BlackRock Inc. is launching wrap programs for retail advisers. Over the next few months, the firm is hiring eight people to make up a new team dedicated to working with advisory firms to develop customized wrap programs, said Frank Porcelli, managing director and head of BlackRock's U.S. retail business. “We have been offering these services to sovereign-debt funds for years and we realize that advisers have the same problems they want to solve,” Mr. Porcelli said.
BlackRock already has created customized managed money portfolios for adviser firms that have approached it, Mr. Porcelli said. The asset manager, for example, has developed an exchange-traded-fund wrap program for LPL Financial, he said.
But
BlackRock won't limit its offerings to large broker-dealers — the firm will also go out into the field and see what independent financial advisers want, Mr. Porcelli said. “The independents don't have the benefit of having their own economist or their own independent portfolio-outsourcing guy to put together diversified ETF products,” he said. “We can do that.”
That doesn't mean that
BlackRock is going to develop a customized wrap program for each individual adviser, Mr. Porcelli said. “We are not building 8,000 different portfolios,” he said. “But we will find out what the issues are and create solutions around them.”
While
BlackRock will be offering model portfolios with ETFs, it doesn't want to be perceived to be competing with advisers who already do so, Mr. Porcelli said. “There are a number of advisers who find that building models is difficult and they would rather have someone like
BlackRock do it,” he said.
By getting into the retail wrap space,
BlackRock is pitting itself against the likes of third-party wrap providers, like Brinker Capital. But very few asset managers have the capability to do something like this, said Patrick Newcomb, a senior analyst at Cerulli Associates Inc. “It makes sense for
BlackRock to do this because they have the products and the investment expertise to pull this off,” Mr. Newcomb said. “Smaller asset managers don't have the capabilities to do this.”
