BlackRock's Rob Goldstein on the Next Megatrends in Finance

SPEAKER_2 (0:02)

Bloomberg Audio Studios, podcasts, radio, news.

Tracy Alloway (0:18)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Tracy Alloway.

Joe Weisenthal (0:21)

And I'm Joe Weisenthal.

Tracy Alloway (0:23)

Joe, when I think about the world of finance, and what I would describe as mega trends of recent years and decades, there are definitely two that spring to mind, maybe a third trend, although I don't know if it's mega, it probably is. The first is definitely the rise of the buy side. So this idea that, you know, it very much used to be all about the banks, and those were the ones that we kind of obsessed over. And then you have this extraordinary growth in the asset management industry.

The second mega trend has to be technology, right? Think about the rise of electronic trading, electronic risk management, model driven risk management.

Joe Weisenthal (0:59)

I like this.

Tracy Alloway (1:00)

And then the third semi mega trend, I don't know, rise of private markets, right?

Joe Weisenthal (1:04)

Yeah. Oh, I have another one.

Tracy Alloway (1:05)

Okay.

Joe Weisenthal (1:06)

That I think is legit. The sort of power law domination of a few mega companies and sort of whether it's consolidated.

Tracy Alloway (1:14)

Big get bigger.

Joe Weisenthal (1:14)

The winner take on this, or the winner take mostness of the industry. I would add that as a mega trend.

SPEAKER_2 (1:19)

Okay, that's great.

Joe Weisenthal (1:19)

And I would say that connects to this episode.

Tracy Alloway (1:21)

Absolutely. So we have four big slash mega trends, and we have the perfect guest to talk about all of those four things. And it comes at a time when obviously we're in this new sort of technological wave with AI. It very much feels like everyone in professional finance wants to figure out a way of being involved in AI in one way or another. It's funny. I was meeting up with someone who works at a very large bank the other day, and they were talking about how work that they've done 20 years ago, their managers are now adamant it has to be put into a big Excel database because they're about to shove all of that into an AI model. So you can see there's this urgency.

And there's a perennial question over how much of it is real.

Joe Weisenthal (2:03)

Random data that exists somewhere, they need to have it as part of a data lake or whatever so that the AI model knows about it.

Tracy Alloway (2:10)

Exactly. And I think the question for this is how much of it is managers who are latching on to the AI trend versus how much of this is actually going to become productive, useful technology for finance. So we can definitely talk a little bit about that, but we do have the perfect guess.

Joe Weisenthal (2:26)

Let's do it.

Tracy Alloway (2:26)

All right. So we're going to be speaking with Rob Goldstein. He is, of course, the COO of BlackRock, someone who has literally lived through basically all of these megatrends that we just described.

Rob Goldstein (2:37)

Yes. And the question is, how many hours do we have? Needless to say, those megatrends we could talk about for quite some time.

Joe Weisenthal (2:45)

Yeah. We could do a series.

Rob Goldstein (2:47)

We could do a series.

Joe Weisenthal (2:48)

A five-part series.

Rob Goldstein (2:48)

And one thing I would just politely identify, I think, is people talk about the big getting bigger.

Joe Weisenthal (2:57)

Yeah.

Rob Goldstein (2:57)

I think there's an underlying catalyst towards those who could provide a better value proposition are getting bigger.

Joe Weisenthal (3:04)

Okay.

Rob Goldstein (3:05)

And I think that's the key theme that's happening, particularly with regard to the buy side.

Joe Weisenthal (3:10)

I know you were saying, what was it, a polite, you didn't push back, but a polite nuance or something like that. But one could say that the ability to provide a better value proposition is itself a function of size in many instances, because the larger have the full suite, the whole menu, right? Of services. So even there, there's a nuance upon a nuance, right? 100%.

Rob Goldstein (3:34)

What's interesting is, I think if you ordered the mega themes, you can make a very strong argument that it all comes down to technology. Technology is enabling things and value propositions to be achieved that traditionally just couldn't be done.

Joe Weisenthal (3:53)

Great. Let's just talk about that.

Tracy Alloway (3:54)

Is it true that some of BlackRock's foundational, by the way, the chances that I say Blackstone in this conversation at least one.