How an Ex-Goldman Advisor Serves Wealthy Clients in High-Stakes Transitions
What You Need to Know
A growing number of RIA firms are launching services to support the closely held business transition planning needs of highly wealthy clients.
Serving this market requires special expertise, but it also comes with significant opportunity for firms that get it right.
One team of advisors says the key to serving this market niche is an empathetic approach that doesn’t compromise on tax efficiency.
The owners of successful closely held businesses face tremendous challenges once they begin to plan for their life after work and how they will liquidate what can be a very substantial amount of wealth tied up in their company.
In fact, depending on the level of liquid wealth being generated by a business sale, getting the planning effort right can save tens or even hundreds of millions of dollars in taxes, says Gary Hirschberg, founder of Aaron Wealth Advisors.
As he told ThinkAdvisor in a recent interview, Hirschberg founded his independent firm to be able to excel in this area. After more than 12 years at Goldman Sachs, where he served as a lead advisor for a select group of high-net-worth entrepreneurs and institutions, Hirschberg came to see that independence would be essential in helping clients navigate big liquidity events.
“For most of these people, this liquidity event is going to be biggest single financial transaction they will ever participate in during their lifetime, and depending on the amount of wealth being generated, it can completely change their life and the lives of their families,” Hirschberg says.
According to Hirschberg, the scale of the transaction and the emotional investment involved in selling a closely held business means a holistic advisory approach is essential to ensuring good outcomes. He warns that many business owners turn to the support of narrowly focused investment bankers who are more concerned about getting deals executed quickly than getting deals done efficiently and effectively.
An independent firm like Aaron Wealth Advisors, he argues, can take a fundamentally different approach built around the needs, hopes and expectations of the client. By keeping these factors front and center from the beginning to the end of the transaction process, Hirschberg argues, a significant amount of tax efficiency and intergenerational wealth protection can be achieved.
Breaking Away to Serve Business Owners
After more than 12 years at Goldman Sachs, Hirschberg knew it was time to seriously consider breaking away and starting an independent practice by late 2017 or early 2018.
At the time, Hirschberg recalls, Goldman had recently made the decision to enter the consumer finance sector via the acquisition of GE Capital Bank’s U.S. online deposit platform — a transaction that was intended to enable Goldman to provide an online banking and investment service for large swaths of retail customers.
By 2016, the firm had launched the Marcus platform, initially offering no-fee unsecured personal loans and other services for the mass market. In the years since, though, Goldman has struggled to find its footing in the retail space, and it has drawn substantial scrutiny from investment analysts for persistent losses on this side of the business.
Hirschberg says his concerns at the time were actually more personal and did not really reflect concerns about the potential success or failure of the Marcus venture. Simply put, his role was to serve as a trusted advisor for a select group of high-net-worth entrepreneurs and institutions, as well as very wealthy private investors and families, on all aspects of wealth management, estate planning and investing.
Hirschberg was concerned that his current clients (and prospects) would worry that Goldman’s focus was shifting away from their distinctive needs and requirements, and he also saw an appeal in gaining more freedom to serve this unique client base in a more holistic manner. He made the decision to launch Aaron Wealth Advisors in September 2018.
The firm is now closing in on its fifth anniversary in independent practice, boasting $2.4 billion in assets under advisement across 45 families served by 14 employees.
Most exciting, Hirschberg says, is the recent expansion of the firm’s capabilities in the closely held business transition and investment banking area, thanks to the hiring of his former Goldman Sachs colleague Chris Mason, who now leads Aaron Wealth Advisors’ mergers and acquisitions business line.
Mason is himself well-known for working as the head of the investment banking management group at Saudi Aramco in the run-up to that organization’s initial public offering, an experience he says has already been highly useful in the new role.
