BlackRock Inc. is expanding its top management ranks in a move that grooms the next generation of leaders at the world’s biggest money manager.
Charles Hallac, 49, previously chief operating officer at New York-based BlackRock, was named co-president and Rob Goldstein, 40, who currently heads the institutional client business and the firm’s Solutions advisory unit, was appointed COO, Chief Executive Officer Laurence Fink and President Robert Kapito said in a memo to staff yesterday. At least 10 senior executives were given new roles.
The changes mark the biggest management reorganization since 2012, when BlackRock added eight members to its global executive committee and shook up its investment unit to boost returns. Fink, 61, and Kapito, 56, who built the firm from a bond shop started in a one-room office to a $4.3 trillion global money manager, are promoting a younger pool of executives to top positions after half of the firm’s co-founders left or retired from an active role.
“This is not about a change at the top, it’s about making sure our leadership collectively gets strengthened,” Philipp Hildebrand, vice chairman of BlackRock, said in an interview with Bloomberg Television’s Francine Lacqua today. Fink is “not going anywhere,” he said.
Money managers such as BlackRock are preparing for succession and promoting younger executives as their founders near retirement age. Pacific Investment Management Co., led by 69-year old co-founder Bill Gross, in January announced six deputy chief investment officers after the abrupt resignation of Chief Executive Officer Mohamed El-Erian.
Hallac will focus on the firm’s strategy and developing its bench of potential leaders, Fink and Kapito wrote in the memo. The appointments are effective June 1.
“We are moving these people into new positions, exposing them to new environments and new geographic regions to make sure they are ready when they need to be,” Hildebrand said.
BlackRock’s growth has been fueled through acquisitions, including its 2009 purchase of Barclays Plc’s investment unit. Susan Wagner, a BlackRock co-founder and leader of the acquisition push, retired in 2012 when the firm had reached a size that made transformational deals difficult. Other co-founders no longer with BlackRock include Ralph Schlosstein, CEO of Evercore Partners Inc., and Keith Anderson, who runs his own hedge fund.
Hallac joined BlackRock in 1988, soon after the firm was started and helped build the firm’s Aladdin trading system. He is battling colon cancer and is at the office every day even as he is undergoing treatment, according to the memo. In one of his most important tasks in his new role, Hallac will lead an effort to evaluate how to improve technology at the firm. The client businesses, investment groups and product management teams will report to Hallac and Kapito.
Rich Kushel, who heads the firm’s strategic product management group, will become chief product officer and Mark McCombe, the 48-year-old chairman of the firm’s Asia Pacific unit, will become head of BlackRock’s institutional client business and chairman of the firm’s alternatives unit.
Ryan Stork, global head of the Aladdin business, was named head of the Asia Pacific unit and will be based in Hong Kong. Sudhir Nair will become head of the Aladdin business, which is being renamed Aladdin Institutional. Quintin Price, 52 and head of the firm’s Alpha strategies, will move to New York as part of the reorganization. Ken Wilson, who has served as chairman of BlackRock’s alternative business, will become chairman of Alpha strategies, working closely with Price. The firm didn’t make any fund manager or client relationship manager changes.
The roles for Price and Wilson highlight Fink’s priority of increasing BlackRock’s market share in actively managed mutual funds. Clients pulled $4.9 billion from BlackRock’s active stock and bond funds in 2013 while depositing $66.7 billion into its stock and bond exchange-traded funds.
Fink has sought to improve performance in the active bond and stock units to attract assets through new hires and reorganization. BlackRock in 2012 set up five new investment units to replace the portfolio management group, previously overseen by Kushel, who became deputy chief operating officer.
That year, the firm reorganized its bond business to give unit heads Rick Rieder and Kevin Holt greater autonomy and accountability. In 2013, BlackRock’s active bond strategies attracted $10.4 billion as fixed-income competitors such as Pimco faced redemptions. Fink has said he hopes the stock business can replicate the success of its fixed-income unit.
BlackRock said in the memo yesterday that it hired Salim Ramji, a senior partner at McKinsey & Co., as global head of corporate strategy.
BlackRock, which added passive investments such as exchange-traded funds with its takeover of Barclays Global Investors in 2009, manages mutual funds, institutional strategies and alternative products such as hedge funds.
Unlike BlackRock, Pimco grew mainly through attracting assets, more than doubling the money it oversees since 2008. Over the past year, the streak of deposits has reversed as Gross trailed peers in his main fund and investors fled bonds. El-Erian resigned in January amid disagreements with Gross.
“BlackRock is planning in advance for succession rather than scrambling after they face a problem, the way Pimco has had to,” said Erik Gordon, a professor at the Ross School of Business at the University of Michigan in Ann Arbor.