Introduction
In this article I want to guide you through the online savings account known as Marcus.
This is the brand name of a savings account set up by Goldman Sachs, one of the best-known names in investment banking in the world.
Anyone who is considering a stable investment vehicle that operates in much the same way that a high street bank would should at least consider what Marcus has to offer.
After all, there is a big name behind the service and while the world economy may struggle, some of the biggest investment banks in the world may have the know-how to see better returns than the average banking provider.
After initially posting this review earlier in 2020, I have decided to update and enlarge the article.
I think that it is important to keep up to date with a changing investment environment – including savings accounts like Marcus – so I want to bring you all the latest information to help you to make the best-informed decisions with your assets.
Read on to find out what Marcus by Goldman Sachs is all about, why it is slightly different from other bank accounts you might choose to open and what is conventional about it.
For those that prefer visual content, I have summarised the article below on my YouTube channel:
Marcus by Goldman Sachs – a brief overview
Although the Goldman Sachs Group is an American multinational investment bank it also runs a number of consumer financial services from its headquarters in New York City.
Goldman Sachs was originally founded back in 1869 which means that it has an almost unrivalled reputation for financial success over the last 150 years or so.
The investment bank holds in the region of $1.85 trillion of assets under management (AUM) with total equity that was reported in 2019 that stands at the $90 billion mark.
Those are some seriously big figures, of course. That said, anyone who believes that they are entering into the investment banking arm of Goldman Sachs directly by opening a Marcus savings account should know that this is not the case.
Like other businesses run by Goldman Sachs, such as Goldman Sachs Capital Partners and Ayco, Marcus is officially a subsidiary of the investment bank.
This means that the offering is very different to the main part of the bank. It is, in short, what is known as a retail bank offering, just as you might find in nearly every town and city centre around the world.
The one difference is that Marcus by Goldman Sachs is an online financial service only. It was first launched in 2018. Back then, it had a strong rate of interest for UK savers set at 1.5 per cent, but that is no longer the case.
Finally, before I go on to discuss how this savings account works and who might benefit from it, it is worth mentioning why it is called Marcus in the first place.
The brand name simply comes from the German-born American financier who set up Goldman Sachs in the first place. He was, of course, Marcus Goldman, which is why the account bears his name.
Which institutions regulate Marcus by Goldman Sachs?
Marcus is an account that can be opened in both US dollars and British pounds. If you opt for the American version, then the United States’ regulatory regime will come into play.
All loans and savings deposits provided under the Marcus brand are offered by Goldman Sachs Bank USA. This bank is regulated by the Federal Deposit Insurance Corporation (FDIC) so investors should be reassured that their savings are properly managed.
The FDIC scheme means that sums of up to $250,000 are protected before investors need to look at other ways of protecting themselves.
Equally, British investors who choose to take out a Marcus account in sterling will have their money managed for them at Goldman Sach’s UK headquarter at 25 Shoe Lane in the city of London.
If this option is taken, then the UK’s Financial Services Compensation Scheme (FSCS) will come into play.
The FSCS scheme provides savers with access to funds should their investment be mismanaged in some way. However, it is important to note that the FSCS will only protect savers – whether they are holders of a Marcus account or not – for an upward limit of £85,000.
UK holders of Marcus accounts are further protected under Goldman Sach’s authorisation to operate as a bank by the Prudential Regulation Authority. It is also overseen and regulated by the Financial Conduct Authority (FCA).
Who is Marcus by Goldman Sachs suited to?
Although Marcus by Goldman Sachs is available to borrowers as well as savers, it has gained most of its notoriety in the financial marketplace as somewhere to invest.
Indeed, in June, the UK wing of the company took the unprecedented decision to suspend new account applications due to the popularity of the financial service among British savers.
Although the move was just a temporary one, it showed just how popular the account had become because of its ease of use and its rate of return, particularly as many people wanted to switch to an online means of saving rather than using an in-person service at a conventional bank.
In other words, Marcus is a savings account that will suit people who want convenience and who are reasonably tech-savvy.
If you are the sort of saver who does not like to use online services to manage your money and prefers to see a human teller in a high street bank, then Marcus may not be for you after all.
That said, the competitive rates of return on offer plus the reasonably easy online tools you get to manage your account mean that nearly everyone will be at home once they have made an initial deposit into their Marcus account.
After all, everything is simply laid out for you whether you access your account in a browser or use Goldman Sach’s purpose-built app.
The company says that it has gone out of its way to avoid technical language and financial jargon. In fairness to Goldman Sachs, I’d say that Marcus does achieve this level of simplicity.
Therefore, my view is that Marcus by Goldman Sachs is likely to suit a wide variety of potential clients so long as they are willing to tie their money up for a minimum of a year.
The flexibility of the software and the simplicity of the account means that for some people, this could be the only savings account they will ever need.
However, there are other options worth exploring before putting your nest egg into this particular savings account, especially if you have more to invest than the insured sums run by either the FDIC or the FSCS.
Of course, I’d be more than happy to offer personalised advice about how to invest in Marcus by Goldman Sachs, especially if you have investments tied up in other sorts of financial products already. Hit the chat button on my website or send me an email to get the ball rolling.
Marcus by Goldman Sachs – the plus points
Okay, you should have got to grips with the basics of what Marcus by Goldman Sachs is, what protections you can expect and the sort of savers it might suit. Now let’s take a look at the benefits of opening an account in more detail:
- Marcus by Goldman Sachs has offered some of the best certificate of deposit (CD) rates since it first got going. If you don’t know what a CD rate is, then it is simply the interest you will earn on your savings in the course of an agreed period.
- There are a number of different CD rate term lengths you can apply for with a Marcus account, the longest being six years. As such, there is something to suit most types of investor.
- Opening an account in the US with Goldman Sachs today would yield an interest rate of 0.6 per cent per annum which is significantly higher than competitor retail accounts offered by investment banks, such as Chase, for example. Nevertheless, that’s down from 1.05 per cent when I first reviewed the account, a reflection of the changing market conditions.
- A Marcus account in the UK will currently yield an annual equivalent rate of return that stands at 0.7 per cent. This is a one-year fixed-term saver rate so you need to commit for 12 months to enjoy that rate of return, only open to existing customers.
- 24/7 access to your account is possible online or with the Marcus app.
- No fees are charged to manage the account on your behalf by Goldman Sachs.
- There is no deposit minimum with Marcus by Goldman Sachs. You can open an account for as little as $1 in the US or £1 in the UK.
- Investors are able to transfer to and from their Marcus account with sums of up to $100,000 a day. This is a high level of access that will suit wealthier investors who want such flexibility.
- The The US-based call centre is open seven days per week during the day to handle phone enquiries.
- Automated transfers are possible with a Marcus account. Simply set up a standing order to get you into the habit of saving on a regular basis.
- UK savers can add up to £250,000 to their Marcus account within a single 14-day period. Unlike US investors, the number of individual transactions is not limited, merely the total amount you can deposit within that time period.
- The interest rates in the UK are fixed which means you can enjoy certainty. However, should the Bank of England base rate go up, then you won’t benefit from it as a saver. Of course, this looks unlikely given the current economic climate.
Marcus by Goldman Sachs – the downsides
Of course, there are some negatives associated with any investment account. This is true with Marcus by Goldman Sach but, in fairness, not everyone will view them all as downsides – it often depends on your point of view and priorities as a saver.
- The one-year CD rate offered for accounts opened and run in sterling is lower than the US counterpart. This is currently set at 0.7 per cent for the annual equivalent rate.
- No debit card or chequebook is offered with a Marcus account. It is primarily designed as a savings account but this limitation will undoubtedly put some people off.
- Interest is only paid after it has been invested for the full term and tax is then applicable.
- The one-year fixed rate saver package offered by Goldman Sachs UK means that no withdrawals are possible. You can close your account, however, but you will have to pay a fee for so doing. This charge is set to the equivalent 90 days of interest.
- UK-based account holders can also take advantage of a call centre to help them. The good news is that this is based in the UK but the bad news is that it is only open on weekdays and not at weekends or bank holidays.
- Transferring funds to and from your Marcus account can only be conducted via another bank account. In other words, you cannot load it with funds from a credit or debit card. Although this won’t be a problem for many savers, it does mean that you need to maintain at least two bank accounts rather than just one.
- Six transfers to your Marcus account are possible per month in the US. If you have a salaried income, then this may be more than you will ever need but for people who have income that is more sporadic, this limitation could be problematic.
- CDs automatically renew in a Marcus account. For longer-term investors, this will not be an issue but if you want to take your funds out once the current term has expired, then you should know that you only get a 10-day period to do so. Withdrawing funds outside of this window could mean you receive a fee because you are deemed to have made a withdrawal within the current CD period.
- The shortest CD on offer with a Marcus account in the US is just six months but you will need to deposit a minimum of $500 to benefit from it.
- They are trading on the Goldman Sachs brand name
Should you invest with Marcus by Goldman Sachs?
There are so many plus points to Marcus by Goldman Sachs – the CD rates, the convenience and the big name – that make it attractive.
The fact that investors in both the UK and the US will be offered the same sorts of protections from the appropriate regulatory bodies is also a good thing.
That said, the level of customer service some account holders have reported – especially when they have emailed enquiries in – seems to leave something to be desired.
Added to that, you won’t get the ability to deposit sums rapidly using a cheque payment, unless you are willing to post one in and wait for days on end for it to clear, that is.
My assessment is that Marcus by Goldman Sachs will suit people who want to tie some of their liquid assets up into a financial product they know will offer a return, albeit a modest one, in the next few years.
If you look at the market for this sort of savings account at the moment, then Marcus by Goldman Sachs is among the best available. How that changes as the market alters is anybody’s guess so I would advise against tying all of your money up.
Security and Marcus by Goldman Sachs
I know that a lot of savers worry about online security when using an app or a browser-based account like Marcus.
The thing is that you are right to take these issues seriously because phishing scams and identity thefts are common when people’s savings are at stake.
In the case of Marcus, the security measures are strong, however. The security of your personal and account information is protected in a number of ways.
These include multi-factor authentication systems to prove who you are, SSL encryption to prevent people prying on your activity and other safeguards, such as the use of firewalls to protect their servers.
Customers who access Marcus via a web browser should know that account information can be captured if the browser being used does not have the right level of encryption.
Thankfully, Marcus has been optimised for all the common browsers – Google Chrome, Microsoft’s Internet Explorer, Apple’s Safari and Mozilla Firefox among them.
If you use one of those, then you and your information should be safe. If not, I’d recommend switching browser or using another savings account.
Better still, use the app which does not suffer from these potential vulnerabilities.
In the end, however, how secure the account is will come down to the strength of the password you set for it and that’s something that is outside of Goldman Sach’s direct control, of course.
September 2020 Update For Savers Considering Opening a Marcus Account
The first news that is worth relaying to UK-based investors – and anyone else who wants to open a Marcus account in sterling – is that it is no longer possible to do so.
I mentioned earlier that Goldman Sachs had temporarily closed new applications for Marcus in the UK for a period in June. After reopening applications, the bank has decided to close them once more.
Again, I think this is a fair indication of just how popular the account had become rather than representing an inherent problem with it.
After all,the bank would not have needed to close new applications if they had not been such a success.
In essence, the problem comes down to the rules that are imposed on banks offering savings accounts. Because so many people were looking for a good rate of return in the UK in 2020, so the value of their total deposits grew beyond their initial expectations.
The rules laid out by the Financial Conduct Authority affecting Marcus altered once these deposits went beyond a certain threshold.
Therefore, the online savings account was suspended for new customers because the regulatory framework in the UK changed the way the bank needed to operate.
Goldman Sachs said that it needed to make this move to ensure that future growth was ‘manageable’.
I do not know when this suspension for new customers will come to an end but it will be worth looking at the state Marcus is in when the bank makes this decision. No doubt there will be some alterations to the rates of return and so on. Only time will tell.
In the meantime, it is important to note that nothing has changed for existing customers with a Marcus account. You can carry on making deposits and withdrawals without any issues.
Indeed, the aforementioned one-year fixed rate account that will appeal to many people looking for a non-variable rate of return remains available so long as you are an existing customer.
Goldman Sachs has said that Marcus will return in its sterling form and it will have a revamped user interface, so that is worth looking forward to.
In the United States, none of these issues that have impacted on would-be UK account holders apply.
It is still possible to open a new Marcus account if you have dollars and are domiciled in the US.
Indeed, Marcus has gone on to win some recent banking awards in the United States when it has been put up in the savings account category.
This is hardly a surprise when you take into account how much better its annual percentage yield (APY) is compared to other savings accounts.
Although you have to take into account deposit levels, local variations and promotions, the basic thing to know is that Marcus has an APY that is over three times the national average in the US.
Conclusion
If you are saving for something specific or have a range of investments already, then it will be in your interests to seek tailored financial advice before opening a Marcus account.
Don’t hesitate to reach out to me to see how I can help you or to find out more about the other investment options available to you right now.
Don’t hesitate to reach out to me to see how I can help you or to find out more about the other investment options available to you right now.
Further Reading
1. Godwin Capital Review explores innovative financial solutions, offering insights similar to those discussed in the MARCUS BY GOLDMAN SACHS 2022 REVIEW.
2. What are the best savings accounts in the UK?
