Goldman wins $70 billion in retirement mandates from Verizon and Lockheed

Goldman Sachs said Thursday it had secured mandates to manage a combined $70 billion of retirement assets for Verizon Communications and Lockheed Martin, adding scale in a market that offers long-term institutional fee revenue. The assignments cover about $30 billion of pension assets for Verizon and Lockheed Martin and $40 billion of Verizon defined-contribution retirement assets, which Goldman said are typically 401(k) plans.

The agreements place Goldman in charge of a larger share of retirement investing for two major U.S. corporations at a time when company benefit plans have become more complex. According to Goldman, large employers are giving more investment responsibility to outside firms with capacity across both public and private markets.

In an outsourced investment mandate, a plan sponsor turns over part of the investment function to an external manager rather than handling all portfolio decisions internally. The outside firm may be responsible for areas such as portfolio construction, asset allocation and implementation, depending on the specific mandate. For companies with large pension and defined-contribution pools, those choices can involve multiple asset classes and long time horizons.

The business is competitive because retirement assets can remain under management for extended periods and generate recurring fees. CNBC reported that Goldman competes in the multitrillion-dollar market with firms including BlackRock, Russell Investments and Mercer.

Goldman has been seeking to expand revenue streams that are less tied to the swings of trading and investment banking. Asset and wealth management revenues are generally viewed by banks and investors as more repeatable than fees from capital markets activity, which can rise or fall sharply with dealmaking and market volatility.

Marc Nachmann, Goldman’s global head of asset and wealth management, said in a statement that large plan sponsors are consolidating work with a single partner that has investment expertise and a broad platform to address their specific requirements.

The new mandates add to Goldman’s outsourced chief investment officer business, which had about $480 billion in assets as of March 31, according to the firm. Goldman’s broader asset and wealth management division oversees roughly $3.7 trillion of investments.

The Verizon and Lockheed Martin wins are among the larger recent announcements in outsourced corporate investing, according to CNBC. They also show how retirement-plan management remains a strategic battleground for large asset managers, as employers weigh whether to retain investment functions internally or use external platforms with wider market access.

This story draws on original reporting from CNBC.