Goldman Sachs has announced plans to acquire McLean, Va.-based Folio Financial.

Folio CEO Steve Wallman sent a message to the firm's clients yesterday alerting them to the acquisition.

"This transaction is another landmark event in Folio’s history, as it will further enhance our innovations and bring scale to our business, particularly in the execution, clearing, and custody space," wrote Wallman. "Goldman Sachs and Folio share a commitment to serving the needs of our clients and to expanding the scope of sustainable, responsible, and impact investing. The combination of Folio’s patented technologies and services with Goldman Sachs’ investment solutions and access to global resources will create material value for our clients."

News of the deal was first reported by Reuters yesterday.

Goldman Sachs would more directly enter the RIA custody space by adding Folio Institutional's $11 billion business. The companies expect the transaction to close by the end  of the third quarter. They did not disclose the financial terms of the deal.  

The deal signals Goldman Sachs' continued efforts to expand its presence in the wealth management space. The company acquired United Capital in May 2019, rebranding it to Goldman Sachs Personal Financial Management.

Folio was launched as Foliofn Investments in 1999 as a brokerage geared towards individual investors. Folio Financial has offered advisors a modern technology stack, including such innovations as fractional share investing, direct indexing and paperless operations.

Folio also gained a reputation for being innovation-friendly, offering a wide range of APIs to allow tech-savvy RIAs to customize their offerings, and launching a robust white-label roboadvisor for RIAs.

Goldman Sachs’ acquisition of a direct-indexing oriented RIA custodian and brokerage business comes directly on the heels of Schwab’s acquisition of technology and other intellectual property from now-defunct Motif Investing. Major diversified financial services companies are entering new lines of business and purchasing next-generation technology in order to expand their revenue base and compete effectively with fast-growing fintech disruptors.

David Goldstone, head of research for BackenD Benchmarking, said in an email yesterday that the  acquisition was unsurprising since it had reportedly been in the works for nearly a year after Folio spent many years courting potential acquirers.

First « 1 2 » Next
To read more stories , click here