Goldman Sachs to offer its investing know-how to the masses

The Wall Street firm on Tuesday is set to unveil Marcus Invest, a low-cost digital platform that allocates and automatically rebalances individuals’ wealth across portfolios of stocks and bonds based on the models developed by the firm’s investment-strategy committee.

Marcus Invest will be tucked into Goldman’s existing Marcus consumer-banking app and website. The offering will help round out a somewhat disjointed set of Goldman banking products, which include savings accounts, unsecured personal loans and budgeting software that carry the Marcus brand and a credit card with Apple Inc. that doesn’t.

With Marcus Invest and a forthcoming Marcus checking account, “we get to the point where we can be someone’s primary banking relationship, meaning we can be the digital bank on your phone,” said Stephanie Cohen, who was promoted to global co-head of Goldman’s consumer and wealth-management division in September after a stint as the bank’s strategy chief.

Among the beta testers for the Marcus Invest app was Chief Executive David Solomon. Under Mr. Solomon, Goldman has de-emphasized riskier activities like trading bonds and derivatives in favor of Marcus and other more predictable businesses preferred by investors.

In 2020, Goldman generated $1.2 billion in consumer-banking revenue, a 40% increase from 2019. At year-end, consumer-loan balances totaled $8 billion while deposits totaled $97 billion.

Goldman is a relative latecomer to the field of digital investment advice, which is estimated to reach $449 billion in assets under management in 2021, according to Cerulli Associates. Startups such as Betterment LLC and Wealthfront Corp. pioneered so-called robo-advisory strategies more than a decade ago. Every other big US bank and brokerage has some version of an automated-investing option, though few disclose how much in assets those businesses have gathered.

False starts marked Goldman’s earlier attempts to expand into retail investing. In 2016, the firm acquired an online retirement-savings startup called Honest Dollar for about $20 million but never fully embedded it within Goldman’s broader suite of services. The debut of Marcus Invest was delayed by many months, in part because Goldman had to reassign engineers to meet a 2019 deadline for the release of the Apple credit card, The Wall Street Journal previously reported.

Historically, Goldman targeted customers with more than $10 million in assets for its wealth-management services, but Marcus Invest is designed for more mainstream investors who can meet an account minimum of just $1,000. Goldman’s high-touch private wealth advisers charge clients annual advisory fees that can exceed 1% of the balances of its smallest accounts, but for Marcus Invest’s digital advisory services customers pay 0.35%.

Marcus Invest is launching at a time when everyday investors’ interest in the stock market is at a high point. Stock-trading apps from companies including Robinhood Markets Inc. and Webull Financial LLC have attracted millions of new users looking to participate in a rally of GameStop Corp. and other hot stocks that went viral on Reddit’s WallStreetBets message board.

Unlike those services, Marcus Invest doesn’t let users buy and sell individual stocks. Ms. Cohen said that Goldman believes the best way to create wealth over time for most consumers is through diversified portfolios and that the firm didn’t design the app to drive user engagement, as Robinhood did. That said, Goldman may introduce brokerage features at Marcus Invest down the line.

“We like trading at Goldman Sachs,” Ms. Cohen said. “It just wasn’t first on the list” at Marcus.

This story has been published from a wire agency feed without modifications…