The bank that for many defines ultrawealthy is now in the market to serve investors whose employers don't even offer 401(k)s.
Less than a year after announcing plans to offer retail lending to the mass-affluent, Goldman is entering the small and midsize online retirement plan space through its acquisition of a one-year-old startup called Honest Dollar.
Goldman's investment management division is buying the retirement savings platform to better serve individuals who either work for themselves or who work for companies that have traditionally been too small to offer workers a 401(k) or other workplace-sponsored retirement plan. The company estimates there are 45 million people in the U.S. who don't have access to an employer-sponsored retirement plan.
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"Honest Dollar has created a simple solution to a complex retirement savings problem," Timothy J. O'Neill and Eric S. Lane, co-heads of Goldman's investment management division, said in a statement. "Together, we have the potential to help millions of people achieve their investing goals."
With the acquisition, Goldman will compete against companies such as Betterment, Ubiquity and Captain 401K. The Wall Street powerhouse also has interests in Kensho, a global analytics and knowledge platform for investment professionals, and Motif Investing, an online brokerage firm. The firm also is developing a consumer lending unit that would compete with the likes of Prosper and the Lending Club.
Honest Dollar staff will remain in Austin, Texas, upon completion of the transaction, expected in the second quarter. Financial terms were not disclosed.
