Sunday, 26 May 2019

BlackRock is going big into the annuity business with Microsoft to create a 21st century defined benefit pension system – RIABiz

The grand plumbing and insurance scheme by the $6T New York manager and the Seattle-based world’s richest firm starts with the firm’s CEOs and addresses their mutual existential threat — Amazon

Brooke’s Note: There is a fine line to draw between a drop-dead, paradigm-shifting move and ill-advised pie-in-the-sky — especially when it’s born of a CEO-to-CEO meeting of two market leaders in two industries. This plan by BlackRock to jump the line to the investor desktop with the help of the desktop itself in Microsoft and give the people what they want — guaranteed income digitally — can not be dismissed. Yes, it seems like a wildly aspiring side project. But yes, too, it may be much more. Microsoft is more than aware of what crosstown rival Amazon might be thinking. BlackRock can now look across the East River to Queens at an Amazon campus, too, and wonder what’ll happen if the bookseller gets its hooks into investors. So here we have a big stick and a big carrot prodding both Satya Nadella and Larry Fink along in a joint-venture that could have implications for RIAs in a bigger sense than anything the robos have done thus far. 

BlackRock has finally showed its hand, and RIAs aren’t in the cards. The giant asset manager’s plan with Microsoft to launch an annuities-based, defined-benefit retirement system could turn advisors into collateral damage in a looming war against Amazon over dominance of the cloud. See: BlackRock buys Envestnet’s love for $123 million to crack its ‘open-architecture’ platform and sets stage for another juicy Envestnet acquisition

“Together with BlackRock we will apply the power of the cloud and AI to introduce new solutions that address this important challenge and reimagine retirement planning,” Microsoft CEO Satya Nadella said in a news release announcing the deal.