Dive Brief:
- Goldman Sachs will acquire Chicago-based fintech NextCapital, a robo-adviser that provides retirement planning guidance and technology to corporate clients, in a bid to shore up the bank’s asset management services, the fintech said Tuesday in a press release.
- Although details of the transaction have not been disclosed, the deal is among the bank’s five largest ever in asset management, according to the Financial Times.
- The transaction is expected to close in the latter half of 2022, according to NextCapital's press release.
Dive Insight:
Goldman's tie-up with NextCapital wouldn't be the first this year to focus on robo-advising in the banking space.
UBS in January agreed to acquire robo-adviser Wealthfront in an all-stock deal valued at $1.4 billion — another transaction that's due to close in the second half of 2022.
"This acquisition furthers our strategic objective of building compelling client solutions in asset management and accelerating our investment in technology to serve the growing defined contribution market," Goldman CEO David Solomon said in Tuesday's press release.
NextCapital provides automated and personalized retirement advice and managed accounts via corporate retirement plans and individual retirement accounts (IRAs). The fintech also sells its retirement advisory technology as a white-label service to other firms.
Asset management offers an enticing, steady stream of non-interest income. The tie-up will grow Goldman’s asset management services through further expansion into the defined contribution market. At present, Goldman has approximately $350 billion in total defined benefit and defined contribution assets under supervision.
"Employers are looking to provide their employees tailored solutions and customizable advice that can better support individual saving and investing needs to help improve retirement savings outcomes," Luke Sarsfield, Goldman's co-head of asset management, said in the release. "We believe personalization represents the future of retirement savings and will drive the next wave of innovative retirement solutions."
Tuesday's deal wouldn't be Goldman's first foray into robo-advising. The bank's consumer unit launched Marcus Invest in February 2021, a platform that allows users to invest in automated portfolios based on algorithms developed by Goldman’s investment strategy committee.
Once the NextCapital deal is complete, the fintech is expected to join Goldman’s multi-asset solutions business, led by Greg Calnon. That unit has about $220 billion in assets under supervision. The NextCapital team will remain headquartered in Chicago.
"Together with NextCapital’s talented team, we will continue to invest in technology to improve the experiences and outcomes of retirement investors and better serve the employers, advisors and financial institutions that support the growing $10 trillion [defined contribution] market and the even larger IRA segment," Sarsfield said.
