Consumer & Wealth Management - Goldman Sachs 2020 Investor Day

• Goldman Sachs is restructuring its consumer and wealth management division under a new strategy titled "Realign to Focus on Individuals," leveraging a differentiated, advice-led, and technology-enabled platform without legacy branch infrastructure.
• The firm currently serves three distinct wealth segments: Ultra-High Net Worth (UHNW) with assets over $10 million; High Net Worth (HNW) between $1 million and $10 million; and Mass Affluent with investable assets under $1 million.
• Total client assets across consumer and wealth platforms reach $2.3 trillion, comprising approximately $850 billion from individual clients ($550 billion in fee-based products and the remainder in brokerage) and $115 billion in deposits.
• The consumer and wealth management business generated over $5 billion in revenue in the referenced period, with more than 90% derived from fee-based assets and net interest income to ensure recurring stability.
• Organic growth over the last five years included a >50% expansion in the advisor base, a >40% increase in assets, and a tripling of deposits to $116 billion.

Ultra-High Net Worth (Private Wealth Management)

• This flagship segment generates $3.5 billion in revenue, representing nearly 70% of the business's total revenue, with 800 advisors operating in 26 global offices serving ~13,000 families.
• Private wealth advisors demonstrate high productivity and retention, with an average tenure of 14 years (exceeding 20 years for top advisors) and generating >$4 million in revenue per advisor annually.
• Despite leading performance, the segment holds only a 3% global market share; capturing an additional 0.5% of this market would add $650 million in annual revenue.
• Growth targets for the next three years include adding 250 new advisors (a 30% increase), with accelerated hiring outside the U.S. to close penetration gaps.
• Lending penetration among U.S. wealth clients has risen from <1% a decade ago to 27% today, driven by the bank's holistic approach to client balance sheets; international lending penetration is expected to converge with U.S. levels.
• Asset allocation monitoring indicates clients are currently overweight in cash and fixed income (50%); the firm anticipates shifts toward alternative opportunities as market cycles evolve.

High Net Worth (Integrated Corporate & Retail)

• The High Net Worth strategy combines existing assets with the newly acquired United Capital (renamed "Goldman Sachs Personal Financial Management") and the "Advisors' Capital Organization" (ACO) platform, creating a combined entity with 600 advisors and $85 billion in assets.
• ACO, acquired in 2003, has grown revenues 4x and pre-tax profits 8x since acquisition, currently serving 435 corporations (including 60% of the Fortune 100) and >1 million U.S. employees.
• The firm plans to expand ACO relationships by adding 30 new corporate clients and 300,000 employees annually, while launching "Marcus at Work" to offer broader financial counseling to corporate employee bases.
• HNW growth is projected via four vectors: organic expansion of current teams, internal referrals from Private Wealth Management and ACO, broader corporate relationship coverage, and inorganic acquisitions.
• Achieving a 0.5% market share increase in the $18 trillion HNW segment would generate an additional $700 million in revenue for Goldman Sachs.

Mass Affluent (Marcus Digital Consumer Bank)

• The Mass Affluent segment targets the creation of a leading digital consumer bank, capitalizing on the lack of legacy infrastructure and strong balance sheet to offer simple, transparent, and secure products (loans, savings, cards, wealth, and checking).
• Marcus has grown to 5 million customers, holding $60 billion in deposits and $7 billion in loan/card balances, generating over $850 million in revenue since its first loan in 2016.
• Product roadmap includes the addition of Marcus-branded wealth capabilities later this year and modern checking capabilities in 2021 to complete the integrated consumer platform.
• Customer acquisition utilizes proprietary channels (Marcus.com, mobile app, Marcus Pay, Marcus at Work) and strategic partnerships, most notably the Apple Card, which integrates dynamic capabilities into the iPhone ecosystem.
• Future innovation focuses on a unified mobile banking experience featuring budgeting tools and insights, replacing traditional desktop-only access with a "retail bank branch through your phone."
• Risk management relies on 150 years of Goldman Sachs credit expertise, maintaining high FICO scores and appropriate approval rates despite aggressive growth in digital lending.

Forward-Looking Financial Targets and Margins

• Over a five-year horizon, the firm expects the consumer business to expand to $125 billion in deposits, $20 billion in loan and card balances, and $700 million in pre-tax income.
• Current segment margins stand at 5%, reflecting heavy investment in high-growth consumer initiatives; these are projected to rise to ~15% in the medium term and exceed 20% at scale, aligning with wealth management margins.
• The strategy prioritizes accelerating advisor growth in international markets and deepening lending penetration in non-U.S. wealth segments to capture significant revenue upside from small market share gains.