.

In addition to getting into the ever-crowded realm of automated investment management, Marcus offers savings accounts, personal loans, and soon, checking accounts.

Goldman Sachs Transforms toward Main Street Investors

There were no specific details about the price tag for using Goldman Sachs’ product for the masses, but employees who signed on for the beta test service have reportedly paid an annual management fee of 0.15%. But, this fee could be a special offer as the average price for similar robo-advice platforms is roughly 0.35%.

“With Marcus Invest and a forthcoming Marcus checking account, we get to the point where we can be someone’s primary banking relationship, meaning we can be the digital bank on your phone,” Stephanie Cohen, Global Co-head of Goldman Sachs’ consumer and wealth-management division told the WSJ.

Goldman Sachs’ strategy is focused on advising and seeking financing for large corporations, as well as investing in businesses that it believes can be resold for large profits. The investment bank launches its latest venture as it came under pressure to justify the high fees it charges. This has prompted the bank to look at ways to broaden its customer base outside of wealthy clientele with $50 million or more in assets, including developing tools based on artificial intelligence.

The low-cost platform could help Goldman Sachs transform from an elite bank for the ultra-wealthy investors, typically defined as those with more than $10 million of investible assets, and broaden its reach to smaller investors.

Robo-advisors, which use computer programs to provide investment advice online, typically charge less than half the fees of traditional brokerages. In addition, Goldman Sachs expects that the robos will attract the mass affluent segment, broadly defined as those with less than $1 million in investable assets, who may be attracted by its high-level technology services.

(Photo: Headtopics)

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