By Hannah Erin Lang
When it comes to encouraging customers to invest for the long haul or live in the fast lane, Rick Wurster says he knows where his brokerage stands. And it is not on the side of the guy dressed as a race-car driver.
Wurster, appointed Charles Schwab's CEO in January, has delivered higher profits this year thanks to individual investors' mounting confidence in trading everything from stocks and bonds to options and exchange-traded funds.
An extended rally has led some ordinary Americans into riskier, more-volatile markets. Nowadays, investors can make leveraged trades on cryptocurrencies, buy zero-day-to-expiry options, and bet on whether the Kansas City Chiefs will win a football game. Those offerings, and many others, are now widely available on mainstream brokerage platforms.
Wall Street has long wrestled with what defines a prudent investment and what should be labeled a daring bet. Technological advances and changing customer tastes may have made it harder for some investors to distinguish between the two, but Wurster said he sees no ambiguity.
"There's a really bright line between investing and gambling," Wurster said in an extensive interview with The Wall Street Journal. "I really worry about the message that's being sent to young investors that you've got to get these quick hits."
Robinhood CEO Vlad Tenev has emerged as one of the most persuasive messengers to young investors. At his company's annual summit for active traders earlier this year, Tenev compared playing the markets to circling a racetrack, where the "machine can make all the difference." Trading, he said, was "high stakes," and "one of the most intense lifestyles out there." And to make his point, Tenev wore a race-car driver's jumpsuit emblazoned with Robinhood's logo.
On Robinhood's platform, investors can play the prediction markets, trade dozens of cryptocurrencies and -- starting sometime next year -- even scroll a social media feed within the app. Schwab doesn't offer event contracts, hasn't rolled out spot trading for crypto and recently invested in a much older piece of financial technology: its branch network.
And Wurster, a one-time McKinsey consultant who joined Schwab in 2016, prefers traditional business suits like the gray one he wore during his recent interview with Journal.
"You're not going to see me in an F1 jumpsuit, and here's why: I think it sends the wrong message to young investors," he said. "What comparing investing to a race does is it teaches the young investor you've got to win today, you've got to go fast, and if that stock's not going up today -- gosh, something's going wrong."
That could pose a real risk to those investors if -- and when -- stocks slide, he said. "We're not always going to be in a three year strong bull market," he said.
Robinhood executives, on the other hand, say they are on the right side of a long-term trend in markets to make all kinds of trading more accessible to individual investors.
"I am old enough to remember when ETFs first came out, and they were considered super dangerous, risky products," Steve Quirk, the company's chief brokerage officer, said in an interview last month, referring to the low-cost funds that now dominate the asset-management industry. "We are rolling out more assets and capabilities to people. That's what they want."
That bull market may still be raging, but within the brokerage industry the battle lines have been drawn. Schwab, which pioneered the low-cost brokerage business in the 1970s, is now part of an establishment that leads with wealth management, investment advice and banking services. On another corner, upstart platforms like Robinhood are blazing into new markets that appeal to a new generation of risk-hungry customers.
Trillions of dollars are at stake -- Gen Z and millennials are expected to inherit more than $100 trillion in assets from baby boomers over the next couple of decades, according to Merill, an event known as the Great Wealth Transfer.
In pursuing his strategy, Wurster is making his own bet: Many younger investors, who may now be infatuated with short-term gains, will ultimately grow into banking, in-person financial advice and other services that have been Schwab's calling card. And as market conditions change, they will care less about getting early access to the hottest new trades, or that their broker's CEO responds to their posts on X.
But here's the rub: This new generation of traders may come to view prediction markets or crypto much as their parents or grandparents had zero-commission stock trades or low-cost ETFs -- as core services they expect their brokerages to offer.
Wurster says Schwab is already "crushing it" with younger investors, noting that the average new customer is still in his or her 30s, and that a third of them are younger than 24.
Schwab remains a larger competitor than Robinhood, with a market value of roughly $170 billion, as of Friday's trading (compared with Robinhood's $106 billion). And Schwab's daily average trades range from seven to eight million; Robinhood and other competitors like Interactive Brokers are closer to four or five million.
But Wurster is also opting out of the business that has put Robinhood in position to close that gap. Monthly trading volumes at major prediction-market exchanges have more than quadrupled in the past few months, according to a team of analysts at Piper Sandler. Robinhood, which has a partnership with prediction exchange Kalshi, has said that event contracts are its fastest-growing business line, ever. Charles "Chuck" Schwab himself was an early investor in Kalshi's Series A funding round.
Would Wurster ever rethink his stance on event contracts? "It's not high on our list at the moment. If we find out [prediction markets] becomes a competitive necessity in the brokerage space...it's something clearly we're going to have to consider," Wurster said, but added that Schwab hasn't heard much interest from clients. "The volume still really is in sports."
Not that Wurster has a problem with sports. The chief executive was the captain of his golf team in college, and has coached his son's basketball, baseball and flag football teams. He's no staunch anti-gambling advocate either: "I have nothing against sports gambling," he said. "I just don't want people to think that's the route to financial success."
A raging bull market has made the merits of taking that path more difficult to see right now. But Wurster said he is playing the long game.
"That's what sets us apart and what will continue to set us apart," he said. "Particularly as markets perhaps don't go so straight up every year."
Write to Hannah Erin Lang at hannaherin.lang@wsj.com
(END) Dow Jones Newswires
December 12, 2025 12:12 ET (17:12 GMT)
Copyright (c) 2025 Dow Jones & Company, Inc.
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