BlackRock Inc. is looking to expand its services — rather than slash costs on funds — to lure advisers to its exchange-traded funds.
BlackRock Inc. is looking to expand its services — rather than slash costs on funds — to lure advisers to its exchange-traded funds.
“There is a price war, but our view is that we don’t need to jump into a place where we can’t offer services,” said Jennifer Grancio, head of U.S. distribution at iShares, referring to recent moves by The Vanguard Group Inc. and Charles Schwab & Co. Inc. to reduce expenses on their ETFs.
“We have no plans to make wholesale changes and re-price the business.”
As part of those plans to beef up services, BlackRock has begun offering its financial adviser clients with periodic exchange-traded-fund recommendations based on the firm’s market perspectives.
In October, the firm appointed Russ Koesterich, who heads the firm’s investment strategy team, to lead its new global iShares investment strategy group. In this role, he is in charge of putting out these investment strategy recommendations, Ms. Grancio said.
“These are regular recommendations that change over time, depending on how our view changes,” she said. For example, iShares’ first market recommendations, which were published last month, suggest iShares ETFs that make sense given the recent round of quantitative easing.
Additionally, the firm is planning to double its 14-person capital markets team in the next two years to meet adviser demand, which has spiked since the flash crash of May 6, Ms. Grancio said.
“These are the people who are fielding calls from advisers asking about how products are trading,” said Noel Archard, head of U.S. product at iShares. “When you have things like the flash crash, market structure issues and phones are ringing off the hook, and advisers need answers right away, this is where we have a competitive advantage,” Mr. Archard said.
