Therestructuring that BlackRockInc. undertook during the first quarter was not about cost cuttingand de-emphasizing any of its businesses, Senior Managing Director and CFO GaryShedlin clarified during an April 14 earnings call.
"Itwas about streamlining and simplifying the organization so that we could usethose savings to reinvest more efficiently in those strategic growth areas andcreate new stretch opportunities for our strongest people," the CFO said.
Thecompany disclosed inits earnings release that it recorded a restructuring charge of $76 million,primarily comprised of severance and accelerated amortization expense ofpreviously granted deferred compensation awards, in the first quarter.
Inimplementing the restructuring, Shedlin said BlackRock took into account itsgoals of further improving its client value proposition and generatinglong-term value for shareholders, which require the company to be "smarter"about reallocating resources in a challenging market environment. The CFO saidthe restructuring will help BlackRock focus on areas such as illiquidalternatives, smart beta and iShares where it can realize"incremental" and "differentiated" growth. He said thecompany will also continue to invest in technology.
BlackRockexpects to end 2016 with a higher total headcount despite the restructuring,according to Shedlin. However, the compensation-to-revenue ratio is anticipatedto be "modestly lower" than in 2015.
Talkingabout the U.S. Department of Labor's fiduciary rule, Chairman and CEO LarryFink expressed confidence that the asset manager is "better positionedthan any organization" in adapting to the changes that the rule brings.
Finksaid BlackRock is still in the process of reviewing the final , and it is still too earlyto determine its impact. However, he said the company will likely see changesin its distribution partners' accounts, fee structures, product preferences andtheir use of technology in building their portfolios.
"Wehave always embraced change, and we will always be looking for ways to betterserve our clients, to operate more efficiently, to focus resources on strategicpriorities and to create new opportunities for our strongest employees,"Fink said.