Goldman Sachs, 2.0?

Goldman Sachs is rewriting its story again.

It’s not a question of whether the iconic Wall Street bank can continue its success in the highflying worlds of investment banking and trading. Rather, it’s long been a question of how to build up other businesses that can keep its fees stable in a down market.

When I spoke to John Waldron, president and chief operating officer for Goldman Sachs Group Inc. , this week for Bloomberg Television, he said: “If there’s a 2.0, it’s really talking about having two market-leading businesses—global banking and markets, and asset and wealth management.”

That means Goldman is taking its calling card to investors around the world and leaning harder into its asset and wealth business, where it has about $2.5 trillion under supervision and a goal to raise billions through next year. “We have scale in active asset management, we’re a top-five player in global alternatives. I’m not aware of another platform that has our kind of scale in both,” Waldron said.

Now do investors buy Goldman’s story? On Tuesday’s investor day—only the second in the bank’s 154-year history—the stock was the worst performer in the Dow Jones Industrial Average. Questions loom around its “platform solutions” business that isn’t expected to turn a profit for at least two more years.

Goldman has already burned billions in its shift to consumer banking, and the worsening economic conditions have made it so Goldman, like other banks, has had to start setting aside hundreds of millions in provisions for bad loans. It’s a difficult equation, because rising interest rates also mean that banks have the chance to start making much more money off loans.

Goldman is considering “strategic alternatives” for some of these consumer businesses. That’s banker-speak that often includes weighing asset sales. Goldman agreed in 2021 to buy a lending business called GreenSky, which offers payment plans for home projects, for more than $2 billion. Selling it off would undo a deal for a unit that CEO David Solomon has said he’s owned for just “five minutes.”

Goldman’s 2.0 model doesn’t come without competition. Morgan Stanley, for example, has a much larger wealth management business and has struck multiple deals in recent years to expand its asset manager.

Waldron said Goldman has significant fundraising goals and plans to expand management fees by about $1.2 billion next year. “Back to your 2.0 question, this is a very important growth opportunity for the firm,” he said. And of the plan to hit $10 billion in management fees, “We’re clearly well on our way to hitting that target, and that target is not the limit of our ambitions."

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