Inside a massive transformation at powerhouse Wall Street bank Goldman Sachs

Goldman Sachs CEO David Solomon.
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Goldman Sachs has been going through some massive changes under CEO David Solomon.

It's taken big steps involving transparency and inclusion to change up its culture. After its first-ever investor day in early 2020, the firm is looking to execute on targets including multi-year cost-cutting plans. And it's making big pushes into businesses like wealth management and consumer banking.

Solomon, who took the reins as CEO in 2018, has also looked to reduce the number of partners at the firm in order to make the status more elite and exclusive. In 2018, there were 484 partners. But as of the latest announcement of the newest partner additions, Goldman's total partners amounted to fewer than 440.

Meanwhile, the upper echelons of one of Goldman Sachs' most prestigious businesses, its investment banking division, are about to undergo a big leadership transition.

Here's everything you need to know:

Who's running the show

Goldman Sachs org chart 2x1 — Cindy Ord/Getty; Paul Morigi/Getty; Sean Zanni/Patrick McMullan via Getty; Jemal Countess/Getty; Shayanne Gal/Business Insider

Goldman in September shuffled its setup, creating a new standalone consumer division that includes its Marcus lending unit as well as its wealth-management and private-banking businesses.

Strategy chief Stephanie Cohen and Tucker York, the head of the private-wealth business, will colead the new consumer and wealth management division and the changes go into effect on Jan. 1.

The change eliminates the former consumer and investment management division, which held the consumer business and the asset-management unit known as Goldman Sachs asset management.

The new setup matches the way Goldman reports financial results, a change the firm made last year to better align with how Solomon wanted investors to think about the firm. Goldman will now have four divisions: consumer and wealth management, asset management, investment banking, and global markets.

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Wealth management and consumer banking

In Goldman Sachs's quest to move down-market, part of its wealth management division is preparing to expand by hiring dozens of financial advisors in the coming year.

Goldman has been on a quest to manage money for clients less wealthy than the multi-millionaires to whom the bank has long catered.

The firm is also set to expand its consumer arm by picking up General Motors' credit-card business for a price tag of roughly $2.5 billion. Goldman launched Marcus, a digital-only consumer bank, in 2016. And last year, it took the plunge into the consumer credit-card business by teaming up with Apple to launch both brands' first consumer credit-card offering.

The Apple Card hasn't been the only way that Goldman is teaming up with Big Tech names. Amazon has partnered with Goldman Sachs to offer loans to its merchants. And Stripe is partnering with banks including Goldman Sachs and Citi to offer business banking services.

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Dealmakers

When Goldman announced its latest class of partners, one group was particularly well-represented on the list. Seven of the 19 investment bankers elevated to partner status came from the bank's powerhouse technology, media, and telecommunications group.

Goldman Sachs' entire investment-banking business ranks number one in mergers and acquisitions and bookrunning for equity capital markets, according to Dealogic.

Goldman has worked on some of the hottest IPOs of the year, including DoorDash. It's also got a pipeline of big names lined up for next year - as Business Insider first reported, the bank has been tapped to lead cryptocurrency exchange Coinbase's planned offering.

The firm also played a role in massive debt financings for travel-related companies during the coronavirus pandemic. One of the solutions was a first-of-its-kind deal helping United raise $6.8 billion in debt in June by leveraging its frequent flyer program.

The group has also seen some shakeups this year. Goldman Sachs veteran Gregg Lemkau, co-head of the firm's investment banking division since 2017 and a member of Goldman's management committee, is departing at the end of 2020. And in September, Goldman Sachs named new leadership in its M&A group.

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What's next for Goldman Sachs

Goldman Sachs itself is reportedly considering plans to shift asset management operations out of New York, where its headquarters tower over West Street in Manhattan's financial district, to South Florida. Goldman's move is not a done deal, but the reported plans echoed other New York-based firms' recent moves.

And overall, Goldman is forging ahead with plans to divert more employees out of traditional banking capitals like New York, London, and Hong Kong to lower-cost cities including Salt Lake City, Dallas, and Bangalore, India.

Goldman's relocation efforts are part of a broader strategy laid out at the bank's investor day in January, which is directed at slashing $1.3 billion in costs over the course of three years.

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