If you are assessing financial career options, consider BlackRock, the world’s largest asset manager.1 Founded in 1988, New York-based BlackRock is an investment management firm, originally created as a risk management and institutional fixed income manager.2
Under the leadership of CEO Larry Fink, the firm has flourished and grown its assets under management to over $4.6 trillion.3
BlackRock Careers: Who Works at BlackRock?
Simply put-smart people work at BlackRock. 25% of their employees have a Master’s degree, PhD. or MBA.4 With employment at the firm over 13,000, that equates to roughly 3200 employees with advanced degrees-impressive.
Being the largest asset manager in the world means casting a wide net for clients. And BlackRock is up to the challenge, with employees in over 30 countries that speak over 100 different languages combined.5
BlackRock’s Value Proposition
The Trend Towards Passive Management
There is a ‘reform’ movement in asset management, with fee structures being challenged by clients wherever possible. This is actually good news for BlackRock, a major beneficiary of the shift towards lower cost, passive investments.
Since 2009, fund flows into passive investments have increased over $961 billion while active management funds (associated with higher fee structures) have dropped by $592, according to EPFR and Banc America Merrill Lynch.
BlackRock is the largest provider of exchange traded funds, ETFs. While the firm does offer traditional mutual funds and closed end funds, the ETFs a major reason they are the world’s largest asset manager. Through their iShares brand, they offer 342 low cost exchange traded funds which range in asset class from stocks to high yield bonds.6
A low-cost, passive approach outperforms general benchmarks over time. This is a popular approach for most individuals. Some of their most popular offerings include their Core S&P 500 ETF (IVV) and Core U.S. Aggregate Bond ETF (AGG). The net expense ratios for these funds are 0.07% and 0.08%, respectively. IVV’s expense ratio is 118 basis points lower than the average equity mutual fund.7 And it will probably outperform a non-index equity index considering just 14% of fund managers beat their benchmarks.8
BlackRock’s scale also allows many ETF investors to benefit from securities lending in the funds, through increased total returns.9 These offerings fit perfectly into the broader movement of lowering fees by asset managers so the long-term returns can be enhanced, benefitting the customer.
In the absence of meaningful interest rates, BlackRock’s Investment Grade Corporate Bond ETF (LQD) remains very popular, with over $32 billion in assets under management.10 LQD currently yields 3.22% versus a 10-year Treasury bond yield of just 1.58%.11
BlackRock’s fees are very low, especially when compared to hedge funds or private equity investments which can charge fees as high as 2% of assets under management and also a performance fee of 20% of profits.
Granted, these fees are high and vary by fund. Some funds offer clients ‘early investor’ discounts and lower cost founders shares while others have creative measuring sticks for compensation. For example, Warren Buffett’s fund used to charge performance fees based not on profit, but profit above the risk-free rate, which was calculated using the U.S. T-bill rates. That was a major protection for investors as T-bill rates, miniscule now, were once double digits.
For institutions such as pension funds, endowments and insurance companies, they also offer increasingly popular alternative ETFs, including core, smart beta, currency hedged and minimum volatility selections. These funds are a part of a variety of strategies including alpha generation for asset managers and hedge funds. The trend towards lower fees is in full force, and low-cost managers like BlackRock should continue to benefit from the trend.
Career Insights at BlackRock
There are numerous factors that comprise a total work experience. The firm employees thousands financial professionals so there’s no way to get insight from everyone. But the review site Glassdoor provides the ability for current and former employees to reveal details of their employment including compensation, culture and insights into their interview process- all on an anonymous basis.
The compensation philosophy at BlackRock is based on their ‘Pay for Performance’ mantra and this ‘meritocracy’ is one of the great features at BlackRock. Not everyone is fortunate enough to have Ivy-league pedigrees, so it’s nice to see the goal-oriented aspect of compensation.
Based on 321 submissions, the average base salary for analysts at BlackRock is $70,433 and $94,392 in total compensation.12 This additional compensation typically comes in the form of cash bonuses, stock bonus or profit sharing.
Employees moving up the ladder at BlackRock become associates after analysts, many following successful completion of an MBA or equivalent. According to a healthy sample size (417) of current and former employees the average base salary for Associates at BlackRock is $94,604 but jumps to $127,033 including all compensation.13 At the Associate level, ‘commission sharing’ becomes an additional income stream.
The majority of additional compensation comes in the form of cash bonuses at the firm. The nice thing about cash bonuses is not having to wait (stock bonuses sometimes are accompanied by vesting restrictions, which can cause major swings in the bonuses value). The frustrating thing is the draconian tax rates on cash bonuses.
BlackRock employees enjoy a wide variety of benefits. These include financial incentives as well as life management and wellness benefits.14 BlackRock offers a generous employee match to their 401(k) retirement plans. The 401(k) plan gets rated 3.9 out of 5 stars from BlackRock employees.15 Sometimes bonuses can be made in deferred fashion, with stock bonuses going into employee 401(k) plans. Executive retirement plans may offer additional benefits from insurance companies including annuities and life insurance.
Again focusing on the alignment of individual, division and firm goals, employees can participate in BlackRock’s Employee Stock Purchase Plan. The plan allows you to purchase BlackRock shares at a discount to the market price. Like many shareholder purchase plans, including ESOPs for private companies, these and really foster a unified effort. When the firm is doing well and the share price is going higher, it’s a great moral booster.
Financial wellness is well-covered at BlackRock, with a number of programs ranging from comprehensive healthcare insurance, pre-tax health savings accounts, to health which rewards healthy living habits.
Life happens. BlackRock offers a number of ‘life management’ including the ability to take leave to care for a family member or just ‘recharge’. BlackRock also defrays commuting costs, which can be very helpful in places like New York City.16
What do Employees Think?
Looking at some of the anonymous review sites that exist can provide some additional insight into what it’s really like working there. According to GlassDoor, the average rating for employees current and former, at BlackRock is 3.5 out of 5 stars. There is a very high approval rating for BlackRock CEO and co-founder Larry Fink. While a couple reviews on the first page tend to challenge BlackRock’s philosophy of meritocracy, there’s always going to be some dissenting opinions, especially at a firm of that size. BlackRock appears poised to continue its growth in assets under management and should remain a sought after destination for aspiring financial professionals.