Thread by @MichaelKitces

This is really big news. Goldman Sachs is getting ready to gear up its 'real' business plan for FinLife CX... (tweetstorm incoming, 1/?)

"United Capital Announces Goldman Sachs Executive Rachel Schnoll to Lead FinLife CX" bwnews.pr/36AJyxH

The rumor when United Capital was on the block to be sold was that Duran hoped to position UC as a #FinTech company (and sell for FinTech multiples). Instead, they 'just' got a great valuation as a mega-RIA business.

But the FinLife CX technology is compelling as an entire wealth management front-end for financial-planning-centric firms. United Capital figured out how to integrate FP software with CRM & client output, and make a real PFM portal for clients, that no one else did.

The question was/is how to monetize FinLife CX. Originally United Capital tried to tie pricing to bps, and/or to nudge advisors towards UC's own investment solutions, but advisors resisted. We're just not used to/willing to pay bps for technology.

But Goldman Sachs buying United Capital opened the door to new avenues. As I maintained at the time, UC tried to sell United Capital for #FinTech multiples based on FinLife CX. Instead, Goldman bought UC for (good) RIA multiples and got FinLife CX thrown in.

So what can Goldman do with FinLife CX that UC couldn't? Two answers:
1) Slap a custody/clearing firm on the back end as an RIA custodian;
2) Attach asset management distribution to the back end (e.g., GSAM + more), akin to Blackrock buying FutureAdvisor & Envestnet stake.

Not sure yet which one Goldman is going after, but with a reported 200+(!!!) developers working on FinLife CX, Goldman is clearly taking FinLife way way way beyond 'just' being wealth management tech itself for RIAs.

Which makes sense, because even a really good #FinTech #WealthTech software platform just isn't really a "Goldman-sized" business market opportunity. But using FinLife CX as the front end to go into the RIA custodian business or distribute GSAM certainly is.

In fact, the new Goldman Exec taking over used to run Retail Product Strategy for GSAM, with strategy for developing & distributing their products. And press release notes "Ms. Schnoll will focus on... broadening its accessibility... including access to Goldman Sachs products"

But Goldman only 'wins' with this strategy if they can get FinLife CX into the hands of advisors actually using it as their central platform. Which means going head-to-head against other investment & FP platforms (e.g., Orion, eMoney, Envestnet) competing for advisor desktop.

And so while the long-term goal for Goldman is likely back-end custody/clearing or GSAM distribution, in the intermediate term expect a big new competitor for the advisor desktop whenever FinLife CX 2.0 starts to roll out into the marketplace...

Which given Goldman's sheer size and scale, will likely be a formidable contender right out of the gate. And Blackrock has already fully validated the strategy w/ FutureAdvisor & Envestnet stakes.

Going to be an interesting few years of advisor #FinTech #WealthTech to come! /end