In ‘wake-up call’ for industry, BlackRock unveils digital wealth arsenal
Eyeing a burgeoning market for digital advice tools, BlackRock consolidated its growing array of advisor tech business operations into a single group.
"Demand from our clients, and the pace of change, is increasing," COO Rob Goldstein, Salim Ramji, head of U.S. Wealth Advisory, and Frank Cooper, global chief marketing officer, wrote in a memo, which was provided by the firm to Financial Planning.
BlackRock's new global Digital Wealth group "will more closely combine product development with marketing and sales, and heighten focus on user experience, both of which are critical to our growth," the executives wrote.
Goldstein will serve as interim head of the unit, which will consist of four underlying groups: product, which includes robo offering FutureAdvisor; business development; platform and sales tech; and advisor engagement. The latter is led by Devon McConnell, who recently joined BlackRock from Wells Fargo where she oversaw the development of Wells Fargo's robo advisor as well as its mobile and online brokerage offerings.
"This is a wake-up call for all industry players ― asset managers, custodians, tech platforms," says Tim Welsh, founder of consulting firm Nexus Strategy. "BlackRock is drawing a line in the sand and saying we are all in on controlling the advisor desktop, making it easy to implement portfolios and outsource portfolio management. If you are not the advisors' home screen, you will be disintermediated, so time to get to work."
A SHOT ACROSS THE BOW
This is the latest in a series of digital initiatives at BlackRock, which reach thousands of advisors and even greater numbers of clients.
The company, which has $6 trillion in assets, said earlier this year that it would offer its risk analysis tool, Aladdin, to wealth management firms. UBS, which has nearly 7,000 U.S.-based advisors, was the first to partner with BlackRock, inking an agreement in May.
BlackRock also acquired FutureAdvisor, with plans to offer the robo technology to advisors through traditional wealth management firms. Bo Lu continues to head that unit; Kameron Rezai serves as COO.
The asset manager has established partnerships with iCapital Network, a financial technology platform that specializes in alternative investments, and Scalable Capital, European robo advisor.
"The opportunity to drive growth and serve clients through technology has never been greater," Goldstein and the executives wrote in their memo.
To some industry observers, the move brought to mind the disruption wrought by digital technologies on other traditional industries.
"At some point, a digital wealth group will just be redundant as software eats and digests the core business and the folks running digital become the most important players at the firm," says Drew Sievers, CEO of technology provider Trizic.
"Similar to how the internet exposed the weaknesses of Blockbuster, taxi companies, the music business, and brick and mortar retailers, BlackRock’s move should be a shot across the traditional wealth industry’s bow, an industry that was left mostly unaffected by the evolution of the internet. That’s about to change," Sievers added.
McConnell's move to BlackRock represents a loss for Wells Fargo. McConnell, a veteran technology executive in financial services, had been with the bank since May 2014, and was overseeing the launch of the bank's robo advisor. A Wells Fargo spokeswoman confirmed her departure. The firm's robo program is currently in pilot mode, and is set for a national launch later this year, she said.
McConnell joined BlackRock as chief marketing officer, a role she continues to hold in addition to her Digital Wealth group responsibilities.
Other large traditional wealth management firms have launched or are currently piloting digital advice offerings. UBS partnered with digital firm SigFig to develop a robo tool for its advisors.
RBC Wealth Management-U.S. had an agreement with BlackRock's FutureAdvisor, but the project was put on hold earlier this year due to concerns about the Department of Labor's fiduciary rule and the effort needed to get in compliance with the new regulation. A spokeswoman for the 1,800-advisor brokerage firm was unavailable for immediate comment.
BlackRock's technology offers, meanwhile, continue to proliferate and gobble up marketshare.