Why the CEO of BlackRock says the retirement crisis is getting worse

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Even as a

BlackRock‘s

earnings rose in 2020, with the world’s largest asset manager benefiting from increased savings and investment, the upcoming retirement crisis in the United States worsens, said Larry Fink, CEO of BlackRock .

The three reasons are low interest rates, low savings rates and more part-time and self-employed workers in the economy. Partly because of the low savings rate of American households, Fink said he believed the U.S. had required more fiscal stimulus than Europe.

In the first quarter of 2020, the savings rate in Europe was 15.6%, compared to 8.3% in the US in March.

“I am petrified by the silent retirement crisis,” Fink said in an interview with De Barron. “The big problem is a high percentage [of people in U.S.] working part-time or self-employed without retirement funding. ”While those who work for larger companies have savings for retirement, many companies do not adequately teach financial literacy.

“The reason the United States has needed more fiscal stimulus than European economies is that Americans don’t have adequate savings,” Fink continued. “When there is a crisis like the pandemic, Europe is better prepared because of a wider and deeper savings” and a stronger safety net. “The United States is less prepared than Europe in terms of financial resilience of households because we are not a society of savers.”

On the other hand, Fink’s stock market outlook remains positive because of the persistence of low interest rates and because he believes coronavirus vaccines will “completely spread” by the end of the second quarter, producing immunity to herd in the third quarter. This will revive parts of the economy that have stabilized and lay the groundwork for better growth by the end of the year.

“I do not expect it [the market] go up like he did in 2020, but I think the market base will be fine, “Fink said. throughout the year.

Finally, Fink said that while the U.S. restricts investment in China, BlackRock recorded record inflows of money into Chinese investment by global investors.

“Let’s be clear: a lot of big American companies are very active in China and sell goods, so the trade deficit with China has never been so big,” he said. “We follow our country’s wishes and do whatever it takes, but we see global investors rushing to China, not far from China.”

He added that he welcomes the possibility of discussing the need for a multilateral approach in China with the Biden administration. “Markets No. 2 and No. 1 need to have talks and have multilateralism to build a better world,” he said.

Fink also said BlackRock is reviewing its political spending after last week’s insurgency by supporters of President Donald Trump trying to stop certification of President-elect Joe Biden’s victory. The company has stopped political spending.

Earlier, BlackRock reported that earnings for 2020 amounted to $ 4.9 billion, or $ 31.85 per share, with revenue of $ 16.2 billion. This compares to a profit of $ 4.5 billion, or $ 28.43 per share, and revenue of $ 14.5 billion in 2019. Net cash inflows on BlackRock products amounted to $ 390.8 billion in 2020, compared to of the 428.7 billion of 2019.

The results were much higher than expected by analysts, wrote Craig Siegenthaler of Credit Suisse.

Assets under management reached $ 8.67 trillion, up from $ 7.43 trillion the previous year. “Strong markets, good performance, and the breadth and depth of the BlackRock platform should produce more of the same,” wrote Glenn Schorr of Evercore ISI.

The Aladdin division of BlackRock, a provider of technology and risk management solutions, was particularly strong. Revenue grew 11% year-over-year in the fourth quarter, bringing the annual total to more than $ 1 billion in 2020.

Edward Jones expects Aladdin to produce long-term middle-income income growth. “We see a long track record for demand as wealth management companies increasingly turn to the best BlackRock technology,” wrote Kyle Sanders of Edward Jones.

Shares of BlackRock fell 4.1% to $ 747.91 in the mid-afternoon. Shares rose 22% during the three months ended Wednesday, compared to 9.2% on the stock market

S&P 500.

Write to Leslie P. Norton to [email protected]