We'll help you compete with Vanguard/Schwab: BlackRock

BlackRock, the world's biggest money manager, wants to be the go-to provider for banks and advisory firms looking to enter the robo-advisory market and compete with the current leaders Vanguard and Schwab. BlackRock's solution is based on FutureAdvisor, a company it bought last year. Clients in the robo-advisory space thus far include RBC Wealth Management, LPL Financial and BBVA Compass.

BlackRock, the world’s biggest money manager, has a message for financial advisory firms and banks that serve individual clients but don’t currently offer a robo-advisory service or want to replace the one they have: Hire us.

The firm, which has $4.7 trillion in assets, is offering firms a customized robo-advisory platform a la FutureAdvisor, the independent robo-advisor it acquired last year.

Many of BlackRock’s clients, whether banks, wealth managers or advisory firms need a “much better more credible way to compete” against Vanguard and Schwab, the “giants of robo investing,” explained Salim Ramji, senior managing director and head of BlackRock’s U.S. Wealth Advisory business, at a meeting with reporters.

One prime target for BlackRock is a “bank that wants to build out its investment capabilities with a few hundred advisors, looking to scale that in a rigorous way,” said Ramji. Another: financial advisory firms that can more easily and cheaply service clients who aren’t flush with assets.

BlackRock’s FutureAdvisor offering is “strictly B-to-B,” delivered through BlackRock’s Solutions (BRS) group, said Ramji.

To date it has entered into partnerships with three firms: Two financial advisors, RBC Wealth Management and LPL Financial, and one bank, BBVA Compass. They are either in the implementation phase, with FutureAdvisor connecting to the client’s internal systems, or in limited pilot; none has been launched yet. And when that happens, the client, not BlackRock, make the announcement. BlackRock is also in talks with other potential clients for its robo offering but no details were disclosed.

Ramji said the firm is also seeing a lot of interest from distribution partners for a digital advice solution to help comply with DOL fiduciary rule. It is “certainly an area that has piqued their interest and ours and we’re working aggressivly to have those solutions at work post April,” said Ramji, referring to April 2017 deadline for advisory firms to be in compliance with much of the new rule.