One of the advantages of running your own boutique investment firm is that you can be honest. I don't have a compliance group in New York. Nor one in Switzerland. I do not have 'big brother' telling me how to invest or who I need to invest with. Because of that, I get to decide what's in the best interest of my clients. NOT an attorney and not the firm. I am a true FIDICUARY.
Where am I going with this? Well, I have been approached for the last 3 years by the folks at BlackRock. For those that really do not follow the news, BlackRock is one of if the not biggest asset management firm in the world. A giant on Wall Street. Founded in 1988 they operate in 30 countries out of over 70 offices. According to their filings Blackrock manages, in their mutual funds, ETFs and other strategies a staggering $10 trillion. Yep, $10 trillion in other people's money. And they approach firms like mine to partner with them. That means, they have salesmen and women who call on firms like mine, as well as the big pensions, brokerage firms and consultants and pitch their investment strategies in hope we use them over one of their competitors.
In the old days, say 20 years ago, BlackRock was a growing firm that competed with their offerings based on performance, risk adjusted returns and price. Today, BlackRock has sought to position itself as an industry leader in environmental, social, and corporate governance (ESG). Their billionaire founder and CEO, Larry Fink, has for years issued an annual letter to the CEO's of the companies they invest in / with and might in the future, explaining his, and now BlackRock's position in the world. A position that is his as there is no true consensus for what metrics you should use in ESG scoring.
In In his 2018 annual open letter to CEOs, Fink called for corporations to play an active role in improving the environment, working to better their communities, and increasing the diversity of their workforces. In his 2019 open letter, Fink said that companies and their CEOs must step into a leadership vacuum to tackle social and political issues when governments fail to address these issues.
Ok...so CEOs now were instructed to use their clout to advance Finks view of the world. ...hmmm.
In his 2020 annual open letter, Fink announced environmental sustainability as core goal for BlackRock's future investment decisions. In this letter, he explained how climate will become a driver in economics, affecting all aspects of the economy. He also divulged in a separate letter (to investors) that BlackRock will be cutting ties with previous investments involving thermal coal and other investments that have a large environmental risk.
And there is the problem. Fink is advocating, no, using his clout as the world's largest asset management firm to push a concept that has become known as STAKEHOLDER Capitalism...defined by the NY Post as a 'squishy concept in which corporations look to better the human race as opposed to churning out profits for shareholders.'
As a FIDICUARY our role is to follow our clients wishes. To put their fortunes and goals ahead of our own. BlackRock has decided that they know better. Fink's view of a WOKE world now means they will advance their goals with your money regardless of if it's in your best interest. ESG has basis in logic. A cleaner safer more just world. But who's to say that Fink's version of cleaner and safer is the right version? Is it really the role of Fink to decide what the world will look like? and use the assets of a publicly owned firm to push that agenda? What if he's wrong?
Or what if he was advocating instead of for things...against them? What if he was the type of person who didn't like people of color, or women or thought that China should rule the world? Would Wall Street accept that? Would the media advance those ideas? And if they wouldn't, why is it ok for him to advocate in any direction? Why is it ok for BlackRock to incite change versus act as they state? in the best interests of a diverse group of investors? As a Fiduciary!
Why is it ok today for Fink to use BlackRock's clout to silence those that disagree?
Short answer. IT'S NOT.
SO ...in the spirit of standing up for my clients, for what I believe and for my own psyche I share a recent letter I wrote in response to the request to do business with Quantum Private Wealth. I am but a foot note in BlackRock's annual report but sometimes you need to stand your ground and speak up.
BlackRock Corp Services
Dear Sir,
I thank you for reaching out, but BlackRock is not a firm I or my firm will do business with. I do not think an asset management firm should try to make policy nor should it be political. A public company CEO should not attempt to use his company’s size and scope to advance either a liberal nor a conservative viewpoint. Yours places his view on display and threatens other CEOs to match or be dismissed. Your firm has offended quite a few of our clients and the concept of choosing social justice over returns – your firm has stated goals that are more important to you than what are in my stated fiduciary responsibilities- is bad for the market and is divisive.
Please remove me from any and all BlackRock correspondence.
I wish you well.
Jim
Footnote. I believe that we all should follow our own paths and help better ourselves and each other. I am not questioning or opining on Fink's views, just on the fact that he's using his firm and the size of it to manipulate others to fashion a world of his choosing. That should not be allowed. The client should come first.
Information contained herein does not involve the rendering of personalized investment advice but is limited to the dissemination of general information.
A professional adviser should be consulted before implementing any of the strategies or options presented.
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