While retirement income products struggle to gain significant traction in DC plans, BlackRock has announced 10 indices to help people approaching retirement calculate how much their savings will generate in income when they turn 65. Five bond funds are linked to these indices that adjust for interest rate and inflation changes as well as lifespan.
Though BlackRock is one of the world’s largest money managers, with $3.96 trillion AUM, only 11% are held in products purchased by retail investors — though 33% of their asset-based fees are generated by this sector. They are ranked sixth among 401(k) mutual fund providers, and have just a 2% market share in open-ended mutual funds — small compared with American Funds’ 12% share and Fidelity at 11%.
Tackling retirement income is an ambitious goal, but BlackRock is one firm with the brand and clout that might be able to be successful.
Starting with their purchase of Merrill Lynch’s money management business almost 10 years ago, BlackRock has set out to move from an almost strictly institutional brand to a more retail oriented one. The purchase of Barclays and its iShares division helped, as did the consolidation of the DC business under one group led by Chip Castille. They have become more aggressive in the DCIO market, expanding their wholesaler footprint, and have recently become a NAPA Firm Partner. Time will tell, but it appears that BlackRock has the will and the resources to increase share in both the retail and retirement markets.
