Goldman Sachs and Vanguard Group

Goldman Sachs and Vanguard Group

The two companies are Goldman Sachs and The Vanguard Group. Goldman Sachs is among the U.S. international investment banks and the financial services firms, which is headquartered in the City of New York. The company offers services to its clients, which include offering customers advice regarding areas to invest their finances, asset management, securities trading, securities underwriting, and prime brokerage. Goldman Sachs is one of the largest investment banking companies in the World, mainly due to the value of its assets that it controls $1 trillion (Clark, 2009).

Conversely, The Vanguard Group is an American registered company under the investment advisor and is headquartered in Malvern, Pennsylvania. Currently, the company controls over $5.3 trillion (The Vanguard Group, 2020). Thus, this article seeks to compare and contrast these two financial institutions, which are Goldman Sachs and The Vanguard Group. It will also discuss the history of these institutions and outline the services that they provide in the financial market. The article will then explain why these two companies differ by considering the markets where they exist, their customers, and their regulations. The conclusion part will then give the examples and the reasoning for their existence and the preview of the way the World maybe when they do not exist.

Both Goldman Sachs and The Vanguard Group share a lot in common in terms of their operations. They were both founded within the U.S., making them great contributors to the U.S. economy. They both operate in the U.S. and international economics. These companies also offer financial services to various customers, including individuals and institutions (Güven, 2018). Multiple regulatory bodies are also regulating Their operations in the market. However, these two firms have lots of distinctions, as discussed below.

These two companies, Goldman Sachs and The Vanguard Group, differ in terms of their history. Marcus Goldman was the founder of Goldman Sachs, and it has been the respected player in the World’s finance for over 100 years. It has aggressively moved into the asset management arena while offering something of the cautious follower in the age of the daring leveraged buyouts and the corporate raids, and it has become 3rd largest investment company. It relies on the trading revenue more than other banks on Wall Street, and its trading profits are at the highest levels when markets soar (Güven, 2018). The company’s business involves cyclical feel that makes it have an unsustainable revenue stream.

Conversely, The Vanguard Group is among the successful mutual fund firms in America as it manages over $520 billion worth of the investors’ money. This firm offers the whole family of the mutual funds from the real estate to the bond funds. The Vanguard 500 Index Fund, which is one of the stock portfolios, tracks broad market and the largest of 103 domestic funds as well as the largest in the U.S. mutual funds that this company manages. The Vanguard’s mutual funds family maintains the lowest ratio of expenses based on the management cost relation for the fund to amount of the asset funds within the industry of the financial services.

The difference between these two companies comes in the distinction of the products that they provide in the market. Goldman Sachs offers banking services and investment options. The services that Goldman Sachs provides are Investment Banking, which entails managing elements companies through aspects such as mergers and acquisitions, offering to finance to companies, and funding specific industries (Clark, 2009). The other category is consumer and investment management, which refers to the control of individuals’ finances. The company offers consumer banking, which provides traditional banking services such as taking deposits, giving loans, and financial management advice. The other function is asset management, and the company offers investment products for clients, and also handles private wealth management, which entails financial counseling. The company also engages in securities, and they offer clients detailed information regarding investment options.

On the contrary, The Vanguard Group provides advisory services for personal and institutional investment products, mutual funds, brokerage services, asset management services, sub-advisory services, and retirement funds. This company specializes in retirement funds, and the specialization has made it one of the largest companies that control the retirement hedge funds. The other critical service that this company offers is Exchange Traded Funds (ETFs) and is the second-largest company in the World to provide this service.

These two companies also differ in terms of the clients that they serve based on their products. Goldman Sachs clients are the general population, as it has the traditional bank that offers services such as ATM services. The company also provides credit card services and other banking services. Apart from Muppets, this company has four categories of clients, which include the wise clients that are composed of significant hedge funds along with the institutional investors consisting of tons of the resources, especially the smart employees who were working for the Wall Street banks. It also deals with wicked clients who push the envelope and attempts to game Goldman, such as Raj Rajaratnam. Goldman Sachs also deals with the simple clients composed of large asset managers and the pension funds that are big with outdated systems. It also deals with the simple trusting clients who have lots of money and confidence in its traders.

The Vanguard Groups, on the other hand, deals with four major categories of clients that include the individuals, institutional investors, financial advisors, and global investors. It handles the individuals who are saving for the retirement, education of their children, home, and other saving purposes. The company assists individual investors with such saving goals to reach them through investing directly or through the employer-sponsored plans. It also deals with the institutional investors in matters of asset management, the retirement plan, as well as advisory services. This company has the institutional experience and the expertise capable of meeting the needs of these classes of investors. The institutional clients can be confident with the company’s unique client-first focus since it is aligned with them and their investment interests. Additionally, the financial advisors are another category of the Vanguard Group clients since they rely on this company to assist them in meeting their objectives successfully and even develop their businesses.

The Vanguard Group gives such clients the confidence and skills required since individuals and the families set their future financial obligations in their hands, and such group of clients also wants to continue in earning the trust of the individuals and families by providing them with the high-quality, cost-effective products and the services. The Vanguard Group also handles the global investors as one of the classes of its customers whom they advise that it shares the commitment of such investors to their goals irrespective of where they invest. This company has low costs, stability, as well as client-first focus in assisting such investors in navigating the entire World of the investments for them to achieve their goals.

These two companies also differ in terms of the markets where they operate. Goldman Sachs has its operations in thirty nations, which include Mexico, Argentina, and Brazil. It also launched the new offices in Colombia and Chile in 2013, where it was seeking to increase its advisory and asset management services in those regions. The company also maintains its operations in the U.S. despite going overseas, whereby it deals with financing, banks, bonds, investment, commodities, Mergers & Acquisitions, financial instruments, financial services, business results, and investment banking. Moreover, it has operations outside the United States, and it offers its services in various international destinations. It leads to investment banking, investment management, and securities.

On the other hand, the Vanguard Group offers its services to clients who are seeking investment decisions. The corporate headquarters of Vanguard Group is in Malvern, Pennsylvania that is a suburb of Philadelphia. The satellite offices of this company are in Charlotte in North Carolina and Scottsdale in Arizona. Vanguard Group has grown into the World’s largest and respected investment management firm. The company also has a global presence with offices in the US, Asia, Australia, and Europe. The Vanguard in Australia has been assisting the investors in meeting long-term financial goals with low-cost indexing solutions.

These companies, Goldman Sachs and The Vanguard Group, differ in terms of the way they are being regulated in their business operations. Goldman Sachs is governed by the Board of Governors of the Federal Reserve Board, which is the body that regulates banks in the United States. It is also regulated by the FDIC and the New York State Department of Financial Services. On the other hand, The Vanguard Group is governed by the U.S. Commodity Futures Trading Commission (“CFTC”), the U.S. Securities and Exchange Commission (“SEC”), and the Financial Industry Regulatory Authority (“FINRA”). The CFTC regulates commodity futures and options market in the United States. At the same time, the FINRA body ensures that companies that offer brokerage services are registered and abide by the rules. The SEC is tasked with the registration and regulation of investment companies, investment advisers, and brokers.

If a company like Goldman Sachs disappears, it will have a significant impact on the entire economy and would lead to a great extent impact social development. This financial institution is the section of the nation’s and the World’s economy that has been devoted to holding the business assets for other customers. They also invest the financial assets provided to them as the leverage for creating more wealth and regulation of the activities performed by the government agencies (Güven, 2018). Moreover, the assets held for the clients will be run by the devastating banks that may destroy the entire industry since the banks will not maintain the minimum requirement of 8% of the book values as the actual money. From the company’s perspective, if it has one building, or ten buildings, machinery, and equipment, which are used in the calculation of depreciation and amortization every year. Without Goldman Sachs, the company’s demand for financial staff will become huge.

Moreover, for investors, it would be difficult for the company’s real assets to become intuitive figures, and it becomes difficult for investors to understand the tangible assets of a company. They can’t get a hands-on understanding of every company that they intend to invest in. It will also be a disaster for the entire market. If Goldman Sachs were to collapse, the sale of government bonds and the underwriting of securities transactions would be significantly affected.

If a company like the Vanguard Group disappeared, it would be a devastating blow for the financial market. First of all, for small and medium enterprises, their founders may not have a business background. The companies may also face some problems with the internal structure of the company. If there is no consulting company, they will struggle to grow their companies and maximize profits (Watson, 2016). For investors, if there is no consulting company to provide public information on the industry and each company, they would not be able to predict the future development reasonably and therefore, would not understand which company to invest in. For the entire market, would immensely damage to the company was to collapse. For example, The Vanguard Group is the largest company in terms of offering retirement investment. Therefore without it, people seeking retirement investment options would struggle as they would not have an avenue to invest their funds.

References

Clark, A. (2009). Goldman Sachs pays off the bailout bill. Retrieved from https://www.theguardian.com/business/2009/jul/23/goldman-sachs-repays-government

Güven, A. B. (2018). Whither the post-Washington Consensus? International financial institutions and development policy before and after the crisis. Review of International Political Economy, 25(3), 392-417.

The Vanguard Group. (2020). Mutual funds, IRAs, ETFs, 401(k) plans, and mere Vanguard. Retrieved from https://investor.vanguard.com/corporate-portal/

Watson, T. (2016). The World’s 500 largest asset managers. New York: Wills Towers.