Goldman Building "Robo-Adviser" For Its 'Poor' Clients (A.K.A. Those With Only $1 Million To Invest)

Tyler Durden's picture

For all you 'poor' people (and you know who we're talking about...all you people with only around $1 million of liquid investable assets) out there who always wanted to invest their money with Goldman Sachs but didn't have the $50 million net worth required to become a private wealth client, today may just be your lucky day. 

But don't think for one second that you're going to get the same access to Goldman's proprietary "market color" as GSAM's wealthier private clients, or even be able to speak with one of Goldman's massively overpaid advisers for that matter.  No, for all you peons who make up the "mass affluent market," Goldman will gladly take your money but if you want advice you'll have to go through their brand new "Robo-Adviser."

As Reuters points out today, in an effort to diversify risk away from the super wealthy, Goldman Sachs is actively hiring developers to code a "Robo-Adviser" for the "mass affluent market"...which basically means rich but not 'Goldman' rich.

Goldman

 

The robo platform would sit within the bank's rapidly growing investment management division, according to the ad. The unit, which Goldman has been trying to build out in recent years to diversify its revenue, posted a record $1.38 trillion in assets under supervision at the end of 2016.

Goldman has for years grappled with how to tap into the mass affluent segment, broadly defined as those with less than $1 million in investable assets, without diluting the brand of its private wealth business which is considered a jewel within the bank, according to people familiar with the matter. Goldman's U.S. private wealth business typically advises clients with an account size of around $50 million.

 

Goldman has in the past considered expanding Ayco, a wealth advisory firm it purchased in 2003, as a way to push more deeply into the mass affluent segment, the people added.

 

While the robo-advice market was initially developed by startups such as Wealthfront and Betterment with ambitions of upending the traditional financial advice sector, large firms such as Charles Schwab Corp (SCHW.N) and Vanguard have launched similar services.

In an effort to save these programmers some time, might we kindly suggest you start with the "Buy The Fucking Dip" simulation as it's likely the only component of your new "Robo-Adviser" that will get any real airplay.

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J S Bach's picture

The "speculator" class - those who produce NOTHING in our world, must be eliminated.

Anonymous_Beneficiary's picture

But, but, they provide market liquidity and, and price discovery, and stuff like that!

/sarc

ACP's picture

I assume these bots will be taking the series 7 exam?

knukles's picture

So, the little bot loses all my money and I can kill it with impunity?

                      Goldman World

philipat's picture

Their "Real" advisors amount to the same thing so this is probably a bargain?

TrollandDump's picture
TrollandDump (not verified) xythras Mar 21, 2017 8:57 PM

Fat cats getting thinner. Go figure.

cue in cue's picture
cue in cue (not verified) TrollandDump Mar 22, 2017 2:46 AM

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... http://bit.ly/2jdTzrM

NoDebt's picture

ACP- nope!  No series 7 required.  The beauty of robo-advosors is that they are considered CLIENT-DIRECTED investment vehicles.  No human involved, just a standardized algorithm.  They get you around so many pesky things that human advisors have to comply with.  

How do I know this?  Because I just launched my "robo advisor" at my firm 2 weeks ago (after more than a year of working on it).  Unlike Goldman, I have no minimum- just straight basis points advisory "fee" from dollar one.  And no, I don't rape my clients on the advisory fee (sub-1% even for a client with only $1 to invest).  No other charges that nickel and dime you to death, either.  No yearly account charges, all portfolios are constructed using no-load, no-transaction fee ETFs so we can trade in/out of positions costlessly, even for small "rebalancing trades" that happen to every portfolio automatically every quarter.

If you really want to hear the details of this shit, I'll tell you (to a point, obviously- I'm not giving away specific software vendor names, portfolio construction techniques and other shit that took half of forever for me to figure out).

For us, mostly this is so we can help people with modest amounts of money to invest that doesn't justify a full human-level advisory relationship.  Children of our high net worth clients just starting out in investing being an obvious niche to service. 

 

ACP's picture

I'd just like to know at what point does it cross over into client directed territory. I left the industry just when the Ameritrades and Etrades were taking over the SOES crowd.

NoDebt's picture

It's a "product", not a relationship, not individually personalized.  It's offered under specific carve-outs in the regs for standardized computer advisory models.  I have no discretion to, say, line my own pockets by selecting Investment A vs. Investment B for any given client.  Everything is standardized, everyone rides the same train.  

The firm that offers the product still has to be registered in some way, shape or form, obviously.  My firm is a Registered Investment Advisor (Series 65, in common parlance), but there are many firm registrations that can offer a similar service.  Goldman Sachs as a firm would be so registered.

IMPORTANT TO KNOW:  Robo-advisors were pushed forward timeframe-wise primarily by the idiotic Obama-era DOL "fiduciary rules" that deemed anyone dealing with a "retirement account" (even a simple IRA) to act as fiduciaries to their clients- that's a pretty high standard.  This regulation made it so onerous to deal with your "Average Joe" who wants to roll his $50K 401k into an IRA with an advisor "too small to deal with".  Too much shit needs to be done to prove you are acting in a prudent, fiduciary manner by rolling that account over to make it worth your time to do it.  Enter.... Robo-Advisor to the rescue!  I'm no longer doing it as an advisor. subject to all that bullshit.  YOU are doing it on your own.  YOU are authorizing how your money should be invested, based solely on my software's recommendations.  It's not me telling you what you should do as a human advisor.  (It's a take-it-or-leave-it recommendation the software spits out, by the way.)

Get it?  Make sense?  See how that little twist gets you around a lot of regulatory obstacles?

You will be seeing a shit-ton more "robo-advisory" stuff in the coming years.  It is inevitable.  It's also going to be nearly ubiquitous.  If even my tiny little speck of a firm can set this up, anyone can.  The software is readily available.  You just have to spend the time to stitch it together properly.

 

Delving Eye's picture

Sounds like Betterment or Wealthfront or Vanguard. I looked at those -- I liked Betterment the most -- but I'm such a noob and the market is so volatile, I stepped away and stashed by measley half a stick in a MMsavings account for a whopping 1%. It's not much, but at least I sleep at night -- and that's priceless.

nhsadika's picture

NoDebt, I sent a contact request.  
I'd love to ask you some more questions about this, as I'm in the same boat trying to start a specialized investment strategy - and investigating a robo concept as a way to boostrap the acquisition of customers.  I have skills I can provide in return (e.g. design skiills)  acuitycorp at gmail 

NoDebt's picture

I just accepted it.

 

nhsadika's picture

NoDebt, I sent a contact request.  
I'd love to ask you some more questions about this, as I'm in the same boat trying to start a specialized investment strategy - and investigating a robo concept as a way to boostrap the acquisition of customers.  I have skills I can provide in return (e.g. design skiills)  acuitycorp at gmail 

ACP's picture

If there is an auto-allocate mode, I wonder if this can turn a bunch of small investors into one giant quant.

bowie28's picture

Well they can't sell toxic MBS to pension funds any more so now they need to line up the next wave of sheep to be slaughtered in the next crash. 

Can you guess who will be on the other side of the trades their robo advisor pushes these muppets into when they transition from pump to dump?

Anyone stupid enough to trust GS for investment advice deserves to lose their cash.  Just go to Vegas.  Better odds.

BigFatUglyBubble's picture

They are doing gods work...

I heard only 10% of their income comes from helping startupup businesses get capital

The rest is alchemy/sorcery

small axe's picture

or they simply cut out the middleman and screw entire countries, such as Greece.

Buck Johnson's picture

Even millionaires are looked at as being middle class slubs?

 

 

Anonymous_Beneficiary's picture

Sweet...I was beginning to think I would never achieve muppet status.

LetThemEatRand's picture

Old joke but fitting:  "how do you get to a one million dollar net worth investing with Goldman Sachs robo-advisers?  Start with two million."

Milton Keynes's picture

start with 8 Million...

That way they can lose your ass and then still have enough left for them to zap you for commissions. 

localstorm's picture

Aaaand it's gone! It's robot, I dunno why

Hubbs's picture

Small fry are the easiest to fleece!

e_goldstein's picture

So when Goldman loses the muppets' money there will be no one to nailgun?

BigFatUglyBubble's picture

Will the robot be able to snort coke and bang hookers?  I thought that's kind of part of the job requirement criteria.

localstorm's picture

AI developers can always do that for robots. Sill not automated

small axe's picture

I'm still waiting to see Goldman ATMs on every street corner after the Squid was allowed to become a traditional bank holding company in September 2008 in order to escape the bankruptcy it so richly deserves.

 

GRDguy's picture

True to GS form, the robo-advisor will tell GS's muppets what to buy while instantaneously telling GS what to sell;

and vice versa. Their customers are sooo stupid.

Anonymous_Beneficiary's picture

Are they any more stupid than SHEPWAVE's spammers?

HRH Feant's picture

Uhhh, no.

P'Od_Accountant's picture

They can go fuck themselves with their investo-bot

Bunga Bunga's picture

if (Goldman == Sell) BUY; else SELL;

TheWrench's picture

I just created a new algorithm; "buy low, sell high". That is yours for free. But the next one, " How to triple your money" is going to cost.

ds's picture

The 1% holding the wealth is an unfolding reality. Muppets are left to machines to scalp. If you have less than $50m, why even bother with a GS account. 

are we there yet's picture

Congressmen do not want to be bribed by robots, so less insider trading for smaller clients.

Sledge-hammer's picture
Sledge-hammer (not verified) Mar 22, 2017 2:08 AM

If I had that kind of wealth, the last thing I would do is give my money to a jew or a jew-bot to invest.

Iconoclast's picture

BTFD, or BFE (buy fuckin everything)? What'll be the main instruction?