By Andy Serwer
This transcript was prepared by a transcription service. This version may not be in its final form and may be updated.
Andy Serwer: Hello everyone and welcome to At Barron's. I'm Andy Serwer, and welcome to our guest, Rick Wurster, CEO of Charles Schwab. Rick, great to see you. Thanks so much for joining us,
Rick Wurster: Andy. Thanks for having me on. It's great to be here.
Andy Serwer: So tell us about Schwab. How big is it these days in terms of assets, customers, geographic footprint, et cetera?
Rick Wurster: Yeah, we're $11.8 trillion of assets, 46 million client accounts, and we're all over the country. We're in about 400 locations. We're in a lot of people's neighborhoods where we like to serve them and help them meet their financial dreams. We work with 16,000 independent advisors across the country and we support their businesses, and they're in most local communities across the country. So we're very much a U.S. company in every pocket of our country, trying to help investors live out their financial dreams.
Andy Serwer: So you mentioned the advisors, the RIAs, and you also have direct customers. So talk to us about that mix. Why do some people go directly and some people go through RIAs?
Rick Wurster: Sure so our business of the 11.8 trillion. A little bit more than half is in retail and a little bit less than half with our independent advisors. And we have a workplace business. And so that has / that is how our business is split-up. An individual investor has many choices for how they want to, how they want to invest, and our retail investors can be active traders. They can be self-directed investors. Some retail investors want help and they want the help of a fiduciary. And I think one of the reasons why the independent advisor channel has been so successful and has outgrown the market is because they are fiduciaries. They sit in the beside the client, take on their best interests. And that model has won. And we've been in that business now for 40 years. I would argue we've we're the institution that has done most to support the growth of the RIA business and it's really flourishing and it's great to see.
Andy Serwer: So is it that young investors come through directly and then transition later to RIAs, and then how do you attract young investors?
Rick Wurster: Sure. Well, let me start with how RIAs tend to grow. I think they're in every community in our country and they're building relationships in those communities. And for those that want a full service, independent relationship, they're finding their way to the RIA. I think they have also over time taken a lot of share from the warehouses, and that has / that is been another source of growth for them. In terms of young investors. We are crushing it with the young investor, we're crushing it with the young investor because no one can match what we can do for the young investor, whether it's our platforms, whether it's our research and education. We put out about 35 hours a week of live educational content geared toward the younger investor. We have a thousand X traders that answer the phone every day, ready to help the young investor make their first trade or figure out what options are and things like that. So we, we think we're the, the best place for a young investor to go. And you see it in our data. One in six of our new-to-firm clients this year are Gen Zers. 60% of our new to firm clients are under the age of 40, I think. Our average age of our client is now in the 40s. It's down 10 years over the last 10 or 15 years. So we've gotten much younger as a firm. Our average new client is in their 30s, so we're very much winning with the young client and in part because we're there, we are where they are. We're the most followed firm on YouTube, and that tends to be an area where young investors go to learn about investing for the first time, and we're the most followed company there. So we're winning with the young investor, I think, 'cause we can do more for them than anybody.
Andy Serwer: I saw you had strong inflows this fall. What is that due to besides just the market going up though?
Rick Wurster: Year to date, through October, we've generated about $400 billion of net new assets, which is a lot of money. And I think it's a testament to a couple things. It's a trust our clients have in the firm. It's the appeal we have to new investors 'cause a lot of that is new client acquisition, which has been up and at really high levels. You know, we are winning with investors across all stripes. And it's true in the RIA business and in the retail business. I do think the market environment helps in terms of bringing new assets to the firm. It also helps our new account growth 'cause there's just more interest in investing in an environment where people are winning and markets are going up. I'm sure you see it in your own viewership and readership numbers. A bull market tends to attract interest, but this level of growth, we've pretty much historically grown at these kinds of rates for the last 15 years.
Andy Serwer: When you talk about that growth, Rick. What are the most key metrics when it comes to measuring whether or not the firm is successful?
Rick Wurster: Yeah, there's a bunch of metrics I look at to measure our success. Number one would be our client promoter scores. We measure how satisfied are our clients with us. We are in business to make a difference in our client's financial life. If they're not happy, we're not doing a good job. And so that would be the first metric I'd turn to, is are we nailing it every day for clients? And those scores are have been at all time highs. The second thing I'd look at is our net new asset growth, which is a measure of the assets clients are bringing to us. And I think a byproduct of the trust and confidence they have in working with us. And those numbers are at really high levels. And the third number I'd look at is our new account growth. And we're growing more than a million new accounts a quarter. We're close to four million new accounts already this year. And again, that has / that is a sign to me that a lot of people both at Schwab and outside of Schwab are interested in what we can do for them.
Andy Serwer: Right. There's a lot of new investing vehicles out there, Rick. There's crypto, there's alts, and there's all kinds of new options. Um, zero days to expiration options. Some people liken that to gambling or suggest that gambling is sort of akin to investing. And I want to go back and we'll talk about some of those other vehicles, but what about this whole notion that gambling and investing are really just the same thing?
Rick Wurster: Well, I think they're really different and we've been trying to get the message out as loudly as we can about the merits of investing and how over time if you are an investor, if you save and you invest over time, your wealth will accumulate. Over a 10 year period of balanced strategy of bonds and equities has never gone down and very rarely have equities gone down over a 10 year period.
Over a 20 year period equities have never gone down. The reason I go into that is because the payoff to investing is you're gonna generate wealth over time. It's a great way to generate wealth. If you compare that to gambling, gambling is a great way to destroy wealth. Less than 5% of people that sign up for gambling apps take more money out of the gambling app than they put. Our client's wealth is at an all time high at Schwab, and the reason for that is because over time their wealth has grown. And so I think there's really stark lines between the two. Now certainly there's some products and some trading strategies that that may blur the lines, but in general I think there's a really strong line between betting on the Monday night football game, which is gonna have a probability of payoff below 50%, and investing in stocks, which over the long run are gonna go up.
Andy Serwer: But is there a concern, I guess, that people have their phones, they have got this app, they have got that app. It's kind of the same thing I'm going from, you know, my sports betting app to my stock trading app. Is there a sense that things are blurring a little bit in that way? Is that why you're concerned about it?
Rick Wurster: I have a lot of concern about that. I think the messages that are being sent in particular to young investors that investing is a race and you gotta win it quickly. And you know, you go into your investing app and if it's a Monday morning, the first thing that has / that is gonna pop up isn't your balance or you know, what happened to some of the investments you were in, but do you want to bet on the Monday night football game? I don't think that has / that is a great development for young investors. And as a father of three. I would really not want my children to be in an app where the money that they had earned, perhaps money that, I've given them over time. I wouldn't want them to be able to put $10,000 into Nvidia and then be able to take that and invest it in a Monday night football game. To me that has / that is really dangerous. And equating those two I think is a real disservice to younger investors. Now that all said, I want to be clear. People are gonna gamble. And I think a lot of people do that thoughtfully. They treat it as entertainment. That pool of money they keep to a certain amount of money, they treat it like going to a movie or going out to dinner, and they expect to lose some of it.
That has / that is totally fine. It maybe a great form of entertainment for some people, but that shouldn't be conflated with a way of generating wealth like investing.
Andy Serwer: And just a quick follow up, there's another leg to that stool perhaps, which is, um, the prediction markets, um, betting on say political races, et cetera. What is your take on that?
Rick Wurster: Well, I think prediction markets started out with the best of intentions when people started. The idea that you could take a position on employment or what was the fed was gonna do and all those kinds of things. That was tied into the portfolio, you could make the case that this is a hedge against my portfolio if something happens in one of these reports. And so that made sense to me. And then the election came along and people began to bet on the election and the volume skyrocketed. And I think these firms that had launched prediction markets thought to themselves, well, isn't this great? Look at this volume and this engagement we're getting around this election. Wouldn't it be nice if we had that kind of interest all the time. And they thought to themselves, well, the way to do that, there's things every Saturday and Sunday that America really cares about, and that has / that is college and professional football. And if we go into that, we'll see the kind of engagement we did with the election, and, and that has / that is exactly what's happened. And now if you look at prediction markets, it's 95% sports gambling. And it's a way of arbitraging the state gambling rules and so I think prediction markets have really changed. I think the original intent of prediction markets was a fine one and now it's become sports gambling.
Andy Serwer: And another, sorry, another quick follow up. Those short term options, your take on those, those daily options.
Rick Wurster: Well, I think a lot of our clients will use them as a way of essentially selling insurance to others. And so they have got a systematic discipline process for participating in zero dated options that allow them to earn premiums. And those people have actually made a lot of money doing that. I think the majority of our clients, I think, take a very disciplined approach to it.
Andy Serwer: I mentioned alts and you guys just bought Forge. Explain to us what Forge does and why you bought that company.
Rick Wurster: Well, we're trying to democratize access to private investing. We think in someone's asset allocation, it's something that can add diversification, potentially enhance returns, but it isn't something that the retail investor has had a lot of access to unless you're among the most wealthy in our country. And what we've done through the launch of our retail alts platform and with the acquisition of Forge is we're gonna be able to bring alts to everyone in our country so that they can access the diversification and the enhanced returns of alts. So we're thrilled about the acquisition and can't wait for them to become a part of our company when the deal closes.
Andy Serwer: And how do you ensure that retail investors are doing it and not gonna get burned? Because there are concerns about that, right?
Rick Wurster: Great question. We've put a lot of thought and energy into making sure that retail clients participate in alternatives in the right way, and so we've stood up a team of alternative investment consultants that are experts in alternatives that our clients have to meet with before they make the decision to invest in alternatives.
We're also trying to create multiple ways to access alternatives at different fee points and different ways of going about it just like exists on the public side. So in privates, after the Forge acquisition, if you want to get into alternatives and you want to work with a professional manager, you'll have access on our platform to some of the biggest private equity venture capital private credit funds and firms. So someone can manage it for you. If you want to take a passive approach like you might to public markets, we will be able to offer a vehicle. That will allow you to passively invest in the biggest private securities out there, Anthropic, Openai, SpaceX. And then finally, if you want to buy or participate in the individual companies, 'cause you have a particular passion about SpaceX or Anthropic or one of these big companies, you can do it via this platform that we're launching. So we're trying to democratize access to alternatives, provide the expertise and the different ways of investing so that the retail investor can get invested and do it in the way that makes is, is suitable for their investment needs.
Andy Serwer: And what about crypto and digital assets? How do you decide how fast or not to move the firm in that direction?
Rick Wurster: Well, crypto, certainly an area of a lot of excitement in the in the retail investing landscape. We already are in crypto in a pretty big way today. Our clients own 20% of all the crypto exchange traded products in our country. So our clients have chosen to get invested through the exchange traded products. And I think the reason they have done that is the following. When most buy Bitcoin or Ether, they're not doing it because they want to transact in those coins. They're doing it as speculative investment that Bitcoin or Ethereum are gonna go up over time. The benefit of being in the exchange traded product is that you benefit from that speculation. If those assets go up, you're gonna get the returns in the exchange trade product, but you also know that it's gonna be kept safe at Schwab and in a trusted way of custodying those assets. So I think that appeals to a lot of our client base. That all said, we're excited to get into spot crypto. We plan to do so in 2026 and are looking forward to being able to roll that off out to clients because. We've got a lot of clients that love Schwab, that have 98% of their assets at Schwab, and they have got 2% sitting at Coinbase or Robinhood or one of these crypto native firms and they want to bring it back and, and we're excited to be able to allow them to do that.
Andy Serwer: Oh, that'll be interesting to see. AI, you mentioned Anthropic. How are you using AI at Charles Schwab and how do you plan on using in the future?
Rick Wurster: I think AI is a big deal, and it's a big deal for our business for two reasons. First, it will drive a lot of efficiencies and it already has. We've rolled out a number of ways for our client facing professionals to use AI to, to help them get quicker, more efficient answers to clients. So we've got 10,000 people who pick the phones up every day. We're empowering them with AI today, we're empowering our technologists with AI and it's having a huge impact. We're finding that our engineers are able to develop 20% 30% faster because of the combination of some of the AI tools they have on their desktop. So there are a lot of efficiency gains from AI and we're already benefiting from that. And I think we'll see a lot more over time as all of this advances. I think in our space we will see advancements on the direct to client side, I expect there'll be AI advisors over time and we want to be the ones to be able to roll that out and we're investing in that. So I think you'll see lots of new capabilities developed in AI in the financial industry.
Andy Serwer: Wow. That'll be something to see too. On the flip side of things, I understand you're actually stepping up brick and mortar a little bit, and so I thought the whole world was going digital, Rick, so why are you doing more brick and mortar these days?
Rick Wurster: Yeah, great question. It's fascinating. People still love to come into our branches and talk to a live human being. And I find that so refreshing. And here's what we've observed when we have a direct client to financial consultant relationship where we've got a one-to-one relationship through our branches in our brick and mortar footprint, which we have 400 of them across the country. Those clients bring us 2 1/2 times more assets when they have a relationship. They are 11 points higher on our client promoter scores, which are really important to us 'cause we want to make sure we're delighting clients. So they're a lot happier clients. Our average client is extremely happy, 11 points above that is world class. And so we love that. And then they engage with us in much more ways. So when we have that personalized relationship, they do a lot more in our wealth solutions. And they do a lot more with our bank. And all of those things allow us to serve the client more holistically and make a bigger difference in their financial life. So the branches are a really important part of our growth strategy.
Andy Serwer: You have a ton of data. What are Schwab customers telling you about the market and maybe the economy writ large right now?
Rick Wurster: We have 46 million client accounts and so we see lots of different behaviors, I think among our investors that are closer to retirement or in retirement the conversations we're having now are around preservation of their assets, because their assets have grown to levels beyond what they would've expected, just because the market over the last three years is up a lot. And so we're talking to them about how to create income streams, how to think about dividend stocks, how to have protection strategies in their portfolio.
We're spending a lot of time, probably the most discussed topic with our higher net worth clients is how to manage concentrated positions. Clients that come to us that might have had $50,000 in Nvidia that has / that is turned into 500,000. And it's a big part of their portfolio and they want to know what to do in that situation. So we've got a group of clients that fall into, into that segment. And then we've got some young active traders that are trying to figure out how to invest for the first time. And we've got all kinds of content for them. And so we're working with their clients. We want to meet them where they are, and every one of our 46 million clients is an individual to us. We want to do everything in our power to bring the strength of our firm and our 33,000 people to making sure we nail it in helping them achieve their financial dreams.
Andy Serwer: Right. That is what customers are telling you about the market? What does Rick Wurster think about the market?
Rick Wurster: Well, to me, the biggest things about the market that clients should keep in mind, number one, is that the longer your time horizon the higher your probability of success. If you stay in the market over long periods, you're gonna win. Number two, diversification matters a lot. And so to me those are the two principles regard. Markets are gonna go up, markets are gonna go down. I think it's relatively hard to predict those things. Certainly hard to know when to get out and then when to get back in. It's really hard to make both of those calls accurately. And so I think being diversified and having a long time horizon are two ways of navigating any market environment.
Andy Serwer: And final question, I believe you became CEO what, last January?
Rick Wurster: Yes.
Andy Serwer: So I tracked the stock and Schwab stock has outperformed the S&P 500 by about eight percentage points. So how do you intend to keep up that outperformance, Rick? And why should investors buy Schwab stock and be confident in that trajectory.
Rick Wurster: You know, I'm focused on our clients. If we nail it for our clients every single day, if we have the product solutions, advice and service that they need to thrive in their financial life, we're gonna attract more clients. They're gonna do more business with us. Then we will grow as a firm. And if we're growing as a firm and thriving with our clients, our stock is very likely to follow. So my focus is on how do we nail it for clients? And this year I feel like we're doing a good job of it. And because of that, our, our stock has had a good stretch. But there'll be periods where our stock will go up and down like any other stock. Through it all our focus is gonna remain squarely on seeing through client size and nailing it for them.
Andy Serwer: Rick Wurster, CEO of Charles Schwab, thank you so much for joining us.
Rick Wurster: Thanks for having me, Andy. Great to see you.
Andy Serwer: Likewise. This is At Barron's. I'm Andy Serwer. We'll catch you next time.
Write to Andy Serwer at andy.serwer@barrons.com
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December 19, 2025 02:00 ET (07:00 GMT)
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