Wealth Strategies

BlackRock's CEO Turns Gaze On Retirement Pressures

Editorial Staff 27 March 2024

BlackRock's CEO Turns Gaze On Retirement Pressures

The CEO and chairman of the world's largest asset management firm and unafraid to stir controversy, turns his focus on retirement and viabiity of existing systems in an ageing population.

Policymakers around the world must re-think attitudes to work and retirement because ageing populations are putting pressure on existing models, the chairman and CEO of BlackRock, Larry Fink, says in his annual open letter.

Fink, who hasn’t been afraid to stir controversy in recent years – such as via his call for ESG investment approaches – turned the focus of his annual letter to retirement issues. 

“As populations age, building retirement savings has never been more urgent,” Fink said. “By the mid-century mark, one-in-six people globally will be over the age of 65, up from one-in-11 in 2019. To support them, governments are going to have to prioritise building out robust capital markets like the US has. 

“But this isn’t to say the US retirement system is perfect. I’m not sure anybody believes that. The retirement system in America needs modernising, at the very least.

“Despite the anti-capitalist strain in our modern politics, most world leaders still see the obvious: No other force can lift more people from poverty or improve quality of life quite like capitalism. No other economic model can help us achieve our highest hopes for financial freedom – whether we want it for ourselves or our country,” he said. 

Fink, who heads a business overseeing $10 trillion in assets under management as at the end of 2023, knows that the sheer scale of BlackRock gives him an almost unrivalled influence on public and private debate. His comments gain the same level of traction as those of renowned investor Warren Buffett.

However, Fink’s tenure has not been without controversy. In the US, for example, in September 2023 the asset manager was sued by the US state of Tennessee, which accused the firm of violating consumer protection laws by misusing environmental, social and governance factors in its investment strategy. Such clashes raise questions the about tension between fiduciary duties to deliver highest possible returns and the  drive to decarbonise businesses. 

Besides retirement, Fink said a second major challenge is infrastructure. 

“As countries decarbonise and digitise their economies, they’re supercharging demand for all sorts of infrastructure, from telecom networks to new ways to generate power. In fact, in my nearly 50 years in finance, I’ve never seen more demand for energy infrastructure,” Fink wrote.

“And that’s because many countries have twin aims: They want to transition to lower carbon sources of power while also achieving energy security. The capital markets can help countries meet their energy goals, including decarbonisation, in an affordable way,” he wrote.

In January, asset management titan BlackRock announced that it had acquired Global Infrastructure Partners. Acquiring GIP creates a business with a combined $150 billion of assets under management. (This news service has had related thoughts on the infrastructure trend.)

Retirement choices
Back on the retirement issue, Fink said: “We focus a tremendous amount of energy on helping people live longer lives. But not even a fraction of that effort is spent helping people afford those extra years.

“Today in America, the retirement message that the government and companies tell their workers is effectively: `You’re on your own.’ And before my generation fully disappears from positions of corporate and political leadership, we have an obligation to change that.

“Maybe once a decade, the US faces a problem so big and urgent that government and corporate leaders stop business as usual. They step out of their silos and sit around the same table to find a solution. I participated in something like this after 2008, when the government needed to find a way to unwind the toxic assets from the mortgage crisis.

“More recently, tech CEOs and the federal government came together to address the fragility of America’s semiconductor supply chain. We need to do something similar for the retirement crisis. America needs an organised, high-level effort to ensure that future generations can live out their final years with dignity,” he concluded.

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