The most consequential development on Wall Street in recent years has been the emergence of colossal asset managers — above all, the Big Three of BlackRock, Vanguard, and State Street. Collectively the Big Three manage over $26 trillion in assets. Most of that money is tied up in the stock market, where the trio collectively controls about 20 percent of every publicly traded corporation. This marks an unprecedented degree of economic concentration — one that labor and other social movements can’t afford to ignore.

But where did the asset management industry come from? How did it grow into such a juggernaut? Wall Street has always wielded power — so what’s new about the Big Three?

The first thing to understand about the asset management industry is that it does exactly what its name implies: it manages assets on behalf of others. That is, BlackRock, Vanguard, and State Street do not themselves own 20 percent of every company listed on the stock market – rather they hold those shares for their clients. Those clients include institutional investors (such as defined-benefit pension funds and university endowments) and participants in individualized investment vehicles (e.g., defined-contribution plans like 401(k)s and individual retirement accounts, or IRAs).