WEBVTT - Charles Schwab President, CEO Rick Wurster Talks Client Support, Investments

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>Please to saying that joining us around the table here

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<v Speaker 2>in New York request of the President and CEO of

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<v Speaker 2>Child swamp Rick is good to see us.

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<v Speaker 1>Sir Jonathan, thanks for having me in.

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<v Speaker 2>Approaching one hundred days in the job. Have you slept.

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<v Speaker 1>It's been a busy period. We've been actively supporting our

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<v Speaker 1>clients and helping them get to where they need to

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<v Speaker 1>be in their financial life, so probably not as much

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<v Speaker 1>sleep as I would like.

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<v Speaker 2>I'm sure you're probably not going to catch up on

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<v Speaker 2>sleep anytime soon, given the headlines we've got elsewhere. Looking

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<v Speaker 2>at those forty four million client accounts just help us

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<v Speaker 2>understand what activities look like, how they're responding to all

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<v Speaker 2>of this incoming information.

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<v Speaker 1>Our clients are actively engaged. Last year, we did about

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<v Speaker 1>six million trades a day on average. In January we

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<v Speaker 1>did seven million. We're doing even more of the last

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<v Speaker 1>six weeks, so our clients are engaged. We're not seeing

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<v Speaker 1>any signs of significant nervousness. In fact, we've seen our

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<v Speaker 1>margin levels over the last months stay relatively flat. Those

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<v Speaker 1>with margin have been leaning inequities. The last week I

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<v Speaker 1>went and visited five of our retail branches in North

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<v Speaker 1>Carolina yesterday and I walked into our Raleigh branch and

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<v Speaker 1>met Gloria, who's at our front desk, and I asked her, Gloria,

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<v Speaker 1>what are clients saying when they come in our doors?

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<v Speaker 1>Are they nervous? And she said, you know what, We've

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<v Speaker 1>had a couple that are nervous, but more than anything,

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<v Speaker 1>they're bringing in checks and they want to get more

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<v Speaker 1>money into the market. So I thought that was a

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<v Speaker 1>good sign.

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<v Speaker 3>This is fascinating and it really skews with some of

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<v Speaker 3>what we're hearing from Wall Street analysts who are saying

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<v Speaker 3>we're just looking for the right levels to buy the dip,

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<v Speaker 3>and it sounds like retail investors have been conditioned in

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<v Speaker 3>the same way. At what point are you going to

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<v Speaker 3>get worried that maybe they're being conditioned in the wrong way? Say,

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<v Speaker 3>if there isn't that balance that we've become used to.

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<v Speaker 1>Well in the seventies, Check wrote our investing principles, and

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<v Speaker 1>they're all about taking a long term view of markets

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<v Speaker 1>being diversified, having a plan, and sticking with that plan.

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<v Speaker 1>And I think when markets go up, when markets go down,

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<v Speaker 1>those are the principles we come back to it's hard

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<v Speaker 1>to have a view on short term what's going to

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<v Speaker 1>happen on markets. Those investing principles we think work and

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<v Speaker 1>you're seeing it this year where at diversified portfolio, European

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<v Speaker 1>stocks are doing well, Gold's doing well. There's assets that

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<v Speaker 1>are performing well. So our clients that have taken that

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<v Speaker 1>advice are hanging in there.

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<v Speaker 3>So retail investors are often painted with a brush where

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<v Speaker 3>they buy Bitcoin and Tesla and AMC and game Stop

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<v Speaker 3>and then they held the breath and keep buying when

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<v Speaker 3>things go down. What is the picture of the retail

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<v Speaker 3>client of Charles Schwab that you're going after.

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<v Speaker 1>Well, we see seven million plus trades a day. We

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<v Speaker 1>see more than two times of trades of any other

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<v Speaker 1>retail brokerage. So we do feel like we have a

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<v Speaker 1>pulse on how retail investors trade, and I think they

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<v Speaker 1>trade very thoughtfully. We've got a range of investors, some

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<v Speaker 1>of who are buying Tesla, who are have been invested

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<v Speaker 1>in bitcoin and made a lot of money doing so.

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<v Speaker 1>But we also have a lot of investors that play

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<v Speaker 1>for the long term. But I think, you know, our

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<v Speaker 1>investors are really thoughtful, they're engaged they listen to your show,

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<v Speaker 1>they listen to Lasana and Jeff clientp and our thoughtful

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<v Speaker 1>anelsts trying to make the right long term decision for

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<v Speaker 1>them and their financial plan.

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<v Speaker 4>I'm getting to center you that your investors are not

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<v Speaker 4>concerned about the uncertainty emanating from Washington, DC.

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<v Speaker 1>I think again, we try to coach our investors to

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<v Speaker 1>take a long term view. I'm sure we have clients

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<v Speaker 1>that are that are nervous about whatever the policy of

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<v Speaker 1>the day may be or the news flow of the day.

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<v Speaker 1>But in large part, one of the great things about

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<v Speaker 1>SCHWAB is we have a lot of different ways to

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<v Speaker 1>engage clients. We've spoken with over six hundred thousand clients

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<v Speaker 1>in the last week. We're able to remind them that

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<v Speaker 1>they have a plan, that these are the times to

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<v Speaker 1>stick to their plan, and we try to remove them

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<v Speaker 1>from the news cycle.

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<v Speaker 2>So this is token to you as a market ponticipant.

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<v Speaker 2>Let's talk to you as a business leader. You've got

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<v Speaker 2>to run a company. We're hanging from a lot of

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<v Speaker 2>companies right now that they're just hitting polls and they're

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<v Speaker 2>waiting to get Clarency on policy. I imagine you'll not

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<v Speaker 2>hitting polls. Can you woc us through what your plan

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<v Speaker 2>looks like for the next several years.

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<v Speaker 1>We're not hitting pause at all. Twenty twenty five is

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<v Speaker 1>a lift off year for our company. We've spent the

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<v Speaker 1>last couple of years integrating a maror trade industry, and

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<v Speaker 1>now we have the benefit of having the best of

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<v Speaker 1>everything that Schwab has and the best of everything Ameritrade

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<v Speaker 1>has for our clients. So the future is all about

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<v Speaker 1>growth and we are seeing our growth accelerating through the

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<v Speaker 1>first quarter. We've seen significant levels of client engagement. So

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<v Speaker 1>it's for us from a business standpoint where we are thriving.

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<v Speaker 3>So you're not cutting down on travel and forcfway to

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<v Speaker 3>come back to the office and saying, guys, it's time

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<v Speaker 3>to tighten the ship.

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<v Speaker 1>We've not taken any of those actions.

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<v Speaker 2>Okay.

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<v Speaker 3>The reason what we ask is if we're wondering how

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<v Speaker 3>much this is trickling out, although it could be a

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<v Speaker 3>somewhat counter cyclical business as you go forward, when you

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<v Speaker 3>are expanding, who are you going after at a time

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<v Speaker 3>where a lot of the big private asset firms are

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<v Speaker 3>trying to broaden out into private markets for retail clients,

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<v Speaker 3>and that's the increasing holy grail for a lot of

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<v Speaker 3>the big banks as well. Who are you going after?

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<v Speaker 3>Who's your competitor?

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<v Speaker 1>Well, in terms of who we're working with, we work

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<v Speaker 1>with clients across all age and wealth spectrums and advisors

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<v Speaker 1>of all sizes. You know, we have one out of

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<v Speaker 1>every six American households with more than twenty million dollars

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<v Speaker 1>in our country works with Charles Schwab. And at the

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<v Speaker 1>same time, we're crushing it with young investors. Sixty percent

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<v Speaker 1>of our new investors last year we're under the age

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<v Speaker 1>of forty and a third we're under the age of thirty.

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<v Speaker 1>So we are really thriving across age and wealth spectrums.

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<v Speaker 1>There is a lot of demand for alternative assets, and

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<v Speaker 1>we're working with great firms like KKR and others that

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<v Speaker 1>are bringing their capabilities to the retail investor, and I

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<v Speaker 1>think that's a great thing. Historically that's been for institutions only,

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<v Speaker 1>and now we can bring it to our retail clients.

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<v Speaker 3>Are other business leaders you talk to as confident and

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<v Speaker 3>as excited as you.

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<v Speaker 1>Are, Well, their business has their own dynamics. For us,

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<v Speaker 1>you know, we're in a lift off fields them.

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<v Speaker 3>The reason why I'm asking is because we've been talking

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<v Speaker 3>about uncertainty and we're seeing it in the data, whether

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<v Speaker 3>it's small business confidence, whether it's business confidence. More broadly,

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<v Speaker 3>are you saying you just don't see it or are

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<v Speaker 3>you saying that your business is somewhat immune to it.

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<v Speaker 1>We feel like we have an all weather business model.

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<v Speaker 1>The newsflow for us that drives activity and engagement, and

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<v Speaker 1>it brings investors into the market. And you know, we've

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<v Speaker 1>had seven eight million trades a day, which is a

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<v Speaker 1>lot for our business and drives our economics. So you know,

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<v Speaker 1>the market engagement is a good thing for us. You know,

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<v Speaker 1>at the end of the day, what's most important to

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<v Speaker 1>us so is that our clients are doing well, and

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<v Speaker 1>that's where we put our energy into making sure we

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<v Speaker 1>can help them in the channel of their choice, get

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<v Speaker 1>to where they want to be in their financial life.

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<v Speaker 1>That's what drives us. When our clients do well, we

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<v Speaker 1>do well.

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<v Speaker 4>Rick, what's it like working with the president because you

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<v Speaker 4>are advising them on this offspin of this Trump linked

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<v Speaker 4>truthfi associated with Trump media.

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<v Speaker 1>Well, we've worked with administrations and regulators for fifty years,

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<v Speaker 1>and we've tried to work with clients across all aisles

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<v Speaker 1>we are supportive of our country. We are Americans. We

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<v Speaker 1>support forty four million American client accounts, and we want

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<v Speaker 1>investors of all types to do well well.

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<v Speaker 2>The financial services industry might have a new regulations and

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<v Speaker 2>this is a name we've got for you. According to

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<v Speaker 2>a person familiar with the matter, the Trump administration will

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<v Speaker 2>nominate Federal Reserve Governor Mickey Bowman as Vice Chair for

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<v Speaker 2>Supervision as soon as today. You will recall that Michael Barr,

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<v Speaker 2>of course, resigned earlier on this year as the FED

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<v Speaker 2>Vice Chair for Supervision. Mickey Bowman, of course nominated by

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<v Speaker 2>President Trump in his first term to become a governor

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<v Speaker 2>of the Federal Reserve. A lot of people not seeing

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<v Speaker 2>this as a surprise. I matched this morning. This is

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<v Speaker 2>a name we had in the hat, not just for

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<v Speaker 2>this role, but also for the FED chair role that

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<v Speaker 2>might open up further down the road, right, And.

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<v Speaker 4>This is someone that Trump administration has looked kindly on

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<v Speaker 4>first person for people to put her there in the chair.

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<v Speaker 4>So this really isn't a surprise, but it is interesting.

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<v Speaker 4>We are getting some clarity as we keep talking about

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<v Speaker 4>uncertainty coming out of Washington. This is one place where

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<v Speaker 4>we do have a name and some clarification.

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<v Speaker 3>It also means that she's not going to be nominated

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<v Speaker 3>to be potentially fed chair, which opens up the seat

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<v Speaker 3>to potentially somebody else who seems to maybe want to

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<v Speaker 3>be fed Chair.

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<v Speaker 2>Rick afinal word on regulation, Have you got everything you want?

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<v Speaker 1>I think Governor Roman's going to be a great choice

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<v Speaker 1>her personally. I think she's a very thoughtful person. It's

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<v Speaker 1>going to be great for the great, great for supervision.

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<v Speaker 1>I imagine a lot of people might agree with you. Rick,

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<v Speaker 1>it's going to see us, sir, thanks for breaking things

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<v Speaker 1>down for us. Appreciate the update, Thanks for having me on,

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<v Speaker 1>and thanks for being a good friend of this program

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<v Speaker 1>over the years too.

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<v Speaker 2>We appreciate it. Rick west of There, the Chow Swap CEO,