$10m is the minimum required to be a client.Private banking in GS has not gotten a lot of attention as the bank has kept its doors tightly closed to the press. Nor is Goldman a titan in the field it ranks #7 among wealth-management firms in the US with $188bn AuM, far behind BofA, JP Morgan or even Fidelity.Still Goldman is believed to have one of the wealthiest client bases, long culled from the ranks of the newly rich entrepreneurs who relied on Goldman bringing their companies public or selling to other firms.Tucker York says the firm has ambitions to be the best-in-breed, highest quality advisor to clients. Blankfein says Wealth management is an area where the firm planned to do more and be in more places. This trend is common among large IBs.The biggest impact from the crisis was new business. Growth was slow. Goldman is spending more upfront time with clients before they invest. People wanted to do a longer period of due diligence.But best in breed doesnt necessarily mean biggest. Goldmans goal is to provide clients the intimacy of a boutique with custom tailored solutions for a range of needs investment, tax, philanthropy, estate transfer etc. The firm clearly benefits from the breadth and scale of its global operations with access to hot IPOs and private equity investments. The firm can also help clients get into hedge funds, real estate, structured fixed-income products, and master limited partnerships.The idea is to form lasting bonds with clients and their children and their childrens children.They have real and meaningful relationships with clients. Clients are important to them and they are important to clients.Financial advisors should be comfortable in discussions, not only with clients, but with their lawyers, accountant, and other consiglieres. They should be with Goldman for the long haul.Most clients are in the US and thats where the bulk of advisors are: 400 in 13 locations each catering to the needs of 20-30 clients. An additional 150-200 advisors work abroad. BofA in comparison has nearly 22,000 advisors working out of 850 offices.Goldman has laser-sharp focus on where the money is being made, establishing offices in Silicon Valley and the mid-Atlantic region, and more recently in Washington. Overseas it has set its sight on the new rich in China and Brazil and is expanding in both emerging markets.

Where Goldman really stands out in the wealth management business is in the quality of services its private client staffers provide. Goldman brings a lot of resources to support the relationship manager in solving issues for clients. They have a flotilla of specialists that do everything from serving their clients philanthropic needs and solving real-estate issues to managing the disposition of illiquid assets. Most cant compete on that level.Fees are competitive, on average 0.5% to 1% for clients assets, depending on the extent of risk. Clients can invest outside Goldman but still have to pay a fee to Goldman.The private bank existed since Goldmans early days as a partnership when IB clients wanted their newly minted windfalls to be invested alongside the partners assets. For years the private bank functioned as a broker dealer relying on the firms institutional equity and bond research and trading desks. This changed after the IPO in 1999 when the asset management and private wealth management business merged and the firm took a more active approach to overseeing clients financial affairs.

Meetings with clients occur on the sanctity of the top floor, the 43rd, with its sweeping panoramic views of New York. After all, taking the long view is what Goldman wants its client to do.Only the ultra-high-end client can truly be a long term investor they have more money than their spending needs, their assets are multigenerational, and they are not accountable to anyone.Endowments, foundations, and pension funds cannot find the right measure for portfolio risk at a time when interest rates are at record lows. In many cases, theyve been forced to limit their horizon and their risk, not the case for the ultra-wealthy.Even in the weeks before Lehmans collapse, Goldman were advising clients to gradually add to their equity positions. Goldman has also spent the last 2 years revamping its traditional asset-allocation models, most of which were based on techniques developed 40-50 years ago. The firm shifted its focus from diversification in asset classes to diversification across the broader risks associated with them. The new model includes measures of market, inflation, interest rate, short term credit risk, market wide liquidity conditions, and system exchange rate risk and risks specific to emerging markets. The model includes tools to account for uncertainties in the estimates of expected returns and more precisely guage the risks. Neutral does not mean not owning it. The surest and best way to add value to a portfolio is to be exposed to the economic engine of the U.S., usually through owning US companies.