Why BlackRock is investing in digital – The Platforum

Miranda SeathBlackRock invests in digital to drive growth in bundled scheme business and greater engagement with the end-saver says Miranda Seath, Senior researcher, Platforum

This month we look at BlackRock’s strategy to win a greater share of the bundled DC market; globally, BlackRock views retirement saving as a core area of focus. And we take a look at the firm’s investment in digital to drive greater engagement with the end-saver.

In our Workplace Savings Guide, we tracked the AUA of the major workplace savings providers. BlackRock had £10.3bn of assets in its UK DC proposition as at 30 September 2015.

BlackRock works with over 500 medium to large employers. Roughly 75 per cent of employer clients use the investment service through BlackRock’s in-house investment platform, Aladdin. This service includes LifePath and target date funds, a post-retirement drawdown account, bespoke defaults and third-party funds. It is therefore no surprise that BlackRock tends to work with the top employee benefit consultants. The firm also has a strategic distribution partnership with Aon Hewitt as the investment manager behind its fund proposition.

However, BlackRock’s ambition is to grow its bundled scheme business in the UK – which includes a master trust solution. This should help it to develop closer relationships with scheme members through its member portal and tailored member communications.

UK consumers typically no longer retire at age 65. Platforum research director Heather Hopkins refers to the “grey glide”: the period at the end of our working lives between full-time employment and full retirement. Therefore, engagement with pension savers is increasingly deemed a priority by the providers that we speak to.

BlackRock needs to understand and engage with its pension savers to better understand their intended path to retirement. This in turn will help it to create the right glidepaths for its pension funds (which include TDFs).

The largest global investment manager has been investing to drive engagement. Every scheme member, irrespective of employer, can access the member portal, TargetPlan, online from one site. On the home page, the value of the member’s account is front and centre and employees can check a statement of contributions and adjust fund options. In some cases, if the employer opts for this functionality, members can adjust the level of contributions.

Making it easy for members to find out the value of their pension pots and adjust contribution levels will drive engagement in saving.

BlackRock also offers interactive tools, animation and videos to help savers understand their choices at retirement. It has a decumulation modeller, myPath, which compares income choices and has just launched CoRI, a series of real-time aged-based indices to give savers an idea of what their current level of savings could generate in lifetime retirement income.

BlackRock does, however, provide some handholding for scheme members. When employees register, it sends out instructions on how to use the member portal. It also offers face-to-face presentations on retirement options and other pension saving themes.
Digital is important but we think having multiple touchpoints with scheme members is key. The proposition needs to appeal to different preferences and age groups.

Digital looms large at BlackRock. Its acquisition of robo-adviser Future Advisor is further proof of its intent to build relationships with the end-saver/-investor. The workplace is a key battleground in driving up saving for retirement. BlackRock has a strong brand and the firepower to make the right investments.