Bank of America 2026 Financial Services Conference: BLK CFO Martin Small on Growth Strategy, Digital Assets, M&A, and Industry Trends

Key Takeaways

TL;DR: BLK posted record 2025 organic base fee growth (+9% FY, +12% Q4), well above expectations, driven by breadth across ETFs, private markets, and tech. Management sees sustainable 6–7% organic base fee growth, w/ industry consolidation and new distribution channels (notably digital wallets, tokenized products) as key LT growth drivers. 2026 priorities: integrate recent large M&A (GIP, HPS, Preqin), expand private markets/wealth, scale tech (Aladdin), and pursue further margin expansion (targeting >45% OP margin, >50% FRE margin). BLK bullish on tokenized ETFs and digital wallet-native AM, w/ regulatory engagement accelerating. M&A focus: integration and selective capability expansion; no need for large deals to hit growth targets.

1. 2025 Organic Growth & Biz Mix

• Record Organic Base Fee Growth:
  • 2025 organic base fee growth +9% (vs. 5%+ tgt), Q4 +12%, every Q >6%.
  • "Six consecutive Qs north of our 5-plus % tgt... 9% for the year, 10% in Q3, 12% in Q4."
• Sustainability:
  • Management sees 6–7% organic base fee growth as sustainable, excluding large enterprise wins.
  • Growth broad-based: ETFs (active/trad.), digital assets, private markets, systematic equity.
• Industry Consolidation:
  • Top 5 AMs now capture ~80% of industry flows, but asset/revenue fragmentation remains high.
  • BLK sees opportunity to consolidate share/revenue as clients seek fewer, larger providers.

2. Strategic Priorities for 2026

• Integration of Major M&A:
  • GIP: Infra leader.
  • HPS: private/alternative credit.
  • Preqin: Alternative data for private markets.
  • Synergy realization, scaling public/private integrated portfolios = top priorities.
• Private markets & Alts:
  • $676B AUM in private markets; top 5 player.
  • Focus: organic growth in private markets to insurance, wealth, active ETFs, digital assets.
  • Targeting $400–500M revenue businesses in these segments.
• Fundraising:
  • $400B growth fundraising target by 2030; on track via institutional, wealth, insurance channels.
• iShares/ETF Growth:
  • $530B organic asset growth in iShares in 2025; #1 globally.
  • Double-digit organic growth continues, w/ new use cases (FI, active, non-linear/option-based ETFs).
  • Significant opportunity in Europe as ETF adoption accelerates.
• Tech & Data (Aladdin):
  • Aladdin finished 2025 at +16% ACV growth; target mid-teens through-cycle.
  • Key to 2030 goals: $36B revenue, double OP.
• Wealth Channel Expansion:
  • Movement from brokerage to advisory, expansion of independent RIAs, model portfolios.
  • Integration of private markets into wealth/retail portfolios.
  • Largest wholesaling teams in US/EU; focus on delivering institutional-grade OCIO service to wealth managers.

3. Digital Assets, Tokenization & New Distribution Channels

• Digital Wallets as Distribution Channel:
  • 820M crypto wallets, $2.5T in crypto value, 4.5B digital wallets globally.
  • BLK aims to build digital wallet-native AM (model portfolios, proposals, trading, tax, etc.).
  • Tokenized iShares seen as "best spear tip" for entering digital wallet ecosystem.
• Regulatory Engagement:
  • SEC highly engaged/supportive of innovation in tokenized ETFs.
  • "More progress in last 3mo than last 5yrs in this space."
  • Tokenized investment products in digital wallets expected to be major LT growth driver.
• Rationale for Tokenization:
  • Primary driver: access to new, rapidly growing ecosystem (not just lower costs/24x7 trading).
  • BLK sees opportunity to bridge trading and digital capital markets, bringing new investors into LT products.