Goldman Sachs has officially entered the robo advice arena.
Marcus, Goldman’s consumer digital banking brand, went live with an investing service Tuesday, offering automated portfolio management for a 0.35% advisory fee and minimum $1,000 deposit. According to the Marcus Invest website, Goldman is offering three different investment strategies and will put clients into one of 50 managed portfolios consisting of stock and bond ETFs.
Goldman’s foray into retail finance has been long anticipated. The robo advisor,
While Goldman may be a latecomer to digital advice, the arrival of Marcus Invest marks a major milestone for a company that traditionally only served the ultra-wealthy.
Now the question is: Will small investors come?
“It's unclear whether the prestige of the Goldman Sachs brand will meaningfully resonate with mass consumers,” says Josh Book, CEO and founder of market research and consultancy firm Parameter Insights.
A key driver of consumer satisfaction in robo-advisors is being able to provide consumers with a variety of account types, which is where Goldman seems to be focusing, Book says in an email. Marcus already offers loans and high-yield savings accounts, and the robo-advisor brings along taxable brokerage accounts and traditional, Roth, and SEP IRAs. Goldman plans to add checking accounts later this year, according to Bloomberg.
In a January conference call to discuss the company’s fourth-quarter earnings, Goldman Sachs CEO David Solomon said Marcus will be able to stand out from fintech startups by offering a wider array of financial services.
“When you think about spending across both checking and credit cards, when you think about borrowing across credit cards and loans, and you think about savings, and also investing and the investment capabilities that we have as a wealth manager, we have a much broader integrated offering,” Solomon said.
What remains to be seen is how successfully Goldman can tie all of these services together for a seamless and straightforward customer experience, Book says.
“To this point we've seen modernization efforts focused on component parts of consumers' financial needs,” Book says. “We've yet to see them all come together in ways that meet consumers' tailored needs in one place.”
Goldman was unable to respond to a request for comment.
The firm has been methodically building out tiered services to reach consumers along the entire wealth spectrum. Besides Marcus, Goldman has a partnership with Apple on a retail credit card, its acquisition of United Capital to provide financial advice to high net-worth investors, and its existing Ayco and Private Wealth Management businesses.
“The digital applications that we have are really excellent by any standards,” Solomon said on the earnings call. “So we're going to continue to move forward with that long-term strategy.”
However, Goldman has a spotty track record when it comes to products for clients on the lower end of the wealth spectrum, says David Goldstone, manager of research and analytics for Backend Benchmarking, in an email. The firm acquired the retirement-focused robo advisor Honest Dollar in 2016 but never integrated it into a larger strategy. And in 2018, Goldman acquired Clarity Money, a spending and budgeting app that will be closing in March to make way for a new app, Marcus Insights.
“While Goldman entering the space represents further competition for digital-advice clients, it will not significantly change the landscape,” says Goldstone. “Most individual investors likely have a digital advice product available to them at an institution where they already do business, like their bank or broker.”
However, the popularity of financial advice is increasing among U.S. consumers. Forty percent of U.S. investors said they need more investing advice,
“The time is certainly right to be building financial services relationships with a much broader swath of consumers,” Book says.
