Squawk on the Street+ Goldman Sachs President & COO John Waldron 5/9/24

Carl Quintanilla (0:00)

We are at Goldman at their Professional Investment Forum, which brings together about 100 CEOs and CIOs from across the wealth management industry. They're gathering here on the lower west side, representing nearly a trillion dollars in AUM. And our next guest joins us before speaking at the conference this afternoon. We're very pleased to welcome, actually, they're welcoming us, Goldman's president and CEO, John Waldron. John, thanks for having us over.

John Waldron (0:23)

Carl, thanks for coming down to our offices, we appreciate it.

Carl Quintanilla (0:25)

I'd love to know, first of all, the strategy behind the forum, and then what kind of feedback you're hunting for today.

John Waldron (0:31)

Sure. So, this is our inaugural forum focused on RIAs, which is an increasingly important client base for Goldman Sachs. We've obviously been in the wealth management business a long time. Our focus historically as an advisor has been much more in the ultra-high net worth segment.

We're servicing the RIA segment more so as a holistic provider of comprehensive solutions. So, we're inviting this group into our offices to have a forum talking about our views on markets, our views on policy, our views on interest rates, any of the topics your viewers will want to hear about, but also how Goldman Sachs can offer solutions to help them achieve their objectives and to serve their client base, which are really high net worth wealth investors who are growing significantly in the United States.

Carl Quintanilla (1:13)

Is it a tell about where Goldman sees opportunities for growth, per se?

John Waldron (1:18)

We absolutely do. The forum is focused on that high net worth segment of wealth in the United States. And obviously, there's been enormous wealth creation in this country over long periods of time. But if you look at the last 10 or 15 years, the compound annual growth rate of this category, we think, is about 10%, which is meaningfully higher than other categories in wealth. And so there's an enormous amount of wealth being generated in this country in that kind of $1 to $10 million net worth category. And Goldman Sachs is really well suited to serve that group of investors and the RAAs that are advising those investors with all the comprehensive capabilities that we have and what we call a one Goldman Sachs platform.

Carl Quintanilla (1:53)

Of course, the Street still remembers your very strong Q1.

And I know there were some upgrades in the days that followed that argued this is the kind of environment in which a franchise like Goldman's shines. Of the things that are clicking, is it equity underwriting? Is it wealth management? Is it something else?

John Waldron (2:10)

Well, I would say, as you know, we've been very focused on clarifying our strategy and getting kind of back to the things that we do really, really well.

I like to call it Goldman Sachs being Goldman Sachs. And really, if you think about our capital markets franchise as a best-in-class franchise, the capital markets activity is starting to get better and better.

It's taking some time. It's better on the debt side than it is on the equity side. But we've done some IPOs of late that have gone really well. And we're starting to see that kind of get more momentum, which is a good thing to see.

And obviously, we're large intermediaries in the financial markets. And as you get more activity in global markets, whether it's in rates or credit or mortgages or the like, there's a lot of activity that we can benefit from being the intermediary in that realm. And then we have built a much bigger financing machinery at the firm. So the firm historically was much more intermediary in markets and less of a financier. And over the last five years, we've really materially grown our financing capabilities and footprint, and we're much larger now as a financier. If you think about all that secular growth and assets that are coming into the marketplace, they all have to get financed on some basis. Some get financed at a higher attachment point, some get financed at a lower attachment point. But that's all opportunity for us to be a much more important financier to our clients, which is driving and propelling our business for sure.

Carl Quintanilla (3:21)

For those who are zeroing in on IPOs, there have been some charts that, as you just pointed out, there's been some activity.

Others argue it's not like S1s are blowing the roof off. And we had a discussion this morning about whether or not there's a window in which it needs to happen significantly before, say, the summer or before the election. Do you go along with that?