Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. I'm Shanalie Bassek, and
Speaker 1: I'm standing here at the Goldman Sachs Financial Services conference
Speaker 1: over here now with Mark Knackman, who's a global head
Speaker 1: of asset and wealth management at Golden Sachs. This is
Speaker 1: the big growth THEORYA. This is the focus that Goldman
Speaker 1: has been kind of honing in on. And you have
Speaker 1: set out a plan to be less balance sheet intensive
Speaker 1: and focus more on that third party fundraising a third
Speaker 1: party business. How far along in that journey are you,
Speaker 1: especially when you have some ambitious plan to even double assets.
Speaker 1: That's some part of the.
Speaker 2: Business, that's right. We set out an ambitious plan at
Speaker 2: the beginning of last year when we formed Asset in
Speaker 2: Valves Management. We had to invest a day in February
Speaker 2: set out some targets, and I think we're well on
Speaker 2: albay on meeting and exceeding a number of them. You know,
Speaker 2: the key was growing durable revenue is high single digits.
Speaker 2: We've done this were the last seven quarters, getting our
Speaker 2: pretax margin into the mid twenties. We're now at twenty
Speaker 2: four percent, so we're well on our way. And as
Speaker 2: you mentioned, we had a couple of targets in terms
Speaker 2: of reducing our balance sheet intensity and fundraising. On the
Speaker 2: balance sheet we at the time, but last year we're
Speaker 2: at thirty billion dollars of our historical principle balance sheet.
Speaker 2: We had a target to get to fifteen billion by
Speaker 2: the end of this year. We're going to exceed this.
Speaker 2: You know, at the end of the third quarter we
Speaker 2: were around twelve billion, so we'll continue to make progress
Speaker 2: by the end of the year. So if you feel
Speaker 2: really good about reducing the balance sheet. At the same time,
Speaker 2: we've had a very good time raising funds in the
Speaker 2: alternative area. We had a target of two hundred and
Speaker 2: fifty billion dollars of fundraising, which we've met. We expect
Speaker 2: now this year to raise more than sixty billion dollars
Speaker 2: of alternative assets. So we feel very good about the
Speaker 2: transition from the balance sheet intensive business balance sheet lighter business.
Speaker 2: And at the same time, you know, continue to grow
Speaker 2: our management fees and we feel good about exceeding our
Speaker 2: target of the ten billion dollar number for this year.
Speaker 1: I'm really curious about the private credit card in particular
Speaker 1: because you look over across the across the island over
Speaker 1: in Manhattan, and you see black Rock making an acquisition
Speaker 1: for HPS to get much bigger in the private credit space.
Speaker 1: How does that make you think about the future of
Speaker 1: M and A in this business. Do you think that
Speaker 1: you need that MNA to get much bigger in private credit,
Speaker 1: especially when you yourself have a plan to more than
Speaker 1: double assets in that business to three hundred billion dollars.
Speaker 2: We feel really good about our position. We're a scale
Speaker 2: player in private credit. We've been in the business for
Speaker 2: thirty years. We launched our first mezzanine FUNT in nineteen
Speaker 2: ninety six, so we've been experienced players throughout the second
Speaker 2: We're in a very unique place where we're scale player,
Speaker 2: but we're also closely attached to the world's leading investment bank.
Speaker 2: And so when you think about that, you know the
Speaker 2: origination capability we have, which is one of the key
Speaker 2: things when you think about private credit, it's unmatched. And
Speaker 2: so I think we think we have what it takes
Speaker 2: to continue to grow, and we have the scale right
Speaker 2: now and we think we're going to be able to
Speaker 2: more than double the business over the next few years.
Speaker 1: Does that mean M and A is off the table,
Speaker 1: whether it is in private credit or another area.
Speaker 2: I'd say generally speaking, we have very strong growth opportunities
Speaker 2: that are organic, and so we're very focused on those.
Speaker 2: We're obviously paying attention to what's going on in the market,
Speaker 2: and so if we see something that could accelerate our
Speaker 2: gross we will take a look at it, but the
Speaker 2: by bar will be high.
Speaker 1: What do you make of the not just private business,
Speaker 1: but the public business here, because in addition to doubling
Speaker 1: down on private assets, you've been doubling down on the
Speaker 1: ETF business as well, making notable hires, including from JP Morgan.
Speaker 1: Does that mean you're setting out to compete and be
Speaker 1: much much bigger in this business and take on the
Speaker 1: likes of JP Morgan and black Rock.
Speaker 2: Yes, I think we are. I think on the on
Speaker 2: the traditional business, I would say we're very focused on
Speaker 2: the solutions orientation there and so I think we are
Speaker 2: a leader in SMAs and you know we already have
Speaker 2: a very strong position. We want to become a leader
Speaker 2: in active ETFs. I think it really our heritage is
Speaker 2: be active asset managers across both the traditional on the
Speaker 2: alternative side, so we're very focused on that. We've launched
Speaker 2: ten new ETFs this year. We're going to launch a
Speaker 2: number of ETFs next year, so we're going to grow there.
Speaker 2: I think we see a greater adoption of ats just
Speaker 2: in general, but also within models. I think one of
Speaker 2: the things that our clients are really interested in is
Speaker 2: having model portfolios and getting Goldman Sachs model portfolios, and
Speaker 2: ETFs tend to be parts of these of these model
Speaker 2: performers as well as SMAs, and so I think we've
Speaker 2: think this whole solutions space, the whole model space is
Speaker 2: a big growth area for us.
Speaker 1: When you think about the path forward here, what are
Speaker 1: clients one at the end of the day, are they
Speaker 1: looking more to be in those public markets or the
Speaker 1: private ones? How do you differentiate where there's going to
Speaker 1: be the most growth in the next five ten years.
Speaker 2: I think clients want a combination. I think it's interesting.
Speaker 2: We obviously have a very big boss manager that is
Speaker 2: focused on the Altrahi network segment, and so we see
Speaker 2: asset allocation there, and I'd say people want a combination
Speaker 2: of public and private assets, and I think it's important
Speaker 2: to have that combination and have the ability to move
Speaker 2: between those two sides.
Speaker 1: Do you believe that there can be this great convergence
Speaker 1: where public markets look more like private markets and vice versa,
Speaker 1: or do you think they have to be separate.
Speaker 2: I think I think it will get more and more blurred.
Speaker 2: I think the difference between between the two markets. I
Speaker 2: think it's interesting. You see some private credit deals that
Speaker 2: trade secondary and so you see some liquidity in sound
Speaker 2: of these deals, and so I think there's you know,
Speaker 2: there's you know, there's a lot of discussion. We've participated
Speaker 2: a lot in private company that have equity that is
Speaker 2: broadly distributed to employees. For example, employees want liquidity. There's
Speaker 2: mays to create liquidity for private companies, and so that
Speaker 2: always blurring the line between what are private liquid assets
Speaker 2: and what are public liquid assets.
Speaker 1: Now, the other big business you have, and we were
Speaker 1: just talking about this in the commercial break, big money
Speaker 1: market business. You think about that wall of money still
Speaker 1: sitting in money markets. There's a big investor expectation that
Speaker 1: that moves. Have you seen it? Are you seeing it
Speaker 1: as rates start to fall?
Speaker 2: I think when I look at our money market business
Speaker 2: this year, we've not seen material outflows into equity from
Speaker 2: their money mask. So a lot of people still keep
Speaker 2: their money market money markets yields are still pretty attractive.
Speaker 2: I would also say that our business is probably more
Speaker 2: tilted towards institutional and corporate clients versus retail clients, but
Speaker 2: we still see people holding on to their money market
Speaker 2: assets for the time being.
Speaker 1: Now you don't just run the asset management business, you
Speaker 1: also run the well business. This has also been targeted
Speaker 1: as a growth area for Goldman's Acts. When you think
Speaker 1: across the world, where are you going to grow? Are
Speaker 1: you going to hire significantly to get that job done?
Speaker 2: Yes. So we have a long history of growing our
Speaker 2: weals business, you know, high single digits for many years,
Speaker 2: really based on great investment performance and a great client experience,
Speaker 2: and I think those are kind of the key two
Speaker 2: pillars driving our weals business, and we're very committed to
Speaker 2: continue to growing it both in the US as well
Speaker 2: as internationally. So we have kind of a long term
Speaker 2: plan to add advisors both in the US as well
Speaker 2: as in Europe and Asia. We've done this this year,
Speaker 2: we'll continue doing it next year and the day often,
Speaker 2: so we're going to consistently growing that business. We're also
Speaker 2: expanding our private bank capability, which is something we had
Speaker 2: historically done less and so we're going to We're getting
Speaker 2: better in lending in that business, which is a very
Speaker 2: good attractive business to be in. Both of the advisor
Speaker 2: grows as well as the expansion of the private bank
Speaker 2: on top of good investment performance and client experience will
Speaker 2: allow us to continue to grow this business.
Speaker 1: If I know anything about you is that you're a
Speaker 1: man who focuses on the numbers. Where are you wanting
Speaker 1: to be number one tomorrow that you are not today?
Speaker 2: Look, I'd say, have we talked about private credit. We
Speaker 2: have a great private credit franchise. We have a kind
Speaker 2: of top five alts franchise. Overall, we want to move
Speaker 2: up there in the ranking we have. We're a top
Speaker 2: five active asset maague. On the public side, we want
Speaker 2: to move up in the ranking. This goes to ETFs
Speaker 2: and model portfolios and other solutions parts of the business.
Speaker 2: I'd say, the interesting thing about the Belt's business, our
Speaker 2: wealth business is entirely focused on the ultra high networks segment.
Speaker 2: We think we're a leader in that industry. There's not
Speaker 2: a lot of good data around where exactly we rank,
Speaker 2: but we think we're a top player in globally in
Speaker 2: that business. But we definitely want to be the number
Speaker 2: one ultra high networst player globally.
Speaker 1: We're looking forward to following that story that is Mark Knockman.
Speaker 1: He is the global head of Asset and Wealth Management
Speaker 1: over here at Goldman Sachs