Goldman Sachs to buy boutique wealth management custodian Folio

NEW YORK (Reuters) – Goldman Sachs Group Inc (GS.N) plans to buy a boutique wealth management custodian and technology company called Folio Financial Inc for an undisclosed amount of money, according to a letter that Folio sent to its customers on Thursday and was viewed by Reuters.

Folio would be the second wealth management company Goldman has acquired in two years, following United Capital in 2019, and it fulfills Chief Executive David Solomon’s goals to build out the bank’s other businesses.

A Goldman Sachs spokesman confirmed plans for the acquisition and the contents of the letter but declined to comment further. Both companies declined to comment on the price of the acquisition, saying it was not material information for investors. Typically, companies are required to disclose to investors the price paid for acquisitions on deals worth more than $500 million.

Based in McLean, Virginia, Folio has roughly 160 employees and $11 billion in assets under custody for registered investment advisers, or RIAs. RIAs are independent, often smaller wealth management firms that sell investment products from a number of financial services providers, rather than from one bank or fund company.

Wealth management firms are required to custody, or keep, clients’ money at a third-party financial institutions to make sure it is safe, and they pay that third party a fee.

Goldman has made investment products and funds for RIAs, as well as operated several RIAs in its asset management business for years. The Folio acquisition will build out the services Goldman already provides, and give it access to Folio’s technology, as well as the ability to earn fees from being the custodian of assets for other firms.

By joining Goldman, Folio said it gains a global audience to market its investment technology to, a long-term goal of the firm, Folio Chief Executive Steven Wallman wrote in the letter to customers.

The execution, clearing and custody business would be incorporated into Goldman’s global markets division. Folio also has a few RIA firms, which will join Goldman’s consumer and investment management division.

Several of Folio’s RIAs focus on environmental, social and governance (ESG) investing strategies, an area of investment expertise that Goldman has been building out in recent years.

The deal, which was in the works since mid-2019, is subject to regulatory approval. The companies hope to finalize it by the end of the third quarter, according to the letter.

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