BlackRock's Edge

How do you stay on top when your core business is a commodity and you measure profits in hundredths of a percentage point? You build the best risk-management software on Wall Street.

- Antoine Gara

On a large flat-screen monitor perched in front of a framed orange-and-blue Warhol print of Teddy Roosevelt as a Rough Rider, BlackRock’s chief operating officer, Rob Goldstein, is looking over the entirety of the financial firm’s $6 trillion in global assets—135 teams with positions in hundreds of markets in 30 countries. He is using software that he’s been perfecting for the 23 years he has spent at the company. A simple gray column on the left reveals BlackRock’s activity on this quiet pre-Thanksgiving day: There are some 25,000 trade orders in the market, 77,000 trades and thousands of collateral calls. A wider view colorfully identifies the specific portfolio managers and traders initiating the moves.

The program is called Aladdin, shortened from the wonky Asset Liability and Debt and Derivative Investment Network, and it can expand and contract like an accordion, from a holistic view of firm-wide risk down to a single trade in a split second. It is the reason Goldstein, 45, is a favorite to run BlackRock one day, despite the fact that he has never placed a trade or made a market call during his tenure. His ascendance at the financial giant speaks volumes about the state of asset management today—a business dominated by the explosive growth of passive index funds all racing to the bottom on fees.

“The ability to have a dashboard for running a firm like BlackRock that’s as simple as the dashboard in a car is a remarkable feat,” Goldstein confidently states. “One system, one database, one set of models. I know the vast majority of people don’t have this.”