The world's largest asset manager hopes to sell more investment products to Main Street with one of the oldest strategies in business: the freebie.
BlackRock Inc. is coaxing financial advisers to upload their client holdings to a complimentary BlackRock website that tests how those portfolios perform under different economic scenarios and compare them to peers. About 20,000 financial advisers have used the “BlackRock Advisor Center” tool since October.
Advisers receive free access to a website powered by a version of BlackRock's technology called Aladdin that big Wall Street firms and insurers use to assess risks. BlackRock's hope is that financial advisers in turn will buy more BlackRock funds. A spokeswoman said the technology “helps advisers manage their practices in a more efficient and scalable way.”
The New York money manager sells a more extensive version of its Aladdin technology to brokerages that have larger networks of financial advisers, such as UBS Group AG and Morgan Stanley. That service is meant to give those companies a view of the risks within client portfolios across their branches.
While some other asset management firms also offer free tools, BlackRock is unique for its sheer size, its vast lineup of investment products and its ability to continually gather new investor assets.
BlackRock is under pressure to find new ways into wealth management because of changing regulations in the asset-management industry as well as a move by price-conscious investors to push down the cost of investing.
A new Labor Department rule that went into effect in April 2016 required brokers who work on retirement accounts to put their customers' interests ahead of their own. That has meant fewer funds make it into brokers' lineup of products, a danger for firms like BlackRock that rely on financial advisers to sell their products to everyday investors.
The Labor Department rule was thrown out by a U.S. circuit court in March, and the Securities and Exchange Commission is working on its own version of a best-interest rule that would apply to brokers.
An initial goal of the Advisor Center was to help turn BlackRock into a hub of data on wealth management akin to what Facebook is for information on relationships and Amazon.com Inc. is for commerce intelligence, people familiar with the matter said.
Gathering data on wealth management portfolios would give the asset manager an indicator of potential fund-buying behavior and of where it might be able to sell more of its funds in addition to improving relationships with financial advisers.
Financial advisers can use BlackRock's free Advisor Center website to test how a portfolio would do if, say, oil prices rise 35% or stock-market volatility increases by 20%. An adviser researching a certain type of fund would initially be shown BlackRock's version of it.
Typing in the ticker for a rival fund from Vanguard Group or Charles Schwab that tracks the performance of the S&P 500, for example, results in a link to the landing page for the iShares Core S&P 500 ETF, a BlackRock product, according to financial advisers that have used the free version of the technology.
A recent update to the site allows financial advisers to compare a customer's portfolio to about 7,000 other adviser portfolios, according to documents reviewed by The Wall Street Journal.
|Under the Hood|
Changing regulations have driven a surge in fee-based accounts, spurring some asset managers to help financial advisers stress test those client portfolios
BY SARAH KROUSE