Individual investors are moving their money to financial advisors, private bankers, and other money managers who use BlackRock technology, executives said on Tuesday’s earnings call.
Those advisors are also investing more client money in BlackRock products, though that’s not the end goal for the tech platform, an executive told Business Insider.
BlackRock’s signature investment management platform, Aladdin, is used by over 200 institutional investors. In the last two years, the firm opened it up to wealth managers, including UBS, Morgan Stanley, and HSBC.
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Individual investors are so impressed by BlackRock’s risk evaluation technology that they’re moving their money to the financial advisors who use it, the firm’s executives said on Tuesday’s earnings call.
BlackRock has been selling Aladdin, its signature investment management platform, to institutional investors, insurance companies, and other asset owners for 20 years. It’s a bright spot for the world’s largest asset manager, driving revenue within technology up 11% year-on-year, according to first quarter earnings.
In recent years, the firm broadened the platform to wealth management companies so that financial advisors, private bankers, and other personal money managers could model portfolio risk for their clients. The first such client started using Aladdin Wealth two years ago.
Now, the firm works with nine wealth management companies globally, including Morgan Stanley, UBS, and HSBC, with 30,000 users total. Those companies’ clients range from the ultra-wealthy to the “mass affluent,” individuals with a net worth in the low- to mid-six figures.
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“Aladdin Wealth is helping the financial advisors have the tools to do their job better,” Rob Kapito, the firm’s president, said on Tuesday’s earnings call. “It’s helping us to be part of the infrastructure and the ecosystem to build out better tools and technology for our firms that unfortunately under-invested in technology. At this time, cost is very important – to be able to buy it a good price and have it maintained is, I think, just going to grow for the future.”
Kapito and other executives said that individual investors with accounts at more than one firm liked the technology so much, they’re consolidating their portfolios with financial advisors who use Aladdin Wealth.
“If you are one of the firms that can show your client the risk and reward of their portfolios and then improve it, that is a great advantage, and we are seeing a lot of money move for those who have Aladdin from people that don’t have it,” Kapito said.
That’s a win for financial advisors, many of whom are struggling to add new clients and grow their businesses, according to a McKinsey report last year. The wealth management industry faces “continued stagnation in the number of new client relationships, with no improvement in penetration of ‘next generation’ assets,” the report said.
‘Not about numbers’
BlackRock isn’t measuring success by assets on Aladdin Wealth, said Woo Fung Kwong, the head of …read more
Source:: Insider – Business