Why do Investors Love Goldman Sachs?

January 11th, 2011
by Portico Wealth Advisors

This question takes on very different meanings, depending on which group of “investors” you are considering.

Investors in Goldman Sachs, i.e. shareholders, are absolutely smitten. It has been the darling of Wall St. well before its IPO back in 1999. The firm has its hands in virtually every major investment banking deal, consistently reports record earnings, and appears headed right back to its pre-meltdown highs. Even the occasional headline shock or SEC inquiry can’t trump the company’s gargantuan bottom line.

Investors of Goldman Sachs, i.e. clients, may not lean so heavily to the love side of the love-hate continuum, in particular those not governed by a fiduciary standard. For those investors, working with Goldman is a little like juggling torches–you may not get burned, but you’re going to have to pay a lot of attention to avoid it.

Goldman’s recent Facebook dealings are a prime example. Over the past few weeks, the firm has been hocking ~$1.5B of the social-networking stock to its wealthy clientele under a suitability standard, while those clients having their money managed by Goldman under a fiduciary standard are being steered away from the very same deal.

Chris Harper of Bloomberg has the whole story on why one sort of Goldman investor is inherently pitted against the other:  http://tinyurl.com/339n8qn

Also, see principal Jonathan Leidy’s recent story on fiduciary duty in the retirement plan market:  Click Here