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Chapter 1: What is the main topic discussed in this episode?
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Bloomberg Audio Studios. Podcasts. Radio. News. Schwab shares, I'm just taking a look at them, shares of the Charles Schwab Corporation. They're up about 1% in today's session. Stock is trading higher after the company reported earnings earlier today, this morning.
It did report a surge in average daily trading volume in the fourth quarter, and that's happening as retail investors really sought to take advantage at the end of a strong year of the stock market. We did see some big moves there. Hey, to talk about the quarter and the outlook, great for Tim and I to be back with Rick Worster. He's president and CEO of the Charles Schwab Corporation.
He joins us from their headquarters in Westlake, Texas. Rick, great to have you back with us. How are you?
I'm doing really well. Nice to be with you, Carol and Tim. I always enjoy it.
Well, we are so glad to have you back with us. It feels like 2026 is off and running. I'm just curious though, I want to talk about the last quarter and you guys did note about clients conducting a lot more of their financial lives at Schwab, doing different things, wealth management, trading and banking.
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Chapter 2: What insights does Rick Wurster share about Schwab's recent earnings?
When we do that, their satisfaction actually increases and our business grows. So it's a win for them because we're bringing convenience. And it's a win for us because we're doing more business with them and doing more to help them in their financial life.
You mentioned financial lives, and you just went through a whole list of things that people do with these apps and services. What about prediction markets? Can you talk a little bit about whether you're planning on exploring options for customers when it comes to prediction markets? It's all a rage right now, as you very well know.
And you thought we were going to warm you up. We weren't. We're just going to go right in.
First, I distinguish between prediction markets and gambling. Being able to forecast... employment or inflation, and being able to take a point of view or position on those, and that could somehow hedge or accentuate the positions in your investment portfolio. And I think as those were born, I think that makes sense within the context of an investment portfolio, and we're absolutely open to
having that on our platform, those types of prediction markets. At the moment, it's not high on our clients' list of things they want us to innovate for them, and so we've been focused our innovations in other areas that are of more interest to clients. But I distinguish that between that and sports gambling.
And if you look at 95% of the volume of what people call prediction markets is actually just sports gambling. And that's not something that we're keenly interested in getting into for a very simple reason, which is our mission as a firm is to make clients better off in their financial life.
And less than 5% of people who go on to one of these gambling apps take out more money than they put in in the first place. Wow. That's the complete antithesis of what we do at Schwab. Our clients' wealth is at an all-time high. The level of advice we're giving them is at an all-time high, and the amount we're doing to try to help them is at an all-time high. So
We'll leave the sports gambling, which constitutes 95% of the prediction market's volume, we'll leave that to the gambling houses, to the Vanduuls, the DraftKings, and the Robinhoods.
So it's funny, it's interesting that you say Robinhood. We'll get back to that because I think Robinhood would probably like to position itself as a competitor to Charles Schwab in a lot of areas. If we stick with the 95% of what you believe prediction markets is sports gambling, what is the 5% that is of interest to you that we could potentially see at one point on Schwab's platform?
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Chapter 3: How has client engagement changed at Schwab in the last quarter?
We launched a series of new capabilities for our advisor clients, and in particular, really leaned into innovations around making it easier for them to work with us. All of those are things that we think are far more impactful to our clients' ability to grow their wealth than prediction markets.
And when we go out and survey our clients about what they want from us, prediction markets is low on the list. So it's something we are actively looking at. I think at some point in the future, we will have true prediction markets at some point.
But it's just not high on our innovation list because we're firmly focused on those innovations that are going to have the most impact on our clients' wealth.
Right. Unlike something we talked about when we were at Schwab Impact with you in November, that you had just done a deal which would give investors access to private companies. This was buying Forge Global. So I get that's more of a priority for clients.
Yeah, I think you go back to the 80s when I believe it was KKR that did the first leveraged buyout. Institutions have been benefiting from the diversification and the return enhancement from alternatives investments. And in the past decades or multiple decades, the really wealthy have also been able to participate in those return and diversification benefits.
But the everyday retail investor has not been able to. And our Forge acquisition was really about democratizing investments and alternatives. We're now going to be able to bring it to all of our investors in multiple different forms and allow them to participate in private markets the way institutions and the very wealthy have been able to.
And we're thrilled to bridge that gap and excited for what that could mean for our clients' wealth.
Hey, Rick, one thing we got to bring your attention to, it's just a headline that crossed the Bloomberg and we're seeing markets turn around and rally pretty substantially on it. We see a straight move up on all of the major equity averages. We're now up nearly 1.2 percent on the S&P and up almost 1.4 percent on the Nasdaq 100.
President Trump, who's in Davos and meeting with European leaders, says he has said he won't impose a Greenland limited tariffs on February 1st. But the headline that really, I think, got markets moving was that the president says he's got a framework for a future deal on Greenland with NATO.
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