BlackRock Inc.

chief executive

Larry Fink

warned that the

artificial intelligence boom

threatens to make wealthy companies and investors even richer while exacerbating inequality, unless more individuals can

share in the market gains

.

“The massive wealth created over the past several generations flowed mostly to people who

already owned financial assets

,” Fink said Monday in his annual letter to investors. “Now AI threatens to repeat that pattern at an even larger scale.”

The head of the world’s largest money manager wrote that while AI will disrupt the labour market — creating new jobs while displacing many other workers — the technology “will create significant economic value.” Encouraging individuals to invest for the long-term alongside that probable growth “is both the challenge and the opportunity,” he said.

“Too many are left out,” said Fink, whose firm manages more than US$14 trillion in client money. “When market capitalization rises but ownership remains narrow, prosperity can feel increasingly distant to those on the outside.”

One of the biggest ways to give more people a chance to share in the upside would be through changes to the United States Social Security system, Fink said. Individuals are eligible for benefits as early as age 62, and those born after 1960 are considered at full retirement age at 67.

“

Social Security

provides stability, but it doesn’t allow most Americans to build wealth in a way that grows with their country,” said Fink, who’s 73.

While he said he’s not in favour of privatizing Social Security or putting all of its funds into the stock market, Fink argued the program needs a rethink before it suffers and can’t pay out what savers expect in their retirement years. The Social Security trust fund is invested in U.S. Treasury bonds, and Fink suggested opening a discussion on how to diversify those investments.

Still, he noted that significant changes to the system would be difficult to accomplish.

“Social Security is a core promise, and people rightly believe it should be honoured,” Fink wrote. “But under the current system, doing nothing could very well break that promise.”

In the more than a decade since Fink began writing high-profile annual letters to corporate executives, shareholders and investors, BlackRock’s client assets have surged, with considerable stakes in companies, private assets and bond markets worldwide.

Long a force in public stock and bond investing after riding a decade-long wave of investor demand for low-cost index funds, BlackRock also has transformed itself through acquisitions to catch up in private markets investing. Fink committed roughly US$28 billion to buy Global Infrastructure Partners, private credit specialist HPS Investment Partners and data provider Preqin.

BlackRock has started a partnership with

leading technology companies

to invest in AI, data centres and the energy needed to power them. Last year, investors led by GIP agreed to buy Aligned Data Centers in a US$40 billion deal, one of the asset manager’s largest-ever infrastructure investments as Wall Street raced to invest in the AI boom.

More comments from Fink’s letter:

  • There is “significant momentum” for a change to regulations that would ease the inclusion of private assets in 401(k) savings plans in the U.S., he said.
  • Rising demand for energy, including from data centres, requires a wider range of power sources, including natural gas, nuclear energy and also solar energy, according to Fink. Solar, he said, “is one of the fastest sources of new power to deploy, and over the past decade its costs have declined substantially.”
  • Fink said “rather than writing an entirely new rulebook for digital markets,” current one should be updated so traditional and tokenized markets work together.

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