Goldman Sachs just won contracts to manage $70 billion in retirement assets from Verizon and Lockheed Martin. That's not Goldman's money. That's money belonging to people who spent thirty years showing up to work at a defense contractor and a phone company. Goldman gets paid to move it around.
The competition for these deals is described as fierce. Fierce. BlackRock, Russell Investments, Mercer, all fighting each other to babysit other people's 401ks. Imagine grown men in suits getting fierce about whether they get to charge 50 basis points or 45 basis points to hold someone's retirement account. That's the dream. That's what they went to Wharton for.
Verizon employees are now having their nest eggs managed by the same firm that helped Malaysia's 1MDB fund disappear billions of dollars. Lockheed Martin workers, who build missiles for a living, just handed their retirement over to a bank that needed a $10 billion bailout during the financial crisis. Smart.
The multitrillion-dollar market for retirement assets is apparently where the real action is. Not trading. Not dealmaking. Collecting fees on money that union guys and middle managers contributed over three decades while Goldman's analysts run it through the same index funds you could buy yourself for free on Fidelity.
But sure, let the professionals handle it. They won the fierce competition. They must be good at something other than convincing Verizon's CFO to pick them over BlackRock during a PowerPoint presentation that lasted 45 minutes and contained the phrase "holistic solutions" at least eleven times.
Somewhere right now a Lockheed engineer who's two years from retirement just got an email about exciting changes to his plan administrator. He'll delete it without reading and go back to designing bombs. Goldman will take its cut either way.
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