Blackrock 3Q17 Earnings Call Notes

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Laurence Fink – Chairman and Chief Executive Officer

market environment has improved

“Over the past year, the market environment has improved considerably. We’ve seen greater political stability in Europe. China is continuing to show economic strength, and after a long period of stagnation, we’re seeing consistent growth in Japan.

Overall, the world has become much more resilient. However, large cash balances remain on the sidelines, and many global institutions are invested in assets with return profiles that are not expected to meet their liabilities over time, which is creating significant demand for asset allocation and investment strategies across multiple asset classes.”

Shifts in wealth mgmt

“In the U.S., there are two major shifts converging in wealth management. First, in one of the largest asset movements, fee-based advisory assets are expected to double by 2020 in the shift from brokerage to fee-based accounts. The second digital technologies are disrupting traditional wealth advisory practices, which create competition for client assets and provides leverage for fast-growing advisory practices. These trends have several major implications for our entire industry.

Value for cost is critical to advisers and asset allocation decisions. Advisers are increasingly focused on managing risk and constructing portfolios. Chief Investment Officers are taking more control over asset allocation decisions. So there’s a heightened focus on repeatable systematized practices that can be scaled.

Against this backdrop, wealth managers are concentrating their business with fewer asset managers. Demand is increasingly for a strategic partnerships beyond anyone specific investment product. They’re looking for partnerships with BlackRock that we can have ability to bring tremendous value to our relationships to our clients.”

Scale is a competitive advantage

“And as Gary said, as our scale has increased, it gives us even a greater competitive advantage. And we do believe data, technology, risk management is going to continue to drive hopefully better financial literacy that gets back to my, once again, my whole concept of financial literacy for better outcome investing.”