BlackRock CEO publishes annual open letter: The wave of tokenization has arrived, and we will lead this trend

Written by: Larry Fink, BlackRock

Compiled by: AididiaoJP, Foresight News

Every year, I write this letter to distill the essence of my communications over the past year with clients, employees, leaders from around the world, CEOs, and investors saving for retirement. Recently, no matter who I talk to, I hear the same refrain: we are uncertain about how to respond to the current situation.

This sentiment is understandable. We are experiencing a unique period—once-in-a-decade events that have defined entire eras are now commonplace: wars affecting the globe, trillion-dollar companies, a fundamental reshaping of international trade patterns, and perhaps the most disruptive technological innovations since the advent of computers.

Unfortunately, people often interpret these phenomena from a short-term perspective. Daily market fluctuations are seen as harbingers of long-term trends, and complex economic or technological transformations are condensed into sensational headlines. We live in a world where information is transmitted instantly, and reactions are equally swift. Sometimes, it feels like a dopamine-driven environment—an endless stream of information stimulates people's short-term impulses. However, speed can easily distort perspective, pushing long-term thinking aside.

Fairly speaking, short-term behavior in financial markets has its value. It is a necessary mechanism for absorbing new information, pricing risks, and allocating capital.

However, in the long run, maintaining an investment stance is far more important than accurately timing market entries and exits. Over the past twenty years, every dollar invested in the S&P 500 has grown more than eightfold. If you missed the ten best trading days, your returns would be less than half of that¹. Moreover, some of the strongest market rallies have occurred during the most tumultuous news headlines.

The risk is that we focus too much on the noise and forget the fundamental things that truly matter. The forces behind today's headlines have been building for a long time. The old model of global capitalism is breaking down. Countries are spending heavily to seek autonomy in critical areas such as energy, defense, and technology.

At the same time, the vast majority of wealth is flowing to asset owners rather than to those who primarily rely on labor for income. Since 1989, a dollar invested in the U.S. stock market has appreciated more than 15 times compared to a dollar tied to median wages². Today, artificial intelligence may replicate this pattern on an unprecedented scale—concentrating wealth in the hands of companies and investors with first-mover advantages.

This is the main source of current economic anxiety: a deep-seated feeling that while capitalism is functioning, it is not benefiting the broader population. Focusing on short-term investments will not solve this issue. On the contrary, only long-term investments can help countries build domestic industries, assist individuals in accumulating lasting wealth, and demonstrate how the results of national development can also benefit them.

Ideal long-term investments can create a miracle akin to a social contract. When people save and invest with decades in mind rather than days, capital markets can effectively allocate these funds to finance businesses, infrastructure, and jobs. When this cycle occurs within a country, individuals' futures become closely linked to the nation's future. You provide funding for national development, and national development, in turn, contributes to your wealth growth.

My belief in this civic miracle is undoubtedly influenced by my professional background. But I am not speaking solely as the CEO of BlackRock—this belief is rooted in my decades of personal experience witnessing how investments help more people share in the fruits of economic growth.

This belief also stems from my family's experiences. My father was born in 1925, and my mother in 1930; they came from humble beginnings. My father ran a shoe store, and my mother taught English. But they lived within their means and committed to saving and investing.

That was during the 1950s and 1960s, a time when the U.S. interstate highway system was being built, the mid-century industrial boom was flourishing, and the automotive industry was reshaping the national lifestyle. They participated in and supported all of this in their small way. They were part of the modern American capital flow. Over time, the fruits of growth also rewarded them. When they retired, their savings were sufficient for them to enjoy a comfortable life well into their nineties. Their wealth growth was always accompanied by the expansion of the American economy.

This phenomenon is far from unique to the U.S. Across different countries and generations, the patterns are remarkably similar. Families that invested broadly and consistently, weathering the Great Depression and wars, inflation and financial crises, and even the global pandemic, had opportunities for their wealth to grow in sync with their national economies. It is this history that keeps me holding onto long-term optimism. Not because the road ahead is smooth, but because markets tend to reward those who maintain their investments amid uncertainty.

This is the challenge of our time: to expand opportunities and ensure that more people have a seat at the table in national development. Because today, too many people are left out.

Many people first lack the funds to invest—those families living paycheck to paycheck. If you can barely manage next month's rent, next week's groceries, or unexpected bills, investing is out of the question. Therefore, the starting point should be to help people build a basic financial safety net.

Progress is already being made in this area. Emergency savings accounts that allow employers to match contributions and workers to withdraw without penalties are becoming increasingly common. More and more countries are trying to establish investment accounts that are available at birth, giving children a stake in their country's future development as soon as they leave the hospital.

Even with savings, market participation remains limited. The U.S. may have the highest market participation rate in the world, but still, about 40% of the population has not engaged in capital markets³. Globally, participation rates are far lower⁴. Billions of people watch their national economies grow but can only deposit their savings in low-interest bank accounts instead of sharing in the growth through investments.

The foundation of a well-functioning market is investor trust that transactions can occur at fair prices. This trust helps companies raise the capital needed for growth and allows families to diversify investments across various assets at low costs, rather than relying solely on a single property. Expanding the reach of this system through technological advancements and financial literacy can enable more people to share in economic growth. Over time, the same technological advancements will also help bring greater transparency to certain areas of private markets—such as infrastructure and private credit—and are expected to open doors that were previously out of reach for most individual investors.

Half of the global population carries digital wallets on their phones⁵. Imagine if the same digital wallet could also allow you to invest in long-term, diversified stocks as easily as sending a payment—what a change that would bring! Tokenization technology could accelerate this vision by upgrading the underlying architecture of the financial system—making the issuance, trading, and access to investments simpler.

I opened this letter with several forces that make the current discussion particularly urgent: the restructuring of global trade patterns, the increasing inequality exacerbated over the past generation, and the risk that artificial intelligence, without widespread market participation, could further widen the gap.

Next, I will illustrate how countries are working to expand market participation and help their citizens grow alongside their national economies, using the practices of four countries as examples—there are countless such examples.

The final part of the letter will turn to how BlackRock is working with clients to advance these goals.

Why Growing Together with the Nation Has Never Been More Important

First, the world is being restructured around "self-sufficiency," which requires more long-term investment.

Wherever I go, I hear similar sentiments. Europe is striving to develop a self-sufficient defense industry, emerging markets are focusing on developing domestic energy, and the U.S. is trying to rebuild its manufacturing base. While the details may differ, the trend is clear: countries are increasing investments to reduce interdependence.

There are reasons for these actions. For many governments, accepting higher costs in pursuit of self-sufficiency is seen as an investment in resilience and long-term competitiveness—strengthening domestic industrial capabilities, anchoring jobs and investments domestically, and enhancing control over critical areas.

However, this transformation comes at a high cost. The costs of obtaining critical minerals like rare earths outside of China and building chip manufacturing facilities outside of Taiwan have risen significantly. Every step toward self-sufficiency means at least temporarily giving up the global economies of scale that have maintained low-cost advantages for decades. In short: in the short term, self-sufficiency is expensive.

So, where does the funding come from? Historically, financing for major economic transformations has come from banks, corporations, and governments—not capital markets, which makes sense. That is where people store their funds. They deposit savings in bank accounts, drive business growth by purchasing goods and services, and pay taxes to support public investments.

But these channels are now overwhelmed; banks alone cannot meet the full demands of growing economies. Governments are burdened with record debts, and even Gulf economies with vast sovereign wealth cannot achieve their ambitions solely through public funds. When the "Tech Seven" build data centers or power infrastructure, they too need to turn to capital markets⁶.

The funding needed for self-sufficiency is increasingly reliant on markets. It is only logical to ensure that a larger proportion comes from domestic investors.

For decades, capital has chased returns globally—while local populations have often failed to benefit sufficiently. Funds should continue to flow freely to where opportunities exist; this is key to the effective functioning of markets. But that does not mean countries cannot take more measures to guide capital to serve their own development.

Abundance and Affordability of Energy

For many years, I have advocated for "energy pragmatism." Meeting growing demands requires expanding supplies of oil, natural gas, renewable energy, storage, nuclear power, and the grid; no single energy source can solve all problems independently.

However, in the U.S., one thing is becoming increasingly hard to ignore: to keep household energy affordable, we must rapidly increase electricity supply.

Electricity demand has risen again after years of relative stability⁷. Households are becoming more electrified, industries are expanding, and data centers require large amounts of stable power. Meanwhile, new generation and transmission capacity takes years to develop. When supply grows slowly while demand accelerates, price increases become inevitable.

Natural gas remains crucial for ensuring the reliability of the power system, and the U.S. has abundant natural gas resources⁸. However, relying solely on natural gas may not meet the expected growth in electricity demand across regions. Therefore, a broader expansion of the power supply structure is necessary. Nuclear power is vital in the long run, but building new capacity takes time, which further underscores the urgency of developing other energy sources now.

Solar energy is likely to play an important role in this expansion process. It is one of the fastest-deployed new power sources, and its costs have significantly decreased over the past decade⁹. Solar energy is not a substitute for other energy sources but an effective complement. Combined with battery storage and grid upgrades, solar energy can help increase total power supply and alleviate price pressures over time.

Supply chains are crucial. Currently, most of the global manufacturing capacity for solar cells and batteries is concentrated in China¹⁰. Based on resilience and security considerations, the U.S. and its partner countries are investing to diversify production and expand domestic manufacturing. While promoting solar energy in the U.S., it is essential to simultaneously build a stronger and more diverse supply chain foundation, including battery manufacturing and its critical minerals and components, which are increasingly vital for energy security and industrial competitiveness.

The principle is simple and clear: energy affordability depends on energy abundance. When electricity is in short supply, households feel the pressure first—reflected in monthly bills and overall living costs. When supply reliably grows, the economy can develop, and households benefit as well.

The goal is not to favor a particular technology but to ensure that the U.S. can produce sufficiently reliable and cost-effective electricity while supporting household budgets and long-term competitiveness. This requires speed, scale, and sustained investment in various energy sources—including meaningful expansions in solar energy.

Second, expanding investment participation can help address the wealth inequality left by the previous era of global capitalism.

Since the fall of the Berlin Wall, the world has created more wealth than in all of human history combined¹¹. Over a billion people in developing economies have escaped extreme poverty and entered the middle class¹². Companies in developed countries have gained access to vast new markets, and consumers enjoy cheaper goods. However, in wealthy countries, the fruits of growth are concentrated in the hands of a few.

There is a wealth of economic literature explaining the causes of this phenomenon. But the simplest, and perhaps least mentioned, explanation is that the vast majority of wealth has flowed to capital markets, while too few people have participated in them.

For many families, wealth accumulation primarily relies on a single asset. Purchasing property has been, and still is, the main way for middle-class families to accumulate wealth.

However, housing is not necessarily a high-return investment. Considering property taxes, insurance, maintenance, and transaction costs—these expenses have risen significantly in many areas—long-term returns may be more modest than nominal price increases and more volatile.

This is not a phenomenon unique to the U.S. In many developed economies, rising housing costs and tightening loan conditions have made homeownership increasingly difficult, especially for young people.

Housing provides stable shelter, a sense of community, and a forced savings mechanism—its benefits far exceed economic returns. However, if we expect more people to share in economic growth, we cannot rely solely on a single asset that people are buying at increasingly older ages to carry this burden¹³.

It is easy to empathize with this predicament. If you no longer believe that work is the path to success, if you feel powerless to buy a home, or even if you can buy a home but struggle to accumulate significant wealth, then the economy is unlikely to feel like it is serving you. If the general population feels this way, no country can thrive.

Many proposals have been made to address this issue. But if wealth is increasingly created in capital markets, then part of the solution lies in ensuring that more people can participate in them.

This is not to downplay the real challenges of housing affordability, nor to deny that many families' incomes have not kept pace with the growth in asset values. It simply means that a key part of the solution is to get more people into capital markets—allowing them to share in the growth that is happening rather than merely watching from the sidelines.

If wealth is increasingly created in capital markets, then part of the solution lies in ensuring that more people can participate in them.

Third, if ownership does not expand accordingly, there is indeed a risk that artificial intelligence will exacerbate wealth inequality.

When discussing the economic impacts of artificial intelligence, the focus often centers on employment. This is undoubtedly an extremely important issue, with implications that extend far beyond the economic realm. Work provides income, purpose, and dignity.

However, history shows that transformative technologies can create immense value—and most of that value accrues to the companies that build and deploy the technology, as well as to the investors who hold their shares.

The economy is rewarding scale to an unprecedented degree. In many industries, we are seeing increasingly divergent "K-shaped" outcomes: leading companies are far ahead, while others struggle to catch up. The contrast is stark: Walmart's market value has reached an all-time high, while Saks Fifth Avenue filed for bankruptcy just two weeks ago¹⁴.

Artificial intelligence may further accelerate this trend. Companies that have the data, infrastructure, and capital to deploy AI at scale will capture a disproportionate share of the gains. This is neither unusual nor an inherent flaw. Market leadership shifts with technological change; it has always been this way. The more core question is: who gets to share in these gains? When market values rise while ownership remains concentrated in a few, those left out will feel prosperity slipping further away.

Artificial intelligence is an unstoppable trend. It is at the core of strategic competition between the U.S. and China. The U.S. clearly recognizes that maintaining leadership in AI is crucial, which requires sustained investment—covering research, infrastructure, talent, and capital markets that can finance large-scale innovation.

Artificial intelligence is also reshaping the investment industry itself. Long before generative AI entered the public consciousness, advancements in data science and computing were changing how investors analyze markets, manage risks, and allocate capital. One of the results has been the rise of "systematic investing"—an approach that leverages vast data, research-driven models, and rigorous processes to evaluate thousands of securities at scale and consistency, rather than relying solely on individual judgment.

BlackRock has been building these capabilities for forty years: expanding data, refining models, applying technology to identify patterns and manage risks, to help clients achieve better long-term outcomes. As these tools become increasingly powerful, we believe that the combination of systematic insights and human expertise will define the next era of investing.

One thing is certain: artificial intelligence will create tremendous economic value. Ensuring that more people can share in this growth is both a challenge and an opportunity.

A Thought on AI and the Workforce

Historically, automation has enhanced productivity and, over time, expanded the scope of work—even as it has displaced some jobs. Artificial intelligence may do the same. But the emergence of new jobs takes time, and workers do not always transition smoothly.

There is no consensus on the impact of AI on the labor market—especially on entry-level white-collar jobs. The fact is, no one can predict with certainty.

In the short term, certain jobs are in high demand and offer lucrative pay: skilled trades, particularly those involved in building AI's physical infrastructure, such as data centers, power systems, and the grid. In the U.S., the employment growth rate for electricians is three times the national average¹⁵.

These jobs pay far above the median wage, with many reaching six figures. This is true in many Western economies¹⁶.

As NVIDIA's President and CEO Jensen Huang told me, "Everyone should be able to have a decent life. This does not require a PhD in computer science."

The question is how to get more people into these jobs. The skills gap is real, and there needs to be ongoing investment in training and apprenticeship programs. This is precisely why the BlackRock Foundation launched the "Future Builders" initiative—a $100 million philanthropic program aimed at expanding economic opportunities and supporting the next generation of skilled workers in the U.S., with plans to benefit 50,000 workers over the next five years.

But the issue goes beyond training. For decades, many societies have equated success with a college degree and white-collar jobs. As technology reshapes parts of the job landscape, we need to engage in a broader discussion about opportunity, dignity, and the value of different types of work. How do we respond?

This is a discussion worth having.

The growth of skilled trades employment in the U.S. is projected to be 5%, higher than the national average of 3% (projected employment growth from 2024 to 2034).

Chart source: U.S. Bureau of Labor Statistics Occupational Outlook Handbook; BlackRock, 2026. Data last updated by the U.S. Bureau of Labor Statistics in August 2025. National averages include all wage and salary workers, self-employed individuals, and workers in agriculture and private households. Military occupations are excluded.

Growing Together with the Nation—Examples in Practice

United States

People often wish to invest in their country's financial markets but lack the funds. A BlackRock survey found that one-third of Americans cannot come up with $500 for emergency expenses like car repairs¹⁷. In fact, many are forced to withdraw from the market to make ends meet. Last year, a record number of employees withdrew funds from their 401(k) accounts to address financial emergencies¹⁸.

The challenge is first to have savings available for investment. This starts with emergency savings accounts. Such accounts enjoy tax advantages and are used for unexpected needs. BlackRock research shows that employees with emergency savings are over 70% more likely to contribute to retirement plans¹⁹. The U.S. has implemented policies to encourage this. Currently, employees can save up to $2,500 (adjusted for inflation) in emergency accounts linked to retirement plans, with employers able to match contributions and withdrawals exempt from penalties²⁰.

Another way to get more people involved in investing is through "early wealth accumulation accounts." These are investment accounts set up for children at birth. Countries like Canada, the UK, and Singapore have attempted to implement this, often with initial funding from the government. A wealth of evidence shows that such investments yield good returns: on average, those with early wealth accumulation accounts are more likely to attain higher education, start their own businesses, and own homes²¹.

Today, the U.S. is adopting similar policies through "Trump Accounts." The funding sources for these accounts vary. In some cases, they are government-funded pilot projects that require subsequent approval for extension. Funds can also come from individual contributions or through certain employer matching programs, like those we offer to employees at BlackRock. In other cases, funding comes from private sponsors.

How these accounts will evolve remains to be seen. But if designed thoughtfully and effectively integrated with existing education and retirement savings tools (like 529 plans and 401(k) plans), this could be an important step in helping more young Americans grow alongside their nation.

Additionally, there is another potentially powerful lever for wealth creation worth discussing—though it is not easy to talk about: the social security system.

Social security is one of the most effective poverty alleviation programs in history. According to data from the U.S. Census Bureau, it keeps nearly 29 million Americans out of poverty each year²². This is an extraordinary achievement.

The problem is that while social security provides stable support, it does not give most Americans a way to accumulate wealth in a manner that allows them to grow alongside their nation.

Currently, the system primarily operates on a pay-as-you-go basis. Payroll taxes are used to pay benefits to current retirees, and the social security trust fund mainly invests in U.S. Treasury bonds. In effect, workers are lending money to the government and receiving defined benefits in return. This structure, as a social insurance program, emphasizes stability and predictability. What it fails to do is align people's benefits with overall economic growth. The question is whether the social security system can balance both. Can it invest some of its funds like other long-term pension plans—prudent, broadly, and across cycles—while still ensuring that the program remains a solid safety net?

This does not mean privatizing social security or investing it all in the stock market. Rather, it means introducing a degree of diversification, with principles similar to the Federal Employees Retirement System, which manages retirement savings for millions of federal employees. The goal is to enhance the system's sustainability over time while maintaining core protections.

Several proposals have been made to suggest similar ideas. For example, Senators Bill Cassidy (R-LA) and Tim Kaine (D-VA) proposed establishing a new investment fund—parallel to the existing trust fund, not a replacement—that would invest in a diversified portfolio of stocks and bonds to achieve higher long-term returns. This fund would require approximately $1.5 trillion in initial funding and would have a 75-year growth period. During this time, the Treasury would continue to pay benefits. Once the fund matures, it would repay the Treasury's principal and supplement future payroll tax revenues to help fill the system's funding gap. Any current or soon-to-retire individuals would not be affected in terms of their benefits.

Market-based solutions are not just theoretical. In some U.S. states, this has become a reality. About six million state and local government employees, many of whom are police officers, firefighters, and teachers, do not participate in the social security system²³. They rely on public pension funds that invest in diversified portfolios. If long-term investments have been helping millions of public employees build retirement security, it raises a reasonable question: why can't more Americans have the same long-term growth opportunities?

Other countries are also taking similar measures at the national level. For example, Australia's retirement savings system invests retirement contributions in the market and has developed into one of the largest retirement savings pools in the world. Strengthening social security could also consider adopting similarly prudent designs.

I understand that any discussion involving social security reform can be unsettling. Social security is a core commitment, and the public rightly expects it to be honored. But under the current system, inaction could very well lead to broken promises. Current projections show that the trust fund will be unable to pay full benefits by 2033²⁴. Many young Americans doubt they will receive full benefits. Bridging this gap may require multiple solutions. But prudent long-term investments could be one of them.

I have written about social security many times. Two years ago, I titled a letter "It's Time to Rethink Retirement." Merely suggesting that social security needs reform drew criticism. This statement may invite controversy again. But one thing I have learned in my 50 years in finance is that the issues we avoid discussing are often the ones we should be most concerned about. And that is precisely why we need to have this dialogue now—because the cost of delay will only grow higher.

Social security is a core commitment, and the public rightly expects it to be honored. But under the current system, inaction could very well lead to broken promises.

India

India is entering a new chapter of economic growth, with a strong stock market performance. As Indian business magnate Mukesh Ambani told me this February, "This is our baby boomer generation—a generation that believes tomorrow will be better than today." Notably, India has laid the financial groundwork for its people to share in this future.

Today, about a billion Indians effectively have bank branches in their pockets²⁵. Through digital wallets on smartphones, they can make payments, save, and conduct digital transactions in rupees. While currently primarily used for payments, these smartphones could become gateways to capital markets. BlackRock's joint venture with Mukesh Ambani's Reliance Group, JioBlackRock, is focused on this: helping more Indians become investors. In less than a year, this joint venture has served over a million investors across India.

This is not just a story about latecomers catching up to existing financial systems; it is a story about building modern financial infrastructure from scratch.

It also provides insights for the next evolution of market infrastructure—tokenization. Tokenization reduces friction, lowers costs, and accelerates settlement by recording ownership on a digital ledger. India's system is not based on blockchain—in fact, it has taken a fundamentally different path. But this precisely illustrates the point. Its success shows that new financial channels do not depend on a single technology. Success occurs only when policy, technology, and application advance in tandem.

Countries that built modern financial systems—the U.S., the U.K., the EU—are now working to modernize existing mature systems to allow traditional markets and digital markets to coexist. When capital markets are already deep and robust globally, change will naturally be more gradual. But the goal should be consistent: to make it easier for people to invest in their country's development.

A smartphone wallet that can be used for investments is already remarkable. But when financial assets themselves become digitally native, the world of investable assets will be even broader. The bonds you hold are still bonds—but they can circulate more efficiently on modern infrastructure.

Over time, a single, regulated digital wallet may not only hold payment balances but also a wide range of financial assets. In the same wallet, someone could hold exchange-traded funds, digital euros, tokenized bonds, and shares of previously inaccessible assets (like infrastructure or private credit funds). By lowering minimum investment amounts and simplifying asset division processes, tokenization can attract more investors. It can also make it easier for investors to receive information and exercise shareholder voting rights. The goal is not to pursue novelty but to provide savers with a simpler, seamless way to participate in markets and accumulate wealth.

As Rob Goldstein and I mentioned at the end of last year, we believe the current stage of tokenization development is roughly equivalent to the internet in 1996. It will not replace the existing financial system overnight. Imagine a bridge being built simultaneously from both riverbanks, ultimately meeting in the middle. One side represents traditional financial institutions, while the other represents digital-first innovators: stablecoin issuers, fintech companies, public blockchains. Policymakers' task is to facilitate the bridge's construction as quickly and safely as possible.

Consistency is crucial. Rather than rewriting a set of rules for the digital market, it is better to update existing rules to allow traditional and tokenized markets to operate in harmony. Tokenization also requires clear safeguards, such as transparent buyer protection clauses to ensure the safety and transparency of tokenized products; strong counterparty risk standards to prevent risk spillover; and digital identity verification to manage risks associated with illicit financial activities. Only then can people approach transactions and investments with confidence, as easily as swiping a card or making a transfer.

This is not just a story about latecomers catching up to existing financial systems; it is a story about building modern financial infrastructure from scratch.

Japan

For decades, Japanese households have kept their savings in cash and low-yield deposits. This has led to slow growth in ordinary people's retirement reserves—an actual challenge for a country with the world's oldest population²⁶. It has also resulted in a lack of capital necessary for growth in the Japanese market, forming the backdrop of Japan's economic stagnation since the late 1980s.

However, in 2022, Japan decided to double or even triple the contribution limits for the "Nippon Individual Savings Account" (NISA), a tax-advantaged investment account²⁷. These accounts have existed for nearly a decade, but due to low investment limits, most people rarely used them. Raising the limits significantly increased the attractiveness of stocks and initiated a virtuous cycle: more investors injected more capital into the market, the rising market made investments more appealing, and companies began to increase their future investments.

Since the announcement of this policy, the Nikkei index has risen from around 28,000 points to over 50,000 points, benefiting many NISA account holders²⁸. In three years, nearly ten million new investors have entered the Japanese market—about 8% of the national population²⁹. With the launch of the Children's NISA in 2027, the NISA program is expected to achieve exponential growth, ensuring that future generations of Japanese people grow as investors³⁰.

Germany

For many, retirement represents their first—often only—meaningful connection with capital markets. It is through retirement plans that workers become long-term owners of businesses, infrastructure, and innovation.

Germany is currently exploring how this connection should evolve. Like most European countries, Germany faces demographic shifts: an aging population and a declining ratio of workers to retirees³¹. Across the EU, there are currently fewer than three working-age individuals for every person aged 65 and older, while total spending on public pensions, healthcare, and long-term care accounts for about one-fifth of EU GDP³².

Germany's retirement system primarily relies on statutory public pensions, operating on a pay-as-you-go basis. Occupational pensions and private pensions also play a role, but the accumulated pension assets remain relatively limited compared to the scale of the economy. Therefore, compared to several other developed European countries, the total pension assets in Germany account for a lower proportion of GDP³³.

At the end of 2025, the German government proposed a plan to expand tax-advantaged, state-supported private retirement savings³⁴. At the same time, a committee has been tasked with reviewing the long-term sustainability of the entire pension system (statutory, occupational, and private pillars)³⁵. The goal is not to replace the public system but to assess how to allow the accumulation elements to play a greater complementary role over time.

Other European countries have demonstrated the possibility of this balance. In the Netherlands, Denmark, and Sweden, accumulation-based pension systems have amassed large long-term assets and invested heavily in public and private markets. Such systems can provide retirement income security while also helping to deepen domestic capital markets.

Ireland is also moving in this direction. Earlier this year, the country launched a nationwide automatic enrollment retirement savings system aimed at expanding the coverage of accumulation-based pensions and bringing hundreds of thousands of workers into the market for the first time³⁶.

However, Germany's situation is somewhat different. As Europe's largest economy, its gradual adjustments to retirement savings structures and investment methods will have impacts that extend beyond its borders³⁷.

Europe's overall household savings rate is relatively high. The policy question is how to guide these savings to be effectively allocated—supporting employment, infrastructure, and innovation—while strengthening long-term retirement security.

Europe's demographic structure makes this issue increasingly unavoidable. As the proportion of retirees relative to the working population rises, the model of each generation fully supporting the previous one will face greater challenges. Strengthening accumulation-based retirement savings is not about replacing Europe's social model but supporting it—by combining shared responsibility with broader ownership of long-term growth.

For years, former European Central Bank President Mario Draghi and others have argued that Europe needs deeper, more integrated capital markets to maintain competitiveness and strategic autonomy³⁸. Pension reform—especially in a large economy like Germany—could significantly expand Europe's long-term capital base and direct Europe's vast savings toward the growth and innovation areas that will determine its next phase of development.

Pension reform—especially in a large economy like Germany—could significantly expand Europe's long-term capital base and direct Europe's vast savings toward the growth and innovation areas that will determine its next phase of development.

250th Anniversary

This July, the United States will celebrate its 250th anniversary, but 2026 is not just a celebration for the U.S.

The historical coincidence is that in 1776, when Thomas Jefferson was drafting the Declaration of Independence in Philadelphia, Adam Smith was publishing "The Wealth of Nations" in Scotland—the foundational work of modern economics.

What began as a coincidence has evolved into interdependence over time. These two concepts reinforce each other: democratic systems rely on the public genuinely feeling that they have a stake in the future of their nation. And capital markets are now the mechanism for realizing that stake—through the tangible benefits of dollars, euros, and yen.

Imagine how recent all of this is. In 1776, there was no widespread capital market system linking ordinary citizens to economic growth. Today, global capital markets—public and private combined—are valued at nearly $300 trillion³⁹. Most of that growth has occurred in the past forty years.

BlackRock has grown alongside this transformation. We see in country after country that the stories I share above are just the beginning. Much of the world is still in the early stages of building markets that not only fuel the economy but also ensure that the public has a meaningful share in the growth they create.

This civic miracle continues to unfold around the world. Extending it—making it possible for more people to invest in their country's growth and share in its benefits—is our shared mission.

Executing Our 2030 Goals

At our Investor Day in 2025, we outlined BlackRock's goals for 2030. We have built strengths on foundational pillars such as ETFs, Aladdin, total portfolio management, fixed income, and cash management. They are a solid foundation for serving clients and achieving organic growth goals.

We have also advanced organic business building in structural growth categories, including digital assets, active ETFs, model portfolios, and systematic equities.

Looking ahead to 2030, our goal is to achieve over $35 billion in revenue, with 30% or more coming from private markets and technology. We expect revenue growth to be supported by our targets of organic base fee growth of 5% or more and annual contract value growth in technology of low to mid-double digits. Our goal is to nearly double adjusted operating income starting in 2024 while maintaining an adjusted operating margin of 45% or higher through market cycles. We already have industry-leading margins, and we believe there is an opportunity to drive margin expansion through the growth trajectory of fee-related revenues in private markets and our highly scalable core business. All of these goals assume a flat market environment, and if the market performs moderately well by 2030, there will be significant upside potential.

BlackRock's growth in 2025 is broad, encompassing capabilities we have had for decades as well as those we have built or acquired over the past two years. We expect the path to 2030 to be similar, with growth coming from our strong foundational pillars—such as iShares and Aladdin—and from businesses we are building in newer high-growth markets within the industry. Private markets for insurance, private markets for wealth, digital assets, and active ETFs—we believe these could all become $500 million revenue sources within the next five years.

We see a tremendous opportunity to bring private markets to more investors, serving as a portfolio enhancer that provides diversification from public markets while also having long-term growth and income potential. Our investments in infrastructure, private credit, and alternative assets into the wealth space support our goal of raising $400 billion in private markets by 2030. BlackRock already manages $30 trillion in assets on behalf of insurance, wealth, and outsourcing clients. We have a tremendous opportunity to provide better outcomes and experiences for clients in private market allocations.

For example, BlackRock is the largest insurance general account manager⁴⁰, managing $700 billion in assets. Through HPS, we are now also a scaled provider of asset-backed financing and high-grade private debt products. We have already seen early momentum in bringing high-grade private debt to portfolios that have historically partnered with us in public markets.

In the wealth space, we already have a strong presence, with retail private market management exceeding $30 billion, combined with BlackRock's global distribution platform and comprehensive advisor relationships. We are now extending private markets into wealth across a broader array of products and multi-asset alternative models. We recently partnered with the Union Group to launch the first private market separately managed account solution, enabling more people to access private equity, private credit, and real assets. These strategies are delivered through a single subscription document, designed to meet client objectives while minimizing operational complexity for advisors and their clients. These collective products are an important step in bringing the benefits of private markets to more investors, including those saving for retirement or other financial goals.

BlackRock has long advocated for expanding retirement savings, whether through investment accounts available at birth or enabling more people to transition from savers to investors in capital markets. More than half of the $14 trillion in assets we manage is retirement-related, whether through individual investors via ETFs or 401(k) plans, or pension clients investing on behalf of millions of teachers, firefighters, and union workers worldwide⁴¹.

We are the largest fixed contribution investment management company⁴², including over $600 billion in assets under our LifePath target date products. Our LifePath Paycheck innovation combines the flexibility of target date funds with solutions designed to provide workers with reliable income streams in retirement.

Many global retirement plans, including fixed income plans, now include private market allocations, bringing diversification, income, and potentially higher alpha to individual members (not just institutions). However, in the U.S., the vast majority of retirement savers enter capital markets through 401(k) plans and cannot access private markets. We see significant changes in the regulatory framework that could alter this situation. We believe that when private markets are prudently and responsibly incorporated into professionally managed target date funds, they have the potential to enhance participants' retirement outcomes. The transformation of introducing private markets into 401(k) plans also presents another opportunity for Preqin. Plan sponsors will need a wealth of data and standardized benchmarks, and Preqin is well-positioned to provide that data and accelerate this shift.

Looking ahead to 2030, our goal is to achieve over $35 billion in revenue, with 30% or more coming from private markets and technology.

Earlier this year, we unified Preqin's data into the Aladdin platform. Through Aladdin, eFront, and Preqin, we created a workflow and data solution for public and private markets within a single platform. I believe Aladdin will be a major beneficiary of artificial intelligence, enabling clients to work more efficiently with an ever-growing dataset and unlocking scale advantages in their investment and analytical processes. AI could become a powerful business accelerator for Aladdin, enhancing its scale, depth of resources, proprietary data, and the advantages of its extensive network embedded in the global investment ecosystem.

BlackRock is also actively building exciting new technologies in financial markets, including digital assets and tokenized funds. Today, traditional investment products are nearly inaccessible in digital wallets. We plan to lead this transformation.

BlackRock has established early leadership in bringing institutional-grade products to digital markets at scale, with nearly $150 billion in assets related to digital assets. Our tokenized treasury fund has grown to become the world's largest tokenized fund, managing $65 billion in stablecoin reserves, along with nearly $80 billion in digital asset exchange-traded products⁴³. All of these businesses have been built over the past few years, and we are exploring opportunities to further expand our advantages.

Our digital asset exchange-traded products are another example of how our iShares ETF platform remains a powerful center for growth and innovation, achieving double-digit organic asset and base fee growth in 2025. Even with over $5 trillion in managed assets, iShares continues to unlock new applications for ETFs, bringing new investors into capital markets and expanding our reach across regions.

In addition to digital assets, active ETFs represent an emerging growth channel for iShares. Our active ETF platform doubled in scale in 2025, ending the year with nearly $100 billion in managed assets, with significant growth potential ahead. Our clients are increasingly incorporating active ETFs into their investment strategies, including model portfolios, to unlock excess returns, manage downside risk, or generate sustainable income. We are bringing active management capabilities to the ETF market, making our portfolio managers and alpha opportunities more widely available to investors around the world.

In Europe, we are seizing an expanding market opportunity as a wave of first-time investors enters capital markets through monthly savings plans and digital-first products. In 2025, iShares saw net inflows in Europe that were 50% higher than in 2024, capturing over one-third of the funding flows in the region. We are seizing opportunities here and globally as ETFs gain increasing recognition among individuals and institutions to grow our business.

For shareholders, our 2030 strategy aims to achieve higher, more sustainable growth and higher profit margins over time. As we expand businesses with strong long-term tailwinds and recurring revenues, we expect to achieve more stable organic growth, enhance profitability resilience through market cycles, and create meaningful long-term value. Our diversified platform, disciplined capital allocation, and focus on execution enable BlackRock to achieve compound growth in profitability while continuing to invest in the future. This alignment between client success and shareholder outcomes is at the core of our strategy and is why we believe we are building a BlackRock for 2030 that is stronger, more resilient, and better positioned than ever before.

Total Compound Annual Return from BlackRock's IPO to December 31, 2025

The strength of our integrated platform and the advantages of our client relationships are key sources of differentiated returns for our shareholders. Since our IPO in 1999, our annualized total return has been 20%, compared to 9% for the S&P 500 and 7% for the financial sector.

The chart compares BlackRock's 20% total compound annual return since its IPO with 9% for the S&P 500 and 7% for the financial sector.

Source: S&P Global, as of December 31, 2025. Performance charts do not necessarily predict future investment performance.

Our growth and success begin with our world-class talent, and our leadership team is no exception. In 2025, we expanded our Global Executive Committee to include more emerging business leaders who will help advance our strategy in the coming years. Over the past 18 months, we have welcomed a talented leadership team from GIP, Preqin, and HPS. We have a long history of successful integration, and many of our current senior leaders joined us through acquisitions. We are already beginning to benefit from the fresh perspectives and experiences brought by new colleagues, as well as from the talent we cultivate locally.

Artificial intelligence could become a powerful business accelerator for Aladdin, enhancing its scale, depth of resources, proprietary data, and the advantages of its extensive network embedded in the global investment ecosystem.

Looking Ahead

Today, BlackRock stands at the intersection of the most powerful forces reshaping global finance: long-term growth in capital markets, modernization of portfolios, expansion of private investments, the evolution of artificial intelligence, and the digital transformation of investing itself. Our diversified platform means we can connect with clients wherever market opportunities align with their portfolio goals—and do so profitably, responsibly, and at scale.

That is why we believe now is an incredibly attractive time to become a BlackRock shareholder. We enter 2026 with strong organic growth, a resilient profit base, and multiple structural tailwinds. Our strategy is clear. Our balance sheet is strong. Our goal—to help more people achieve financial well-being—continues to guide our growth direction.

BlackRock has always been built for the long term. The performance of 2025 and the momentum we see today bolster our confidence in the coming years.