Your Money, Your Choice
🚀 The quick version: BlackRock CEO, Larry Fink was trending on Twitter this past week for 4 full days as a controversial video resurfaced of him discussing his view that BlackRock should use its power to “force behaviors” (here is the YouTube clip).
BlackRock is the biggest investment management company across the globe with more than $10 Trillion in assets under management (AUM). Some of their other competitors you may have heard of include firms like Vanguard, Fidelity, State Street, and other asset management firms (Sidebar: the way all these firms mainly make money is through fees on your investment accounts with them).
These companies have a significant influence today on corporate America; they hold that power because of us. Here is how it works: .
The funds or single stocks you own in your brokerage account with firms like BlackRock theoretically are supposed to give you a say in how those companies conduct business (usually 1 share = 1 vote).
Because investment management firms have massive amounts of assets under management, they wind up owning a lot largely on your behalf (collectively they can wind up owning 30% or more of an individual company).
How much of a stock they own is data that is publicly available by the way if you search for a stock you own and look at the holders list (here is an example using Apple’s stock).
They largely vote these shares how they want on all votes around company matters. Whether it’s deciding a new CEO, deciding on what the company spends money on, or deciding how the company chooses to do business, these large investment management firms have a big say.
Many prominent investors have taken notice and are warning against the growing power of these institutions.
👪 How it affects your family: If you have investment accounts at one of these firms, chances are the firm is using the underlying shares in your accounts to shape company behavior.
This may be totally fine with you if you agree with what they are doing (we will never tell you what to think), but the broader point is that you should at least be aware of this trend when it comes to your money.
If you want to take charge of this issue, here are some productive steps today take today:
Watch the headlines around whatever investment firm holds your accounts. Watch what the leaders are saying and doing.
Proxy voting is when these firms vote the shares you own on your behalf. In most cases they will have to ask your permission (this may have been something they showed you in fine print). But the fact is you have a legal right to the shares you own (where it gets gray is if you own mutual funds or index funds); you can call up your investment firm and ask them about what you own and your voting rights. They also should have information on how they have voted historically upon request.
Talk to your kids around the broader point of being aware of how you spend and invest your money. They need to be aware of these issues as they think about investing their own money.
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