Looking back over the past year, what questions have consultants asked you most?
For clients with defined benefit pension plans, the gilt crisis has brought forward questions about the future. Some clients are ready for buyout, while others have a strong funding level but don’t want to go to buyout and are seeking other solutions. Then there’s a third category who aren’t in as strong a position as they would like – they’re reaching out to BlackRock for help.
From those with defined contribution schemes, the questions have been different. They ask how they can incorporate illiquid assets into their investments, and about decumulation. They want to know what we can provide for their members as they reach retirement.
Finally, sustainability is always engrained in the questions we receive.
How are BlackRock responding to this?
We start by listening to the client and understanding their strategic goals. By aligning our goals with those of our clients we can partner to help more people experience financial wellbeing.
All our clients are different. We must make sure that we offer a choice of robust, high quality investment products. We’ve seen a trend of clients wanting to do more with fewer managers, so we work with them to provide a compelling holistic solution at every stage of their journey.
We seek to offer clients a ‘subscription to innovation’ – new solutions that will change with them.
Over the next one to three years, what emerging trends do you see evolving across the retirement landscape?
Transition investing is now a big topic of interest, with clients needing help mitigating risks and capturing opportunity as the world transitions to a low-carbon economy.
Consolidation will continue, led by increasing regulatory requirements, as mentioned in the Mansion House reforms this year. That brings opportunities in terms of economies of scale and value for money.
Many clients are working, or will work, with fewer managers, who must be able to manage all aspects of the journey.
Changing retirement preparedness is a challenge. People are living longer, so their pots need to work harder for longer. Only 21% of savers are very confident they will have enough money to last throughout their retirement, and this will be a growing problem.1
Risk: Any forward-looking statements may not come to pass.
Pivoting slightly, inequalities within the pensions sector continue to persist. What are some of the challenges you are seeing within this space?
Gender disparity is a huge issue: women’s pensions in Great Britain are worth 35%2 less than men’s by the time they reach 55, but women live longer than men. More than half worry they will outlive their retirement savings.3 We’re working on this with our Model Portfolios for Women strategy, which incorporates bespoke investment solutions for women.
Then there is race disparity. In the UK, on average, those from minority ethnic backgrounds will retire with less than half the savings in their pension pot as someone from a white British background.4
I see it as our role to help address these disparities. If we're not giving back, then we’re not fulfilling our social license to help more people experience financial wellbeing.
And finally, what has been your single most valuable take away from the past 12 months and what excites you most about the next?
My most valuable takeaway, particularly with the challenges and volatility that we've seen in markets over the past 12 months, is that even when things are bad, there's opportunity.
And that’s what excites me about the next 12 months as well. When you are in a volatile place, things can feel quite negative, but there's always opportunity. I look around and see people doing brilliant, inventive things at BlackRock. It’s easy to stay excited.
