Chapter 1: What is the main topic discussed in this episode?
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Bloomberg Audio Studios. Podcasts. Radio. News. All right, folks, if you really want to know what's going on in the investment universe, you really want to talk to the folks at Charles Schwab. It is a great place to start. First of all, it's a $175 billion market cap company. Stock is up about 26% year to date. Following its recent earnings, at least 11 analysts raised their price target.
on the stock after Schwab's third quarter earnings beat, thanks to a surge in retail investing activity. And it's something we certainly want to dig into.
Yeah, let's talk about some more numbers behind the firm. $11 trillion, more than that in client assets, 38 million client brokerage accounts, 2.2 million bank accounts, 5.6 million workplace plan participant accounts, and over 16,000 independent investment advisors. Thousands of them are here at Schwab Impact 2025 in Denver.
Now, Rick Worcester took over as CEO in January of this year after previously serving as president for about three years at the company. He was head of Schwab Asset Management Solutions before that. So you have been at the company for nearly a decade. Is that right?
Yes.
Welcome. Thank you. Thank you.
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Chapter 2: What insights does Rick Wurster share about his first year as CEO of Charles Schwab?
How do we generate this level of interest on more of an ongoing basis so we can see this windfall more regularly? And then they migrated from things that were tangentially related to financial markets to pure sports gambling. Because every Saturday and Sunday, there's lots of activities that the nation cares about.
And now I think we're in a world where what's driving all the volume in prediction markets is pure sports gambling.
So yes or no for Schwab getting involved?
That's something we've got to keep an eye on.
You're considering it?
We're not actively considering it. And the reason we're not actively considering it is our mission is to make our clients better off in their financial life. 5% of people, and actually I read this on Bloomberg very early this morning, 5% of people that put money into a gambling app take out more than they put in in the first place. So gambling has proven to be a net negative opportunity.
contribution to your wealth. Now it's fine if you use it as entertainment and you're doing it in a thoughtful way, but our mission is to make clients better off in their financial life and enhance their wealth.
Does that then say to you that it's not a good idea in terms of the prediction markets and kind of mixing them with traditional investing?
From my viewpoint, we want to do everything we can to put our clients in the best chance to grow their wealth. Right. And I think it's fine for people to gamble. People are going to gamble and hopefully they'll do it in a responsible way. The thing I worry most about is the conflation between gambling and investing.
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Chapter 3: How does the investment environment impact Charles Schwab's business strategy?
We had a fun conversation about crypto. You made headlines. You said this was a year ago. I have not bought crypto now and I feel silly. You also said crypto investors have been right and that you haven't been right. So update us. Have you bought crypto since then?
I have not bought crypto. I have nothing against crypto. I can certainly see the case of it. If people believe it's a store of value, it is scarce and it could go up. I think the blockchain is something that is likely to play a bigger part in markets and therefore crypto can have some value around blockchain. For me personally, My investments are in assets that I consider to be productive assets.
They're generating earnings, they're generating principal or interest, and that's where I focus my investment portfolio.
It's interesting that you say that because when you said that comment to us last year in the middle of November, Bitcoin was at, and we were talking about Bitcoin, was at $100,000. Right now it's at about $104,000. So you look right by not actually getting in right then.
Possibly. And Bitcoin and crypto generally is going to go up. It's going to go down. Its volatility is something, its standard deviation is something like 50%. So we should expect wild swings. And for the right group of folks, they want to own it. They believe passionately in it. And they should have it as part of their portfolio. For some investors, it's what they want to invest in.
Private credit, private markets. How about that in terms of, you think, the role that that will play in investors' portfolios? In our retirement accounts? How do you feel about that one?
Well, you're a great private company. There's lots of great private companies in our country that have been really well. I think retail investors should be exposed to private opportunities. We would like to bring it to market in three ways.
Number one, we provide access to retail clients to great alternatives managers in private equity, private credit, venture capital, a lot of the names that you're familiar with. Second thing is I think at the right time, We would love to be able to offer passive exposure in a fund-like structure to private markets.
Just like in public markets today, you can go buy the S&P 500 index fund and get broad representation of stocks. You should be able to do that in private markets. We'd love to play a role in that in the future. And then third, like you can buy individual stocks if you don't want either the active management or the passive exposure to the broad market,
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