BlackRock, the world’s largest asset manager with over $7 trillion, was not always so interested in private wealth managers. “Ten years ago, we didn’t do a good job with financial advisors,” BlackRock CEO Larry Fink said Thursday at the Morningstar Investment Conference.
Over the last decade, that has changed.
BlackRock has been talking to advisors, understanding their needs, and building tools for them, Fink said. Seven years ago, the company made Aladdin, its software to test how portfolios perform under various theoretical circumstances, available to advisors. It continues to add practice management resources and more to its online Advisor Center. And BlackRock is building model portfolios — “the next big opportunity for asset managers” — and expanding their availability.
Out of BlackRock’s more than 16,000 employees, “thousands” are dedicated to Aladdin. A relatively small number of RIAs use it, but the ones leveraging Aladdin to stress test portfolios are capturing more wallet share of existing clients, Fink said. The risk management tool helps advisors show clients (and prospective ones) how on or off track they are to achieving their long-term goals, he added.
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Along with offering more model portfolios, BlackRock is doing other things to improve advisors’ investment management, such as broadening how they think about exchange-traded funds. “We’re spending a great deal of time helping advisors understand how to use ETFs as an active trading instrument not just a passive instrument,” Fink said.
But BlackRock has been outspoken about its intention to deepen its relationship with advisors for a long time. Specifically, to wealth managers, the most noteworthy part of Fink’s fireside chat with Haywood Kelly, head of Research at Morningstar, was the executive’s declaration that it was a friend, not foe, of advisors. With BlackRock’s help, advisors “are the ones shining with their clients,” Fink said.
"Our job is to make those financial advisors better at what they do and we are not a threat to go directly to their clients...We do not go to the customers like some other asset managers do.”
On BlackRock, Fink said the asset manager has performed well under the circumstances forced upon it by the Covid-19 pandemic but flagged one concern in particular.
“Probably the most difficult issue for all of us is retention of a culture. Cultures were not meant to be in a remote fashion and culture is what binds and unifies us an organization.”
Fink worries that creative ideas aren’t as free-flowing during video conferences, at least compared to the office hallway or watercooler. He wondered out loud: Will the 400 new analysts BlackRock hired — who have never been to the office — have the same experience working there as analysts of the past?
However, that doesn’t mean all BlackRock employees will someday be returning to a daily commute. Not all positions benefit equally from being in the office, Fink said.
“I believe one of the great humanistic discoveries from Covid is we can work remotely. I don’t believe that BlackRock will be ever 100% back in-office.”
Michael Thrasher (@Mike_Thrasher) is a reporter at RIA Intel based in New York City.