BlackRock knows the world of investment is changing. As Gen-Xers and Millennials begin to accumulate more wealth, it intends to stay ahead of the curve. Earlier this year, the world’s largest asset manager took a stake in Acorns, an app that invests people’s spare change.
BlackRock hopes Acorns can give it insight into the behavior of a younger investors, so it can develop products to suit their needs down the line. The company is also fleshing out its suite of ethical and sustainable investing funds, which it expects to appeal to younger clients. “BlackRock is looking at how can they take their analytical infrastructure … and apply that to the changing financial advice landscape,” said Robert Lee, an analyst at Keefe, Bruyette & Woods.
Can you invest responsibly and make money, too? That’s the big reason BlackRock ( BLK ) partnered with Acorns in May, when the company led Acorns’ $50 million funding round. Chief Marketing Officer Frank Cooper now holds an observer seat on the Acorns board of directors. Noah Kerner, the CEO of Acorns, said BlackRock gives Acorns counsel and support for its investment products. In return, BlackRock gets an inside look at Acorns’ business. “They’re interested in learning and evolving and growing,” Kerner said. “So I think they’re intrigued by the things we’re doing.”
For example, Acorns has a team of people looking at behavioral economics. The group has found that encouraging people to invest $5 per day is more effective than asking them to invest $35 per week. It shared these results with BlackRock, allowing the company to use that information to inform its own products. BlackRock is “trying to get a better sense [and] a better understanding of how a different generation invests: what they look for,