The brain trust: Kapito, Wagner, and Fink Christopher Anderson
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As chairman and chief executive officer of BlackRock (BLK), Larry Fink controls more money than Germany has GDP. BlackRock is the world's biggest asset management firm, a $3.45 trillion powerhouse that's the largest counterparty on Wall Street, on track to pay investment banks $1 billion in fees this year. It manages $1.4 trillion for state pension funds in New York, New Jersey, and California, among others, invests $240 billion for central banks and sovereign wealth funds such as the Abu Dhabi Investment Authority, and in the U.S. stock and bond markets, it's responsible for a massive amount of trading volume each day. BlackRock serves as the U.S. Treasury Dept.'s go-to source for private sector financial expertise and managed at least $150 billion in toxic assets on behalf of U.S. taxpayers after the 2008 bailouts of American International Group (AIG) and Bear Stearns. While running the company is a team effort, Fink, 58, is BlackRock's brain, and BlackRock, increasingly, is Wall Street's.
"There's no bank, no sovereign wealth fund, no insurance company that's as large as BlackRock," says Ralph Schlosstein, a co-founder who left in 2007 and is now CEO of investment bank Evercore Partners. "BlackRock today is one of, if not the, most influential financial institutions in the world."
In light of all this, it's surprising how few people beyond Wall Street are familiar with Larry Fink and BlackRock. Founded in 1988 as a bond trading shop, BlackRock has somehow reached financial omnipotence while remaining out of the public eye, escaping the scorn, and the acclaim, so often heaped on the nation's premier investment bank, Goldman Sachs (GS). Although BlackRock competes with Goldman's much smaller asset management unit, the two firms are fundamentally different because trading, not investing, makes up most of Goldman's business, and Goldman is known as a place where executives achieve mind-boggling wealth. BlackRock is focused on the less lucrative work of investing money for individuals and institutions such as pension plans, endowments, and foundations through mutual funds, exchange-traded funds, and separately managed accounts. It makes most of its money through old-fashioned management fees rather than by taking positions for itself. On Wall Street, where boring is suddenly better, Fink is the newly minted nerd king.
Still, there are two things that Goldman has, or used to have, that Fink and his BlackRock co-founders—Rob Kapito, 53, Susan Wagner, 48, and Charles Hallac, 46—covet: a prestigious brand and a permanent spot in the public consciousness.
On an October afternoon, recognition is very much on Fink's mind as he prepares to address his 8,900 worldwide employees in one of his quarterly "state of the state" pep talks. The atmosphere crackles inside the company's seventh-floor conference room in Manhattan, where an oval table and a wall of monitors show live footage of BlackRock offices around the world, giving the place the feel of the White House's situation room. One end of the table remains conspicuously empty until two young men in blue dress shirts sit down. "Dude," jokes a third, seated on a bench against the wall, "you realize Larry's gonna be sitting right there? Can you handle the pressure?" The two scramble into other chairs.
Moments later, Fink walks in with a slightly sheepish affect and takes his seat. "Good morning, everyone," he says, holding a single sheet of paper. "I'm not here to tell you we're perfect. We have problems, as all firms do." He talks about BlackRock's quarterly performance ("We grew by 9 percent"); the company's recent, slightly troubled integration of Barclays Global Investors, the U.K.-based money manager BlackRock bought for $15.2 billion in 2009 ("It's clear to me that we have a firm that's more cohesive than ever"); and the current share price ("I think the market is dead wrong in terms of where our stock is trading"). The rhetoric is hardly soaring, but Fink exudes confidence. He tries to excite his audience with descriptions of the firm's success and power and the need for all employees to try harder. "We have a giant responsibility," he says. "We have to not just focus on $3.4 trillion of assets being managed, but who we're managing for—maybe it's your parents, maybe it's a school teacher or a fireman. … We are connected to the entire world in what we do."
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