Financial Times Magazine — The $10 Trillion Man
This glimpse is based on an article written by FT’s global finance correspondent, Robin Wigglesworth, and published on October 7th, 2021 in the FT Magazine under the headline: The ten trillion dollar man: how Larry Fink became king of Wall St [25 min read]
Investing, politics, money, and climate change— a story that interests me on several fronts and an adapted excerpt from a book that dives deeper into one of the most prominent figures of the financial world in the 21st century. This is a little glimpse into an engaging article and a preview to the book that is referenced in the article and written by the same author.
Kapito was on a secret mission that would not only transform the fortunes of his employer, the investment group BlackRock, but change the face of the financial industry ¹
Every king needs an astute commander and the author picks an interesting plotline to begin his narration of Larry Fink, BlackRock, and the rise of passive investing. FT’s finance correspondent, Robin Wigglesworth, who has penned both this article in the FT magazine and the book (Trillions) from which we get this interesting adapted extract, instantly focuses on the characters and people who’ve directly impacted Fink’s success.
The introductory paragraphs weave a storyline that provides intrigue for both kinds of readers: those who wish to understand the personality and career of Larry Fink and those who wish to learn about the backstory of the rise of passive investing and index funds.
Despite the awful, casual xenophobia of the era, Fink loved it at First Boston, which was at its core scrappy and meritocratic. The reality was that no one cared who you were, as long as you made money. And Fink made money ¹
After a brief synopsis, Wigglesworth jumps right into the adapted excerpt from his book and describes Larry Fink’s background and humble beginnings. There aren’t many significant moments from Fink’s early days that are worth beyond a cursory reading. The only detail that stood out was Fink’s ambiguous ambition and desire to make money that drove him to Wall Street and into bond-trading. Wigglesworth does an excellent job to juxtapose this detail with the fact that BlackRock is now roughly equivalent to the global hedge fund, private equity, and venture capital industries (worth nearly $10 trillion).
The history of the investment industry is riddled with acquisitions gone awry, but BlackRock used its listing to transform itself from a narrow bond investment house into the world’s biggest money manager ¹
BlackRock’s inorganic growth via shrewd use of acquisitions at key moments in the financial markets is a salient aspect of Wigglesworth’s story that should be one of many satisfying plotlines for M&A enthusiasts. While it is difficult to gain a full picture of all the key drivers of BlackRock’s success, reading this article definitely gives the impression that Fink was less innovative as a financial engineer and more of an opportunist that knew when and how to acquire financial products and assets to help BlackRock exploit market inefficiencies.
The inexorable shift towards such funds has handed the industry’s so-called Big Three enormous sway in many corporate boardrooms ¹
The excerpt switches course a little and focuses on some of the bigger picture changes in the investment management industry courtesy of BlackRock and other large passive funds. Wigglesworth transitions the narrative from “how” Larry Fink & BlackRock became so big to “what” are the consequences of such burgeoning power and how Fink is primed to weather all the challenges lying ahead for BlackRock. The political effects, on both the left and right, of BlackRock’s recent push for ESG-driven investment decisions and its ability to pressure companies to alter their business strategies is one such challenge that sets up another interesting subplot.
“If society believes this is going to be a big issue, it is solvable…And I could still provide transparency, convenience, and [low] pricing” ¹
Wigglesworth chooses to conclude the article/excerpt by giving readers a peak into Larry Fink’s ego and messianic nature to solve what he believes to be the world’s biggest problems. Regardless of which side of the political and economic spectrum you fall on, Fink’s impact on traditional investing, control over large swathes of corporate boards, and controversy over ESG-oriented investing methodologies provide a compelling story for Wigglesworth to tell.
Final Thoughts -
I’m usually a sucker for well-written financial stories about companies or leaders that have redefined the landscape of their respective industries. Occasionally a story comes by that isn’t just a character exposé, but delivers an insight into crucial historical and economic events too. This FT story does both.
Bottom line: Read further if you wish to learn how the rise of index funds is tied to one man’s journey to the top of the investing world¹. If the article hooks you and you want to dive even deeper into Fink’s backstory, then Wigglesworth’s book is available from October 12th onwards ²
References:
(1) Financial Times | The ten trillion dollar man: how Larry Fink became king of Wall St | Robin Wigglesworth | Updated on Oct. 7th, 2021
(2) Penguin Random House | Trillions: How a band of Wall Street Renegades Invented The Index Fund and Changed Finance Forever | Robin Wigglesworth
Other Links Referenced:
(1) Financial Times | BlackRock, Vanguard and SSGA tighten hold on US boards | Owen Walker | Updated on June 15th, 2019
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