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Larry Fink calls on CEOs, money managers to teach financial literacy

Larry Fink
Laurence D. Fink

Laurence D. Fink, chairman and CEO of BlackRock (BLK), called on money managers and the CEOs of major companies to do their part in teaching financial literacy to employees.

“Asset managers also have an important role in building financial literacy, but as an industry we have done a poor job to date,” wrote Mr. Fink in his annual letter to the CEOs of all S&P 500 companies. “Now is the time to empower savers with new technologies and the education they need to make smart financial decisions.”

The BlackRock chairman noted that in order to solve the retirement crisis and help workers adjust to a globalized world, “businesses need to hold themselves to a high standard and act with the conviction that retirement security is a matter of shared economic security.”

As major participants in retirement programs in the U.S. and around the world, Mr. Fink argues that companies must do their part to “developing a more secure retirement system” for all employees. This includes employees of smaller companies who are not covered by employer-provided plans.

“The retirement crisis is not an intractable problem. We have a wealth of tools at our disposal: auto enrollment and auto escalation, pooled plans for small businesses, and potentially even a mandatory contribution model like Canada’s or Australia’s,” Mr. Fink wrote.

Mr. Fink also wrote that it is essential that companies do their part to improving employees’ understanding of how to prepare for retirement. As plan sponsors, companies must embrace the responsibility to build financial literacy in their workforce, especially because employees have assumed greater responsibility through the shift to defined-contribution plans from traditional pension funds, he said.

Mr. Fink added that BlackRock plans to build long-term value for its clients through engagement. However, he notes that a long-term approach does not necessarily mean an “infinitely patient one.”

“When BlackRock does not see progress despite ongoing engagement, or companies are insufficiently responsive to our efforts to protect our clients’ long-term economic interests, we do not hesitate to exercise our right to vote against incumbent directors or misaligned executive compensation,” he wrote.

The full letter is available on BlackRock’s website.