Key Takeaways:
Goldman Sachs won $70 billion in retirement asset management mandates from Verizon Communications and Lockheed Martin, one of the largest outsourced chief investment officer deal announcements in recent years.
"Large plan sponsors are consolidating responsibilities with one partner with the investment expertise and depth of platform to manage their bespoke needs," Marc Nachmann, global head of asset and wealth management at Goldman Sachs, said in a statement.
The mandates include about $30 billion in pension assets for Verizon and Lockheed Martin and $40 billion in Verizon defined-contribution retirement assets, typically 401(k) plans, according to Goldman. The firm's OCIO business had about $480 billion in assets as of March 31, while its broader asset and wealth management division oversees roughly $3.7 trillion.
The deals show how America's largest employers are increasingly handing retirement asset management to outside firms as portfolios grow more complex and require expertise across public and private markets. Competition in the multi-trillion-dollar market for retirement assets is fierce among managers including Goldman, BlackRock, Russell Investments and Mercer, because the long-term institutional mandates generate steady fee revenue.
The Verizon and Lockheed Martin wins come as the Trump administration pushes to loosen rules governing 401(k) investments, potentially opening the door for more alternative assets like private equity and cryptocurrency in retirement plans. The Labor Department has proposed a rule that would make it harder for workers to sue employers over 401(k) investment choices, giving companies more leeway to include complex, higher-fee options.
Goldman has been preparing for this shift. Major firms that manage private investments, including BlackRock, Apollo and Goldman Sachs, have announced funds for 401(k) plans that include private assets, according to a ProPublica report. Empower, the second-largest recordkeeper, has been expanding alternative options through managed accounts, with about 1,000 companies agreeing to offer these investments to workers.
For Goldman, growing its asset management business helps increase its share of revenues seen as stable and recurring, unlike the more volatile trading and investment banking operations. The $70 billion in new mandates represents roughly 15 percent of the firm's OCIO assets under management as of March 31.
The broader trend of outsourcing corporate retirement management has accelerated as plan sponsors seek specialized expertise. BlackRock, Russell Investments and Mercer compete aggressively for these mandates, which provide long-term fee revenue streams. The $10 trillion in America's 401(k) plans represents a significant growth opportunity for asset managers.
This article is for informational purposes only and does not constitute investment advice.
