BlackRock's Kapito: Advisers need better risk tools

Broker-dealer firms are not providing advisers with the technology and resources they need to manage risk in their portfolios, Robert S. Kapito, president of BlackRock Inc., told attendees of the Investment Management Consultant Association's conference in New York today.
JAN 20, 2010
Broker-dealer firms are not providing advisers with the technology and resources they need to manage risk in their portfolios, Robert S. Kapito, president of BlackRock Inc., told attendees of the Investment Management Consultant Association's conference in New York today. “I don't think your firms are creating the tools you need to answer clients' questions,” Mr. Kapito said. Advisers need to be able to stress-test their clients' portfolios to see how they would perform under various scenarios, such as if interest rates rise or the real estate market bottoms out, Mr. Kapito said. “Wall Street spends too much money on technology to sell securities and not enough on clients,” he said. “I would like to see all of you have the tools to stress clients' portfolios.” While banks provide this kind of support to advisers, most of the broker-dealers don't, agreed an adviser who attended the conference. “Broker-dealers just give advisers the systems to manage portfolios but not to be proactive,” said the adviser, who declined to identified. BlackRock sells its own risk management and trade-processing tools under the BlackRock Solutions banner, but the products are designed for institutional investors. Clarification: The headline in the story has been updated to clarify that Mr. Kapito was speaking specifically about the technology and resources that broker-dealers provide to their advisers.

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