RIAs keep Goldman Sachs' hopes alive its RIA custody unit will find legs as $55-billion New Edge signs on and Goldman fills vacated No. 2 custody spot

Goldman Sachs' custody business has a new No. 2, Jeremy Eisenstein, and a major new client – NewEdge Capital Group, a wealth manager, breakaway recruiter and roll-up with $55 billion in administered assets.

Goldman Sachs Advisor Solutions has promoted Eisenstein to head RIA sales, two months after Cooper Rey stepped down from the role. See: Goldman Custody No.2 resigns, but insiders say this time the ship is showing signs of righting itself.

“Jeremy has been appointed as head of RIA sales for global banking and markets, public,” says a company spokesperson in an email exchange, confirming the move.

GSAS apparently retains its parent's public backing, even after Goldman largely dumped its other recent retail banking effort to expand its business beyond its core investment banking services. See: After a false start, Goldman Sachs unloads high net worth unit to high-flying Peter Mallouk.

“Goldman Sachs continues to invest in the infrastructure and human capital for what is an increasingly important client base for the firm, and we’re excited to continue building upon this momentum,” says Eisenstein, who now reports directly to RIA custody head Adam Siegler.

Healthy pipeline

The NewEdge deal – GSAS' eighth custody win of the year – could also prove to be a trifecta, if advisors at NewEdge's* two RIAs – NewEdge Wealth and NewEdge Advisors – move assets to Goldman's custody.

LPL Financial is currently the largest RIA custodian for one of NewEdge's RIAs, NewEdge Advisors; with Fidelity the largest for NewEdge Wealth.

GSAS is already rocking with NewEdge's pipeline, too, according to the New York investment bank.

“We’ve been working with NewEdge Capital on the collaboration for many months, and the pipeline for NewEdge teams [to adopt GSAS custody] remains healthy for both the [NewEdge] Advisor and Wealth divisions,” a Goldman spokesperson said. 

Indeed, two teams recently recruited by NewEdge, Morgan Stanley breakaway, Lehigh Valley, and J.P. Morgan breakaway Fortis Wealth Advisors have chosen GSAS as their primary custodian*. See: RIA 'gambles' on Goldman Sachs, seeing TD Ameritrade-like service wrapped inside gold standard brand.

Blue-box swagger

Both Eisenstein's promotion and the NewEdge deal also represent the latest step by GSAS to right the ship, after five years spent bedeviled by pauses, delays, technology glitches, morale issues, media batterings, two false starts, and a steady stream of staff departures. See: Inside Goldman Sachs' on-again, off-again custody play.

What it does right continues to drown out its deficiencies.

“Goldman has something no one else has; blue-box swagger and a reputation for innovation in the high-end space,” says Philip Waxelbaum, principal of Masada Consulting and a frequent GSAS critic.

“Goldman Custody [also] has a narrow but first-class product solutions platform ... very much targeted to the HNW and UHNW market and small institutions," he explains, in an email exchange.

"It's a bespoke partner fit for many of the advisors NewEdge attracts … [but] the big deal is [it's] Goldman," he adds.

New No. 2 client

NewEdge Wealth has $8.6 billion of assets under management (AUM), 88% of which are HNW assets. NewEdge Advisors manages $18.4 billion, 59% of which are HNW assets. 

The wider firm, which includes the $3.5 billion AUM broker-dealer, NewEdge Investment Solutions, administers $55 billion.

Both Goldman and NewEdge declined to comment on whether its adoption of GSAS includes an agreement to custody a minimum value of assets at the firm, although a source claims this is unlikely.

NewEdge is the second-largest wealth manager to sign on with GSAS, including Goldman's reportedly mothballed custody agreement with $32 billion of administered assets Steward Partners. See: Pershing wins $27-billion Steward Partners RIA custody account after Goldman Sachs boots launch.

NewEdge could be a gift that keeps giving. 

Its two RIAs collectively recruited over $5.5 billion, managed by 75 new advisors across 19 new teams in the last nine months, according to data obtained from several company releases.

Yet Creative Planning, which administers $340 billion, remains GSAS' potential biggest client. See: Peter Mallouk grants Goldman Sachs a 'multi-billion dollar' RIA custody opportunity.

Several more RIAs have also signed on with GSAS custody without publicizing it, according to a source familiar with the matter.

GSAS declined to reveal the number of RIAs, or the value of assets under custody.

Blue chip 

NewEdge signed on with Goldman because it provides services its current custody partners do not, according to a NewEdge spokesperson, who declined to answer specifically what those services are.

“[GSAS] allows us to further expand our capabilities,” a spokesperson for NewEdge Wealth explains.

“Our partnerships provide the tools that help our advisors ... provide best-in-class services and achieve growth,” says a NewEdge Advisors spokesperson.

NewEdge is a known admirer of GSAS' widely praised fixed-income and alternative investing (alts) capabilities, and its clients love Goldman's blue-chip name, according to Waxelbaum. See: Peter Mallouk and Goldman Sachs' $7 billion sweetheart deal.

“Without a doubt, the Goldman name instills enthusiasm and conveys an exclusivity of access. NewEdge has been a fan of the offering since first adding GSAS to its platform [via Fortis],” he explains.

“It's a solutions set with high appeal to the NewEdge target advisor,” he adds.

Tech forward

The NewEdge deal is also notable for its similarity to GSAS’ 2023 custody agreement with Ashton Thomas Private Wealth in Scottsdale, Ariz. See: Ashton Thomas, which manages $2 billion, has tried every custodian, and finds Goldman to its taste.

Like Ashton, NewEdge regards itself as a technology-forward, early adopter of software and systems that can give it an edge when recruiting new clients.

As a result, it won’t face the difficulties some RIAs have reported with GSAS’ custody software. It brings its own, Waxelbaum explains.

“NewEdge has worked very hard to build its own very robust technology solutions suite, [and] much of that work fills GS’s known gaps seamlessly.

"Because of the shared target client, NewEdge is [also] better positioned than peer RIAs to deliver the integrated offering," he adds.

Those alts

GSAS' ability to offer high-end alts investing to RIAs like NewEdge is drawing increasing interest from the outsourcers that serve them.

Even during some of the custodian’s most difficult public moments – when current and prior employees openly doubted its survival – no one doubted the top-tier alts investing system built by Vice President Amber Murphy.

One former employee, who was otherwise highly critical of the firm, even labeled it “the crown jewel,” in a March email exchange.

As of Sept. 25, Goldman has opened up direct access to data from its RIA alts platform to Axxcess Wealth Management, a Carlsbad, Calif., corporate RIA and TAMP, which just launched its own alts marketplace and reporting system for RIAs.

“Improving opportunities for advisors to invest in sophisticated investments, such as alts, starts with providing access,” says Eisenstein, in a release.

* NewEdge Capital Group is owned by EdgeCo Holdings, which administers $550 billion overall, through AmericanTCS and NewEdge. EdgeCo Holdings is financed by Waterfall Asset Management and Parthenon Capital Partners, which also holds stakes in Allworth Financial and HDVest.

* NewEdge Wealth custodies primarily with Fidelity; whereas NewEdge Advisors – where Fortis and Lehigh have landed – custodies at a mix of LPL (44%), Fidelity (26%), Raymond James (13%), Schwab (14%), MATC (0.7%), and now Goldman