Technology altering how we invest, says BlackRock

Investors will get much more detail about where their money is going in the future, says the Australian boss of the world’s largest asset manager.

Dominik Rohe, BlackRock’s country head for Australia, was in Auckland yesterday to talk to its New Zealand clients about how technology is changing the way it invests.

BlackRock manages more than US$5.4 trillion ($7.8tr) globally and specialises in managing risk on behalf of its major clients.

In New Zealand its clients include ASB Bank and the New Zealand Super Fund.

Rohe said technology was changing the way people invested.

Five years ago there would have been a room with five people in it — usually males — making the decisions, he said.

Across the road there was another room with another five blokes in it — both groups thinking they could outsmart each other. “That might have worked back then — it still works in a market where data is hard to come by — but now there is a lot of data out there. We think there is a big shift going on.”

Rohe said the company was marrying up scientific information and big data with its investment teams.

Instead of analysts asking for data and getting a big report weeks later they are now getting pinpoint data at a much faster rate.

The data did not tell someone whether to buy or sell a share in a company but it could be plugged into a model to help make that decision.

At the same time financial advisers were able to access a lot more data about how individuals should invest to get to a certain outcome.

“In the past investing has been around [that] I need to put some money away. People didn’t really think about the outcomes.”

Now, Rohe said, people needed to invest earlier in life to take advantage of compound interest. “A big issue is longevity risk. We are living longer but it’s not great if you are poor.”

Rohe said data was being used to provide better financial advice by helping someone in their 50s work out how much more they needed to save to have the lifestyle they wanted at 65, and then how much they could afford to spend to make it last.

“Technology will enable clients to . . . have a conversation with a financial adviser. It will also allow you to do it yourself with digital advice.”