Why the CEO of BlackRock says that the retirement crisis is getting worse

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Earnings have risen in 2020, with the world’s largest asset manager benefiting from increased savings and investment as the future US retirement crisis worsens, said BlackRock CEO Larry Fink.

The three reasons are low interest rates, low savings rates and more part-time and self-employed employees. Partly because of the low rate of US household savings, Fink said he believes the US has demanded more fiscal stimulus than Europe.

In the first quarter of 2020, the savings rate in Europe was about 15.6%, compared to 8.3% in the US in March.

“I am petrified by the silent retirement crisis,” Fink said in an interview Barron’s. “The big problem is a high percentage [of people in U.S.] in part-time work or self-employment without funding for retirement. “While those who work for larger companies have savings in retirement, many companies do not adequately teach financial literacy.

“The reason the US needed more fiscal stimulus than European economies is that Americans do not have adequate savings,” Fink continued. “When you have a crisis like the pandemic, Europe is better prepared because of the wider and deeper economies” and a stronger safety net. “The United States is less prepared than Europe for the financial resilience of families, because we are not a society of savers.”

Separately, Fink’s outlook for the stock market remains positive due to the persistence of low interest rates and the belief that coronavirus vaccines will be “fully disseminated” by the end of the second quarter, producing immunity in the stock market. third trimester. This will revive emerging parts of the economy and lay the foundations for better growth during the year.

“I do not expect it [the market] to grow as it did in 2020, but I think the foundation of the markets will be good, ”Fink said. This does not mean that the process will be smooth: Fink also said that he expects a correction from 5% to 10% during the year.

Finally, Fink said that even though the US is restricting investment in China, BlackRock has seen record inflows of money into Chinese investment from global investors.

“Let’s be clear: many large US companies are very active in China and sell goods, so our trade deficit with China has never been greater,” he said. “We agree with our country’s wishes and will do whatever it takes, but we see global investors running to China, not far from China.”

He added that he welcomed the prospect of discussing the need for a multilateral approach by China with the Biden administration. “Markets 2 and 1 need to have conversations and have multilateralism to build a better world,” he said.

Fink also said that BlackRock is reviewing its political spending after last week’s uprising by supporters of President Donald Trump who are trying to stop the certification of the victory of President-elect Joe Biden. The company stopped political spending.

Earlier, BlackRock reported that earnings in 2020 amounted to $ 4.9 billion, or $ 31.85 per share, with revenue of $ 16.2 billion. This compares to a profit of $ 4.5 billion or $ 28.43 per share and revenue of $ 14.5 billion in 2019. Net cash inflows in BlackRock products totaled $ 390.8 billion in 2020 , down from $ 428.7 billion in 2019.

The results were much higher than analysts expected, wrote Craig Siegenthaler of Credit Suisse.

Managed assets totaled $ 8.67 trillion, up from $ 7.43 trillion a year earlier. “Strong markets, good performance, and the breadth and depth of the BlackRock platform should produce more of the same,” wrote Glenn Schorr of Evercore ISI.

Aladdin’s division of BlackRock, a provider of technology and risk management solutions, has been particularly strong. Revenues rose 11% from a year earlier in the fourth quarter, bringing the annual total to more than $ 1 billion by 2020.

Edward Jones expects Aladdin to achieve a medium-term increase in long-term income. “We see a long line of demand as wealth management firms increasingly turn to the best technology in the BlackRock class,” wrote Kyle Sanders of Edward Jones.

BlackRock shares fell 4.1% to $ 747.91 in the middle of the afternoon. The stock gained 22% in the three months ended Wednesday, compared to 9.2% for

S&P 500.

Write to Leslie P. Norton to [email protected]