Larry Fink's plan for winning over advisers

BlackRock big seeks to expand firm deeper into the retail channel

Jun 12, 2011 @ 12:01 am

By Jessica Toonkel

If “big,” “strong” and “mysterious” are the attributes you want for a financial brand, you can't pick a better name than BlackRock Inc.

But chief executive Laurence Fink, who has led the firm to the top spot among the world's asset managers, now wants more light to shine on the global giant and he especially wants Mr. and Mrs. Average Investor to say, “Wow!” instead of, “Huh?” when they see or hear the name.

“Our brand institutionally is pretty good. I think, with financial advisers, it could be better. But with retail clients worldwide, it needs work,” Mr. Fink told InvestmentNews in an exclusive interview last Thursday.

“Advisers are telling us, "We would like your brand to be more known with our clients,'” he said.

BlackRock, which wants to double its retail business (excluding exchange-traded funds) by 2014 and is relying on advisers to achieve its goal, is about to launch a major effort to become better known among individual investors.

In May, public-relations guru Linda G. Robinson stepped down from her seat on the BlackRock board to head global marketing and communications. And the firm is working on a global branding campaign — which will include social media, print ads and possibly television — to attract the attention of retail investors.

“I have some ideas [about the new effort], but I am not ready to share them,” said Mr. Fink, who added that it will include iShares, the ETF giant BlackRock acquired from Barclays PLC in 2009.

“Early on, iShares learned that being connected to BlackRock is good for their business, so we are moving to bring the two names closer,” he said. “We love the iShares name and we are no way reducing our commitment to the brand, but that doesn't mean that we are going to diminish one name versus another. They will remain closely attached.”

Over the past several months, he said, BlackRock has worked to integrate iShares into its culture.

“Every day, it's more integrated, and you will see it in our branding,” he said.

By establishing a cohesive global brand, Mr. Fink also hopes to build a more cohesive culture for BlackRock itself.

“If our 10,000 employees can have a brand that they believe in and that they understand, then our client touch, whether it's in Milan or in Hong Kong, is similar.”

When asked how BlackRock plans to protect its margins against the likes of The Vanguard Group Inc., which is going after its ETF market share aggressively, Mr. Fink said he isn't worried.

“Vanguard is a huge client of ours, and there is room for many competitors,” he said.

Mr. Fink said he isn't concerned about competition in the ETF space.

“Our data show that most ETF players lose money,” he said. “We will see how long the vast majority of ETF players stay in the business.”

BlackRock will lower fees if necessary, as it did with its iShares Gold Trust ETF (IAU) a few months ago, he said.

“We will look at each product and see what is necessary to promote it,” he said.

In addition to branding, Mr. Fink's other major effort is completing the conversion to a single technology platform with the aim of improving communications within the firm.

“We are still nine months away from bringing all the technology together,” he said.

“BlackRock has been somewhat more successful than others at merger integration because we are religious about having one technology platform,” which is crucial in solidifying the firm's culture, Mr. Fink said.

Another factor in the successful integration of Merrill Lynch Investment Management and other acquisitions, he said, is the firm's emphasis on risk management.

Addressing the Morningstar conference in Chicago last Friday, Mr. Fink said that BlackRock will introduce a risk management tool for advisers over the next nine months.

He said his firm is open to an acquisition in the “risk management space.”

Mr. Fink also wants to expand the business globally. While BlackRock is the largest ETF player in South America, for example, the firm would like to build its business there through other products. Mr. Fink said he would consider buying a good asset manager in South America, but outside of that, he has no plans to buy another firm anytime soon.

“I am not looking at any acquisitions in asset management,” he said.

And as he pushes harder into the retail business, Mr. Fink is holding on to the one lesson that he has learned from serving institutions for so long.

“You live and die by performance institutionally,” he said. “Performance counts.”

E-mail Jessica Toonkel at jtoonkel@investmentnews.com.

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