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iShares: The Evolving Investor/Advisor Relationship


Those of us a certain age remember when riding in the back of a car meant little access to the view of the road ahead, a floaty ride and very little in the way of safety equipment.  Consequently many of us fought to ride in front where the view was better, it was easier to converse with the driver and occasionally steer the car when help was needed.  And very often seat belts were for front occupants only.

Today, more investors of all ages are demanding to ride in the front seat with their advisors. Prior to 2008 many investors were comfortable in the backseat, not realizing the inherent dangers of overly correlated asset classes, static portfolio management and strong domestic equity biases that dominated many portfolios after a 25 year secular bull market for equities.

Though portfolio “safety features” certainly existed prior to 2008, their popular use was limited.  Similar to our analogy, many car passengers don’t realize that safety glass was invented in 1903 and seat belts were first installed in Saab cars in 1958.  It took many decades of conversation by safety “zealots,” reviews by government agencies and eventually strong consumer demand to popularize many of today’s safety features.

Fortunately for current investors, many portfolio safety features after 2008 took only a few years to be popularized and widely embraced.  As examples, tactical global asset allocation, go anywhere portfolios, aggressive use of cash and market tools that can temper adverse market events are all widely used in the retail marketplace.  Previously, many of these strategies were only available, and understood, by a select few in investment management.

Today’s advisors are well educated and trained, often participate in broad functional teams, utilize portfolio construction experts and seek information from many sources, including from us, the world’s largest asset manager.  In general, they are equipped to be much better “drivers” than their peers of 20 or 30 years ago.

Which is a good thing. It seems unlikely investors will want to give up their newfound proximity to the portfolio construction process or settle for only periodic rebalancing of their portfolio to manage risk and enhance return.  It’s these two reasons of better advisor “safety” tools and increasing investor knowledge and engagement that allows for a new relationship between advisors and investors.

For today’s investor, riding in the backseat isn’t good enough anymore.  Investors today want to ride shotgun, and occasionally steer the car too.  So how can we help?  Over the coming months, I’ll be sharing investment ideas and insights from our discussions with clients – solutions that make the most of this evolving investor/advisor relationship.

Welcome to the new journey of investing.

Martin Beaulieu, Managing Director, is Co-Head of the BlackRock’s U.S. iShares business and leads the U.S. iShares Wealth Advisory group.