Dive Brief:

• BlackRock’s head of U.S. Wealth Advisory Martin Small will become the asset manager’s next CFO effective in 2023, following the completion of the firm’s 2022 financial responsibilities around Mar. 1 of next year, according to the announcement.
• Small will replace long-time CFO Gary Shedlin, the firm announced Monday. Meanwhile, Shedlin will transition to serve as a vice chairman, “working directly with key strategic clients of the firm,” according to the press release. 
• Small’s appointment as CFO could potentially signal a shift to “a strategy more focused on either private equity or high net worth wealth,” Cathy Seifert, VP, equity analyst at CFRA Research said in an interview.  

Dive Insight:

Shedlin has served as BlackRock’s CFO for nearly a decade since joining the company — which, managing approximately $10 trillion in assets, is the world’s largest asset manager — in 2013. Shedlin is 60, according to the company’s April 14 proxy filing which did not include Small’s age. 

Shedlin, whose background is in investment banking, served as vice chairman, investment banking and managing director in the financial institutions group for Morgan Stanley prior to joining BlackRock, according to a company biography. He has also held previous executive roles for Citigroup.

Small, who joined BlackRock in 2006, served as an associate for global law firm Davis Polk & Wardwell LLP before moving to the asset manager, according to his LinkedIn page. Elevating Small, someone from the wealth side of things, into the CFO position could be a sign the company is looking to further expand into the ultra-high net worth or private equity space, areas where strategically, the company has not “made as big of a push,” Seifert said.

“Given their size and how much they dominate the market, I think they're going to have to be very careful,” she said, noting the current Justice Department’s sensitivity to anti-competitive moves by corporations. “Certainly, they don't want to make any strategic moves that could backfire,” she said.

BlackRock’s stock was trading up nearly 5%, a healthy boost that indicates investors are taking the transition in stride. Shedlin will be staying with the firm and his departure will occur after reporting season, factors that should help to soothe investors’ nerves, Siefert said.

The announcement of Small’s appointment comes as BlackRock continues to tussle with conservative U.S. lawmakers and politicians over its environmental, social and corporate governance (ESG) policies.

But the company’s appointment of Small as CFO was not prompted in some way by the company’s ongoing ESG tug-of-war with conservative politicians, according to Greggory Warren, a senior analyst at Morningstar. “No to the ESG question,” Warren wrote in an emailed response to questions. Separately, Warren wrote that Small’s service record at the asset manager may position him well to serve as a Shedlin’s successor.

As well as serving as the head of U.S. Wealth Advisory, Small also headed the company’s iShares division, and has a background in capital markets investment management, Warren noted.

“From that perspective, he seems fairly rounded and a good fit to replace Shedlin, who really acted more as a strategic advisor (especially on the M&A side of things) to Fink and the rest of the executives/board than a true numbers-crunching CFO,” Warren wrote.

BlackRock is one among several companies caught in the climate cross hairs of Republican lawmakers — a group of 18 state attorneys general sent a letter addressed to long-time company CEO and chairman Larry Fink on Aug. 4, arguing that the asset manager’s public commitment to a zero-emissions policy conflicted with its duty to its clients.

Dalia Blass, head of external affairs for BlackRock, wrote in a letter in response to the attorneys generals arguing they had misunderstood the company’s policies, which are focusing on “enhancing transparency,” according to a Sept. 8 report by the Washington Examiner.

Fink, for his part, has remained convinced of ESG’s potential. “I believe the decarbonizing of the global economy is going to create the greatest investment opportunity of our lifetime, he wrote in his annual 2022 letter to CEOs. “It will also leave behind the companies that don’t adapt, regardless of what industry they are in.”

BlackRock’s share price closed at $573, up 4% from the day’s open at $555.

BlackRock did not respond to requests for comment.