BlackRock chairman Larry Fink has outlined how the world’s largest asset manager plans to navigate the year ahead after a volatile 2018 with intentions to dominate China and grow the company’s digital investment platform.
Uncertainty is rife in the current landscape, with shaky global politics giving way to rising populism, trade disputes starting and driving fear about the global economy, Brexit costing a number of global businesses, and the US having its longest government shutdown in history.
Globally, people are wary of finance services, just as Australians have been and still are in the aftermath of the royal commission.
It demands change from the industry. Mr Fink believes the way forward involves a better understanding of consumers and their goals, while retaining a focus on the long term.
“Against this backdrop of financial and geopolitical uncertainty, I believe that people are increasingly frustrated with the culture of investing and the structure of financial markets,” Mr Fink said.
“Today, the traditional investing frameworks are insufficient to meet the needs of most investors, whether individuals saving for retirement or pension funds seeking to close their asset-liability gaps.
“Clients today are increasingly uncertain about where their returns are going to come from.”
Clients want asset managers who have a better understanding of their goals their constraints, Mr Fink added, and they want tailored portfolios to target specific outcomes.
BlackRock’s response has been to target high-growth markets, with an aim to become one of China’s largest global asset managers.
“[China] is one of the largest future growth opportunities for BlackRock, we are focused on building an onshore presence,” Mr Fink said.
“Asia is expected to drive 50 per cent of the organic AUM growth in the asset management industry over the next five years, largely driven by China, where there is increasing demand for more diversified and long-term investment solutions.”
In Australia, the market recently speculated that the BlackRock had been running a ruler over AMP Capital as the bank was already working to finalise the sale of its life business to Resolution Life.
Earlier this year, the US-based asset manager acquired a 12.5 per cent stake in Perpetual.
BlackRock has also showed a strong appetite for Aussie real estate. In 2013, it bought the former Macquarie Global Property Advisers business.
In the past year, BlackRock has also sought growth in other regions, having appointed its first head of Brazil to oversee its long-term strategy in the country and acquiring a Mexican asset manager.
Fintech is also a target. The group sapped up investment software provider eFront for $1.3 billion to grow its alternatives and multi-assets capabilities. Last year the firm generated a new high for technology services revenue, at $785 million.
BlackRock has $9 trillion of assets under management. In 2018, it generated $124 billion of net inflows with its global investment platform and $168 billion of net inflows into iShares ETFs.
The company now has around 14,000 staff in more than 100 countries.
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].