BlackRock and Pimco CEOs preach caution to advisers

The worst of the recession may be over, but the financial system still faces risks, Mohamed El-Erian, chief executive of Pacific Investment Management Co., and Laurence Fink, chief executive at BlackRock, warned financial advisers at an industry event.
SEP 14, 2009
The worst of the recession may be over, but the financial system still faces risks, Mohamed El-Erian, chief executive of Pacific Investment Management Co., and Laurence Fink, chief executive at BlackRock, warned financial advisers at an industry event. “I'm more cautious than bearish” about the U.S. approach to its fiscal problems, Mr. Fink told advisers last night at the Schwab Impact conference in San Diego. Mr. El-Erian, echoing Mr. Fink's sentiments, added: “We still don't have a system yet that can deal with large [troubled] financial institutions.” The effectiveness of new regulations will be mixed, they said. “We'll have a bunch of smart regulations and a bunch of dumb regulations,” once the political process plays out, Mr. El-Erian said. Mr. Fink stressed the need for regulators to ensure greater transparency in the capital markets. With a weak outlook for growth in the United States, both Mr. El-Erian and Mr. Fink urged advisers to make sure their clients were invested globally. Advisers also need to “pay attention to liquidity a lot more,” Mr. Fink said. And if clients “think they can retire early, they need to think again.” “Today more than ever for clients, it's important to focus on objectives and [avoid] mistakes [clients] can't afford to make,” Mr. El-Erian said. Advisers should look at clients' future liabilities and plan accordingly, Mr. El-Erian and Mr. Fink said.

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