WEBVTT - Day One from Schwab Impact in Philadelphia 0:00:01.360 --> 0:00:05.680 This is Bloomberg Business Wait inside from the reporters and 0:00:05.880 --> 0:00:09.440 editors who bring you America's most trusted business magazine, plus 0:00:09.520 --> 0:00:13.680 global business, finance and tech news. The Bloomberg Business Week 0:00:13.720 --> 0:00:18.600 Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio. 0:00:31.960 --> 0:00:35.559 Let's actually though about Kibe, Jim King, did you know that? 0:00:35.600 --> 0:00:36.120 I did not know that? 0:00:36.159 --> 0:00:38.920 All right, we'll talk about that. We know that today. 0:00:38.920 --> 0:00:40.600 It's a gift go to Schwab because this is where 0:00:40.600 --> 0:00:44.199 we find ourselves at Impact twenty twenty three. There's so 0:00:44.280 --> 0:00:46.440 much going on, a good reason why investors are made 0:00:46.440 --> 0:00:48.519 that something hasn't broken in the economy yet. Because the 0:00:48.560 --> 0:00:51.240 last time US government bond yields climb so far, so fast, 0:00:51.800 --> 0:00:54.320 the nation plunged into back to back recessions. So that 0:00:54.440 --> 0:00:56.680 is part of kind of our backdrop. Let's get to 0:00:56.720 --> 0:00:59.320 it though. We are here at Philadelphia, at the Philadelphia 0:00:59.320 --> 0:01:02.120 Convention Center, at Schwab Impact twenty twenty three and with 0:01:02.200 --> 0:01:05.360 us as Rick Worcester, he's president of Charles Schwab. I 0:01:05.400 --> 0:01:07.000 want to say thank you for joining us, but thank 0:01:07.000 --> 0:01:07.720 you for having us. 0:01:08.000 --> 0:01:09.319 We thank you for having me on. 0:01:09.400 --> 0:01:11.520 It's so delightful to be here it's great to have 0:01:11.560 --> 0:01:13.320 you here in a day where I kind of laugh 0:01:13.360 --> 0:01:15.280 with you. It's a shame nothing is going on, but 0:01:15.319 --> 0:01:20.000 it's a really interesting environment geopolitically. Obviously we're you know, 0:01:20.040 --> 0:01:22.160 front and center watching what's going on around the world, 0:01:22.160 --> 0:01:26.199 but also within the investment environment, how do you make 0:01:26.360 --> 0:01:29.399 sense you and your team back at schwab about kind 0:01:29.400 --> 0:01:32.080 of how to prioritize what investors are going to care 0:01:32.080 --> 0:01:34.400 most about and what's going to impact your world specifically. 0:01:34.760 --> 0:01:37.120 Sure, well, Sutinly, when we think about the global events, 0:01:37.120 --> 0:01:39.720 the first thing I think about is the human suffering 0:01:39.760 --> 0:01:41.880 and the difficulties that a lot of people have had 0:01:41.880 --> 0:01:47.960 to endure recently. From a market standpoint, we want that 0:01:48.080 --> 0:01:51.320 volatility can be challenging to clients, and one of the 0:01:51.360 --> 0:01:53.880 things that we say in an environment like this is 0:01:53.920 --> 0:01:56.320 seek out an advisor. And we're sitting here, of course, 0:01:56.400 --> 0:01:59.880 at our thirty third annual Impact Conference for advisors, and 0:02:00.640 --> 0:02:03.400 they help clients thrive through environments like this. So it's 0:02:03.440 --> 0:02:06.760 a challenging environment for the world. Certainly, it creates uncertainty 0:02:06.760 --> 0:02:09.880 and some volatility, but I think advisors can help a 0:02:09.919 --> 0:02:11.520 lot of our clients through periods like this. 0:02:11.720 --> 0:02:13.520 What are you hearing from advisors right now about the 0:02:13.560 --> 0:02:15.760 questions that their clients have. I mean, we're not only 0:02:15.760 --> 0:02:17.720 in a challenging world for financial markets, but we're in 0:02:17.720 --> 0:02:21.040 a challenging world for advisors. They're robo advisors. I mean, 0:02:21.080 --> 0:02:24.040 Schwab has its own robo advisor, its rob intelligence portfolio. 0:02:24.120 --> 0:02:27.119 What are you hearing from these people whose businesses are 0:02:27.200 --> 0:02:28.160 being challenged right now? 0:02:28.440 --> 0:02:30.960 Well, the thing I would say about the advisor market 0:02:31.040 --> 0:02:33.920 is that there's a bull market for advice more and 0:02:34.000 --> 0:02:36.360 more clients because of everything that's going on in the world, 0:02:36.400 --> 0:02:39.480 because of what's happening in markets, because people are trying 0:02:39.520 --> 0:02:44.120 to integrate markets into taxes and their trusts or states 0:02:44.120 --> 0:02:45.160 passing wealth along. 0:02:45.600 --> 0:02:48.000 There is a bull market for help and guidance. 0:02:48.040 --> 0:02:51.160 And so it's a market in which advisors are thriving 0:02:51.680 --> 0:02:53.280 and the area is really growing. 0:02:53.880 --> 0:02:56.760 Rick, what's the most interesting demographic in terms of the 0:02:56.760 --> 0:02:59.320 investing public right now for you guys, Well, to me. 0:02:59.280 --> 0:03:01.720 It's got to be the base boomers. The baby boomers 0:03:01.720 --> 0:03:04.280 have amassed a lot of wealth and more and more 0:03:04.320 --> 0:03:06.840 retiring every day, and they want that help and guidance 0:03:06.880 --> 0:03:09.200 to help them get through retirement and navigate all the 0:03:09.240 --> 0:03:11.760 things in front of them. So to me, that's the 0:03:11.760 --> 0:03:15.040 most interesting demographic. But at SCHWAB, we want to meet 0:03:15.040 --> 0:03:18.079 the needs of every demographic, whether it's a young investor, 0:03:19.200 --> 0:03:21.920 a baby boomer. We need to be exceptional at meeting 0:03:21.960 --> 0:03:23.720 the needs of all of those different demographics. 0:03:23.800 --> 0:03:26.119 Yeah, it's kind of interesting, right for like a younger investor. 0:03:26.360 --> 0:03:28.120 We talk a lot about. We had a guest on 0:03:28.840 --> 0:03:31.360 this past week of just you know, trying to assess 0:03:31.480 --> 0:03:34.160 are we in a recession? And you know, while technically 0:03:34.720 --> 0:03:37.800 the numbers that we've got growth in the US, you know, 0:03:38.000 --> 0:03:40.880 strong consumer spending numbers, still, retail sales. 0:03:40.720 --> 0:03:42.480 Numbers, employment is strong. 0:03:42.400 --> 0:03:45.040 Employment is strong. Having said that, she said, you know, 0:03:45.240 --> 0:03:48.880 I'm coming from Wisconsin again, somebody who manages money. She said, Yep, 0:03:48.920 --> 0:03:51.600 they're working, but folks can't buy a home because they 0:03:51.600 --> 0:03:53.880 can't afford it with the mortgage rates. They've got one 0:03:53.920 --> 0:03:56.880 thousand dollars a month car payments, So they in essence 0:03:56.960 --> 0:03:59.400 feel like it's a recession for them. So I'm just 0:03:59.520 --> 0:04:03.400 curious from your people who want to invest with you 0:04:03.440 --> 0:04:07.000 guys and work on your platforms, you know, what is 0:04:07.080 --> 0:04:09.600 it that they're doing looking to save money concerned principle, 0:04:09.840 --> 0:04:11.800 or be more aggressive in this environment because they see 0:04:11.840 --> 0:04:13.720 some opportunities amid the volatility. 0:04:14.080 --> 0:04:16.200 Well, first, the first part of the question, there's no 0:04:16.320 --> 0:04:19.560 question this environment has been difficult for investors and difficult 0:04:19.560 --> 0:04:21.640 for people trying to live in the world. There's been 0:04:21.680 --> 0:04:24.440 a lot of inflation the uh you know, the FED 0:04:24.520 --> 0:04:28.279 has raised interest rates dramatically and quickly, but that was 0:04:28.320 --> 0:04:31.200 after letting inflation run a little bit, and so it 0:04:31.240 --> 0:04:35.640 has squeezed individuals. At the same time, markets are not 0:04:35.720 --> 0:04:38.160 that far away, particularly the S and P or the 0:04:38.240 --> 0:04:40.480 NASTAC not far away from all time highs. So there 0:04:40.560 --> 0:04:43.119 is a lot of wealth being created along the way. 0:04:43.640 --> 0:04:46.960 And from our perspective, we're here to solve to serve 0:04:47.000 --> 0:04:50.680 all investors. Our goal is to help clients navigate their 0:04:50.720 --> 0:04:53.360 financial life, to make them better off and help them 0:04:53.360 --> 0:04:54.200 get to where they want to be. 0:04:54.279 --> 0:04:56.880 But do they want to be more conservative in this invironment? Like, 0:04:56.920 --> 0:04:59.000 I'm just curious in an environment where we talk. You know, 0:04:59.000 --> 0:05:01.440 a money market pays you, you know what everybody keeps. 0:05:01.240 --> 0:05:02.360 Saying more than five percent? 0:05:02.440 --> 0:05:04.520 Why not put it there right without the risk. I'm 0:05:04.560 --> 0:05:06.440 just curious what you're seeing in terms of those trends. 0:05:06.520 --> 0:05:08.799 I would say that the call volumes on our fixed 0:05:08.800 --> 0:05:11.160 income line have gone up ten times what they were 0:05:11.160 --> 0:05:14.320 about eighteen months ago. So there's no question that there's 0:05:14.320 --> 0:05:16.360 a lot of interest in yield right now. And why 0:05:16.400 --> 0:05:17.880 not you get a two and a half percent real 0:05:18.000 --> 0:05:20.320 yield on the twenty year now on I think you 0:05:20.400 --> 0:05:22.480 have to go back quite a while before that was 0:05:22.520 --> 0:05:22.960 the case. 0:05:23.400 --> 0:05:25.480 Kind of folts perfectly into my next question, which is 0:05:25.720 --> 0:05:28.839 about the business and about cash in the business. Schwab 0:05:28.880 --> 0:05:31.640 recently reported earnings deposits down twenty eight percent in the 0:05:31.640 --> 0:05:34.640 third quarter, was better than analysts forecast, still though a 0:05:34.720 --> 0:05:36.919 drop of more than two hundred and eighty four billion dollars. 0:05:37.880 --> 0:05:40.679 How much money do you see staying in the schwap 0:05:40.720 --> 0:05:44.000 ecosystem right now, even if you know cash sleep is occurring, 0:05:44.800 --> 0:05:46.960 but people can get you know, more than five percent 0:05:47.000 --> 0:05:47.800 in money markets. 0:05:48.000 --> 0:05:50.120 Well, what I would say is we want clients to 0:05:50.160 --> 0:05:52.839 do the right thing for them and their situation. We 0:05:52.960 --> 0:05:55.560 bring all you know, the clients leave cash in their accounts, 0:05:56.040 --> 0:05:57.920 We leave it there until we know what they want 0:05:57.960 --> 0:05:59.720 to do with it, and so they make a decision 0:05:59.760 --> 0:06:02.000 that they want more yield, they should go and do that. 0:06:02.040 --> 0:06:04.520 So the money leaving our bank, it's staying at Schwab, 0:06:04.800 --> 0:06:07.560 it's going and buying government bonds, or it's going into 0:06:07.560 --> 0:06:10.440 a money market fund. But that money is staying at Schwab, 0:06:10.480 --> 0:06:12.600 and it's going to places where it can earn a 0:06:12.640 --> 0:06:13.159 higher yield. 0:06:13.279 --> 0:06:15.120 Then why were deposits down so much if it's staying 0:06:15.160 --> 0:06:15.960 at Schwab. 0:06:15.800 --> 0:06:18.000 Because it's coming out of our bank and finding its 0:06:18.000 --> 0:06:21.839 way into higher yielding money market funds or fixingcome investments. 0:06:22.000 --> 0:06:24.600 And that's exactly what we would want for clients. It's 0:06:24.600 --> 0:06:26.880 not the best thing for our profits, but we want 0:06:26.880 --> 0:06:29.040 the best thing that's for our clients. And so that 0:06:29.080 --> 0:06:31.080 money movement is healthy for our clients. 0:06:31.360 --> 0:06:33.440 Right, banking key to revenue. Right, we know that right 0:06:33.520 --> 0:06:36.240 from the last earnings report, is money still continuing to 0:06:36.279 --> 0:06:37.560 come out of that unit? 0:06:38.040 --> 0:06:40.200 Well, what I would say is that if you think 0:06:40.200 --> 0:06:42.320 about what's happening clients are looking at. You know, if 0:06:42.320 --> 0:06:45.039 you went back to when interest rates were quite low, 0:06:45.080 --> 0:06:47.080 they would have a lot of cash in their portfolios 0:06:47.360 --> 0:06:49.400 and they would say, there's no need to move this cash. 0:06:49.480 --> 0:06:50.680 I'm just going to leave it here. It's going to 0:06:50.720 --> 0:06:52.760 earn zero here, It's going to earn zer anywhere else. 0:06:53.440 --> 0:06:56.280 As the FED has lifted interest rates and yields are 0:06:56.279 --> 0:06:59.960 now more attractive, people have looked at their balances and said, well, gosh, 0:07:00.040 --> 0:07:04.160 why would I leave it here earning earning less unless 0:07:04.200 --> 0:07:06.719 they needed to transact or they know they're going to 0:07:06.720 --> 0:07:09.080 spend it on something. But for the portion of their 0:07:09.120 --> 0:07:12.320 cash that they know is longer term cash, they can 0:07:12.320 --> 0:07:15.360 get better, they can get more yield somewhere else. So 0:07:15.440 --> 0:07:17.720 it's moved. And I would just wrap up by saying 0:07:18.040 --> 0:07:20.120 we think a lot of the movements occurred because that 0:07:20.160 --> 0:07:22.680 yield's been high for a while, so people have made 0:07:22.760 --> 0:07:25.840 that transition, and we're starting to see a strong deceleration 0:07:25.880 --> 0:07:27.280 of the pace of cash realignment. 0:07:27.320 --> 0:07:29.280 So it's still coming out, but at a slower pace, 0:07:29.360 --> 0:07:30.160 much slower pace. 0:07:30.280 --> 0:07:32.880 And in fact, last month was the first month where 0:07:32.880 --> 0:07:35.840 in our bank sweep we saw a positive growth in 0:07:36.280 --> 0:07:38.360 bank some more money coming into the bank than leaving 0:07:38.360 --> 0:07:39.920 the bank for the first time in a while. So 0:07:41.120 --> 0:07:43.520 from a business standpoint, that's positive. But again, what we 0:07:43.600 --> 0:07:45.800 want is clients to find the right investment for them. 0:07:45.840 --> 0:07:47.559 Does it make you nervous though? As we get ready 0:07:47.600 --> 0:07:51.400 for a GDP report, that's backward looking. Mind you another 0:07:51.480 --> 0:07:54.160 read on inflation that in terms of what that could 0:07:54.200 --> 0:07:58.360 mean for monetary policy, we do think we're getting close 0:07:58.400 --> 0:08:01.400 to our peeking rates. But nonetheless, whether again and if 0:08:01.400 --> 0:08:04.120 we see signs of inflation, if we see more signs 0:08:04.160 --> 0:08:07.240 of growth, whether or not that that means ultimately you're 0:08:07.240 --> 0:08:09.200 going to see more money coming out because the money 0:08:09.200 --> 0:08:11.040 markets just kind of get more and more attractive. 0:08:11.160 --> 0:08:12.680 Yeah, it could be we're back in one of these 0:08:12.680 --> 0:08:14.920 cycles where where bad news is good news. You know, 0:08:15.080 --> 0:08:16.880 I feel like we might be back in that because 0:08:17.160 --> 0:08:20.160 good news may lead to the higher rate environment. That 0:08:20.160 --> 0:08:24.000 could be you know, it could hurt the economy certainly. 0:08:24.240 --> 0:08:28.480 Okay, So what about creating new products that help people 0:08:28.560 --> 0:08:30.880 keep their cash at SCHWAB. I'm wondering, if there are 0:08:30.920 --> 0:08:34.640 so many high yield accounts available at other financial institutions 0:08:34.720 --> 0:08:36.880 right now, what are the conversations happening behind the scenes 0:08:36.880 --> 0:08:38.920 about creating those sorts of products at Schwab. 0:08:39.200 --> 0:08:40.680 Now, what I would say is, we have all kinds 0:08:40.679 --> 0:08:42.760 of cash products for clients, and we're not having an 0:08:42.800 --> 0:08:45.360 issue with cash leaving the firm. We've we've brought in 0:08:45.400 --> 0:08:47.840 over two hundred billion dollars of net new assets to 0:08:47.880 --> 0:08:49.719 the firm, and a lot of it has found its 0:08:49.720 --> 0:08:52.320 way into fixed income or money funds. The issue is 0:08:52.360 --> 0:08:54.840 just where they're saving it, but it's not leaving the firm. 0:08:54.880 --> 0:08:57.560 So I think there's no better place and no broader 0:08:57.679 --> 0:09:00.880 array of fixed income and money fund ones than we 0:09:00.920 --> 0:09:03.559 have at Schwab. So that, certainly, we always want to 0:09:03.559 --> 0:09:06.240 bring out new and relevant products, but we're doing a 0:09:06.360 --> 0:09:08.920 really nice job today of keeping those clients here at Schwab. 0:09:09.520 --> 0:09:10.560 Impacts the top line growth. 0:09:10.640 --> 0:09:12.280 We've been happy when. 0:09:12.120 --> 0:09:14.199 This five percent rate environment is over. 0:09:14.600 --> 0:09:15.880 Well, I don't have two and a half percent. 0:09:15.880 --> 0:09:17.880 Really, I feel like, you know that's not a bad 0:09:17.920 --> 0:09:20.360 deal for savers and investors. 0:09:20.440 --> 0:09:22.080 I want to ask you about your tenures so far. Right, 0:09:22.120 --> 0:09:24.839 you came in around twenty seventeen, twenty eighteen. I'm just 0:09:24.880 --> 0:09:27.520 thinking about kind of where the world was at that point. 0:09:27.880 --> 0:09:29.280 Not too shabby, right, and then all of a sudden, 0:09:29.280 --> 0:09:30.920 we move into a FED starts to raise rates, the 0:09:30.960 --> 0:09:34.480 pandemic hits. It's a whole other world, right, the FED 0:09:34.480 --> 0:09:37.920 cuts dramatically, we have the economy, everything just shuts down, 0:09:37.920 --> 0:09:39.880 and then we see markets bounce back in a big way. 0:09:40.400 --> 0:09:43.160 I mean, how do you think about kind of our 0:09:43.240 --> 0:09:46.600 visibility going forward in terms of the market environment. Do 0:09:46.640 --> 0:09:48.280 we really have a good grasp or is it hard 0:09:48.320 --> 0:09:52.000 to considering that trajectory and trying to figure out kind 0:09:52.000 --> 0:09:53.880 of what happens after a pandemic and all of the 0:09:53.920 --> 0:09:56.000 stimulus and crazy activity that went on. 0:09:56.080 --> 0:09:58.240 Well, we've certainly seen a lot in the last five 0:09:58.320 --> 0:10:00.840 or six years, haven't we. Yeah, you know, a pandemic 0:10:01.000 --> 0:10:04.360 timing was good, Yeah, all kinds of different market environments. 0:10:04.840 --> 0:10:05.040 You know. 0:10:05.080 --> 0:10:08.000 Our advice to clients at Schwab is to is to 0:10:08.040 --> 0:10:11.240 come up with a plan, stick to that plan, and 0:10:11.559 --> 0:10:12.920 if you need to help, seek the help of an 0:10:12.960 --> 0:10:14.800 advisor who can help guide you through it. 0:10:14.840 --> 0:10:16.320 But it's we believe it's. 0:10:16.160 --> 0:10:19.280 Hard to time the markets and and outthink you know 0:10:19.320 --> 0:10:19.960 what's going to happen. 0:10:20.040 --> 0:10:21.800 Are we going to be in a recession? Not in recession? 0:10:22.320 --> 0:10:24.400 Of course, we have an opinion on those things, but 0:10:24.400 --> 0:10:26.440 we're not always right, and we want investors to stay 0:10:26.480 --> 0:10:28.240 the course, have a plan, stick to it, and work 0:10:28.240 --> 0:10:29.920 with an advisor if that makes sense for them. 0:10:30.240 --> 0:10:32.560 What's your opinion on where we're going on the on 0:10:32.640 --> 0:10:33.120 the markets? 0:10:33.160 --> 0:10:35.560 Yeah, I mean I think at some point monetary policy 0:10:35.679 --> 0:10:37.800 has to lead to a more restrictive economy. 0:10:37.920 --> 0:10:41.160 But US recession or soft landing. 0:10:41.000 --> 0:10:42.559 I am not an economist. I'm not going to make 0:10:42.559 --> 0:10:44.960 that call. But you know, listen to Liz Anne Saunders 0:10:45.000 --> 0:10:46.880 or Jeff clientob they do a really nice job of 0:10:47.440 --> 0:10:49.840 calling the markets and and and the economy. 0:10:49.920 --> 0:10:51.719 As someone who manages though it is very part of 0:10:51.760 --> 0:10:53.760 the c suite right here, who covers you know and 0:10:54.040 --> 0:10:56.760 runs this company. What's top of mind for you guys, 0:10:56.800 --> 0:11:00.320 whether it's employees, whether it's cost cutting, what is it 0:11:00.320 --> 0:11:00.520 to me? 0:11:00.600 --> 0:11:04.679 It's opportunity. We have so much opportunity to delight our 0:11:04.720 --> 0:11:07.000 clients and make them better off in their financial life. 0:11:07.240 --> 0:11:09.360 But what I worry about at night is are we 0:11:09.400 --> 0:11:11.280 doing enough? And are we doing it fast enough? I 0:11:11.360 --> 0:11:14.120 just think we are blessed to have thirty five million 0:11:14.160 --> 0:11:16.560 clients that we serve on a daily basis, and I 0:11:16.600 --> 0:11:18.640 want to make sure we do everything in our power 0:11:18.880 --> 0:11:20.080 to make them as well off. 0:11:19.960 --> 0:11:20.520 As they can be. 0:11:20.960 --> 0:11:24.000 Can you talk a little bit about customer service? I 0:11:24.040 --> 0:11:26.800 have full disclosure. I'm a Schwab client, so I've. 0:11:26.679 --> 0:11:28.000 Experienced thank you for your business. 0:11:28.080 --> 0:11:30.840 And one thing that is notable it's like to me, 0:11:30.880 --> 0:11:33.240 it's like Carol, when we talk about American Express, you 0:11:33.280 --> 0:11:35.680 call Schwab in the person answers, you call American Express 0:11:35.679 --> 0:11:37.560 and a person answers. Can you talk about the investments 0:11:37.600 --> 0:11:40.640 that you make in customer service so people have those 0:11:40.679 --> 0:11:42.280 interactions just in the last minute that we have. 0:11:42.480 --> 0:11:44.600 Yeah, client service is critical to us. 0:11:44.600 --> 0:11:47.640 It's one of the things that really differentiates Schwab from 0:11:47.679 --> 0:11:51.079 some of our Vermar competitors. We've answered the phone this year, 0:11:51.120 --> 0:11:53.679 on average in less than thirty seconds. I can't get 0:11:53.720 --> 0:11:55.800 anyone to pick up my phone call in thirty seconds, 0:11:55.840 --> 0:11:59.000 certainly not my teenage daughter, so we ext her. 0:11:59.120 --> 0:12:00.600 Yeah, we make it. 0:12:01.280 --> 0:12:04.560 Yeah, it's really important to us that we answer the phones, 0:12:04.559 --> 0:12:06.760 that we're there for the clients and that we're delivering 0:12:06.800 --> 0:12:09.559 what they need. We are a client focused business. We 0:12:09.600 --> 0:12:11.720 only succeed when our clients. 0:12:11.400 --> 0:12:13.800 Succeed, So no worry about AI taking over. 0:12:14.160 --> 0:12:15.800 Hey, it's going to be really helpful to all those 0:12:15.800 --> 0:12:17.560 people answering the phones. I think they're going to make 0:12:17.600 --> 0:12:19.640 them more efficient. They're going to help them get an 0:12:19.640 --> 0:12:22.120 answer to the exist as an assist. They're going to help 0:12:22.120 --> 0:12:24.160 you get an answer more quickly. They're going to help 0:12:24.200 --> 0:12:26.400 you get a better answer, but they'll be in the background, 0:12:26.480 --> 0:12:27.760 supporting that person you're. 0:12:27.600 --> 0:12:29.600 Talking to, all right, love to hear that rather than 0:12:29.640 --> 0:12:32.679 taking over. Rick, thank you so much, really appreciate it. 0:12:32.800 --> 0:12:33.640 Thanks for having me on. 0:12:33.720 --> 0:12:36.160 Thank you for having us, Rick Wurster. He's a president 0:12:36.200 --> 0:12:39.040 of course of Charles Schwab onside EDH Schwab Impact. We're 0:12:39.080 --> 0:12:41.840 just getting started though. On this Wednesday, Carol Master along 0:12:41.840 --> 0:12:45.200 with Tim Stenewick, and you're listening and watching Bloomberg Business Week. 0:12:51.480 --> 0:12:55.079 You're listening to the Bloomberg Business Week podcast. Catch us 0:12:55.080 --> 0:12:58.440 live weekday afternoons from three to six Eastern Listen on 0:12:58.520 --> 0:13:02.559 Bloomberg dot com, hard radio app and the Bloomberg Business app, 0:13:02.840 --> 0:13:05.079 or one just live on YouTube. 0:13:05.400 --> 0:13:07.559 Well. One of the most read on the Bloomberg Terminal 0:13:07.840 --> 0:13:10.800 over earlier this week all about the challenges that active 0:13:10.840 --> 0:13:14.120 asset managers are facing Carol even Matt Levine wrote about 0:13:14.160 --> 0:13:16.120 this in his column on Monday. Across the one hundred 0:13:16.200 --> 0:13:20.679 trillion dollar asset management industry, money managers have been confronted 0:13:20.679 --> 0:13:23.079 by a tectonic shift when it comes to investor appetite. 0:13:23.360 --> 0:13:26.040 They're looking for cheaper, passive strategies at least heard this 0:13:26.080 --> 0:13:27.440 before right over the last decade. 0:13:27.480 --> 0:13:30.360 Absolutely, and now they're facing something even more dire. The 0:13:30.440 --> 0:13:32.640 unprecedented run of bull markets may be a thing of 0:13:32.679 --> 0:13:34.880 the past. We've got a good guest to get into 0:13:34.920 --> 0:13:36.960 all of this, who actually is going to talk about 0:13:37.000 --> 0:13:40.480 how maybe people want simple investing, which I find really fascinating. 0:13:40.600 --> 0:13:43.440 Joe Grogan. He has head of distribution over at Wisdom Tree. 0:13:43.480 --> 0:13:45.520 He works with some of the largest custodial platforms that 0:13:45.559 --> 0:13:48.280 are out there. He's here on site with us in Philadelphia. 0:13:48.280 --> 0:13:50.640 Wisdom Tree, by the way, it's an asset management firm. 0:13:50.679 --> 0:13:52.040 You know who they are. They offer up a lot 0:13:52.040 --> 0:13:54.800 of ETFs and are among those financial firms filing for 0:13:54.800 --> 0:13:56.920 a spot bitcoin ETF, which I'm really interested. 0:13:57.000 --> 0:13:59.080 We'll spend the whole We'll spend the whole interview talking 0:13:59.080 --> 0:13:59.680 about bitcoin. 0:14:00.000 --> 0:14:01.120 You know how many people come up to you and 0:14:01.160 --> 0:14:02.800 be like, let's talk about that bitcoiny TAF. 0:14:03.000 --> 0:14:04.480 Well, first of all, thank you very much for having 0:14:04.480 --> 0:14:07.400 You're welcome. It happens quite a bit. It happens at 0:14:07.400 --> 0:14:09.640 the booth, that happens pretty much everywhere we go. And 0:14:10.160 --> 0:14:12.839 the same answer right now, we really can't speak to. 0:14:12.800 --> 0:14:15.280 That, is there is there interest a little bit? 0:14:15.679 --> 0:14:17.520 Is there a well, talk to me about interest around 0:14:17.559 --> 0:14:19.680 the product. Speak about that. I mean, have you ever 0:14:19.760 --> 0:14:22.120 launched a product that has had this much attention, this 0:14:22.200 --> 0:14:22.760 much interest. 0:14:23.120 --> 0:14:25.720 It's certainly overwhelming, for sure, the amount of interest that 0:14:25.760 --> 0:14:29.840 gets for whatever reason that may be, it's out there. 0:14:29.960 --> 0:14:33.200 It's it's pretty amazing. It's a lot of interest. Maybe 0:14:33.240 --> 0:14:35.240 not that much of an appetite that we've seen in 0:14:35.360 --> 0:14:38.920 the US, but there's certainly appetite in Europe and Canada. 0:14:38.920 --> 0:14:41.800 We've seen it. You know, we have a few in Europe. 0:14:42.800 --> 0:14:44.760 But as far as the launching the one in the 0:14:44.920 --> 0:14:47.640 US goes, I leave that with our lawyers and our 0:14:47.720 --> 0:14:49.520 church General Council until we get through the SEC. 0:14:49.720 --> 0:14:51.360 Can we just say, though, is it going to be 0:14:51.360 --> 0:14:54.040 like cannabis? And they overseight like, is it going to 0:14:54.080 --> 0:14:56.240 be every like? Is it something? Or do you feel 0:14:56.240 --> 0:14:58.240 like there's a lot of attention now to try and 0:14:58.280 --> 0:14:59.200 kind of figure this one out. 0:15:00.080 --> 0:15:01.920 You've seen a lot of attention, especially with the rise 0:15:01.960 --> 0:15:03.400 in the last you know, week or two. I mean, 0:15:03.400 --> 0:15:06.320 it's been amazing to see a meteoric rise in crypto 0:15:06.640 --> 0:15:08.440 and what does that mean for the average investor. I 0:15:08.440 --> 0:15:12.120 mean to your original comment about simplicity, how do you 0:15:12.200 --> 0:15:12.920 make that simple? 0:15:13.560 --> 0:15:15.680 Well, that's why I'm trying to get my head around 0:15:15.800 --> 0:15:16.440 those two things. 0:15:16.480 --> 0:15:16.920 Absolutely. 0:15:16.920 --> 0:15:18.280 And you know, we talked to a lot of folks 0:15:18.280 --> 0:15:21.320 in the digital world, if you will, Bitcoin world, crypto world, 0:15:21.320 --> 0:15:23.160 and they're like, you know, it's so pure in all 0:15:23.200 --> 0:15:24.960 those things, but it's complicated. 0:15:25.080 --> 0:15:26.120 It's extremely complicated. 0:15:26.160 --> 0:15:28.240 You don't have your cold storage all set up. 0:15:29.040 --> 0:15:29.480 I do not. 0:15:30.040 --> 0:15:32.640 So that's so tell me this, you know, interest and 0:15:33.120 --> 0:15:36.400 desire for things more simplistic. Yeah, and then you have this. 0:15:36.920 --> 0:15:40.160 Well, let's put crypto aside and talk about simplicity and 0:15:40.200 --> 0:15:43.040 what that means. I mean, we're seeing this huge shift 0:15:43.160 --> 0:15:48.400 towards simplicity away from the real complex type of investment strategies. 0:15:48.800 --> 0:15:51.480 And I think the biggest reason behind that is the 0:15:51.600 --> 0:15:54.840 average consumer or the investor. They can't understand these products, 0:15:54.880 --> 0:15:57.080 they can't manage them, So how are they going to 0:15:57.120 --> 0:15:58.880 actually try to understand them, work with them and put 0:15:58.880 --> 0:16:01.520 them into portfolios? You know? So as we go to 0:16:01.560 --> 0:16:04.200 a simpler process, a simpler type of formula, it doesn't 0:16:04.200 --> 0:16:05.600 mean we're losing sophistication. 0:16:05.800 --> 0:16:07.160 Well, that's what I want to ask what do you mean? 0:16:07.200 --> 0:16:08.880 They want a simpler like, what is it? Are you 0:16:08.920 --> 0:16:11.280 talking about the process itself or the investment itself? 0:16:11.320 --> 0:16:13.640 You know, it's more the investment itself, okay, right. They 0:16:13.640 --> 0:16:16.680 want to understand the underlying investment, how it works. You know, 0:16:17.000 --> 0:16:18.920 back in the days, over the last few years, we've 0:16:18.960 --> 0:16:21.160 seen a lot of option based strategies, a lot of 0:16:21.440 --> 0:16:25.600 derivative tape strategies, very complicated, very tough to understand. If 0:16:25.640 --> 0:16:27.720 the market goes up, these go down. How does that work? 0:16:28.400 --> 0:16:30.720 Now it's really well, what about the traditional stock and 0:16:30.720 --> 0:16:33.120 bond portfolios? What about these portfolios that we can better understand? 0:16:33.200 --> 0:16:33.960 That's what people want. 0:16:34.560 --> 0:16:36.840 Well, they're looking for that. They're looking for the quality 0:16:36.880 --> 0:16:39.640 type investments. We're seeing a big shift of quality in 0:16:39.720 --> 0:16:42.160 our in our business. That's what they're looking for. 0:16:42.360 --> 0:16:45.359 If people don't understand something, does it belong in their portfolio? 0:16:46.280 --> 0:16:47.080 That's a great question. 0:16:47.880 --> 0:16:50.880 I know what Warren Buffet would say, Yeah, it's a. 0:16:50.800 --> 0:16:52.680 Great Lynch would have said it right decades ago. 0:16:52.760 --> 0:16:54.920 Absolutely, Peter Lynch, I used to work in fidelity for 0:16:55.040 --> 0:16:56.920 quite a while, and yeah, you know he always said, 0:16:56.920 --> 0:16:58.120 if you can go into a store and you see 0:16:58.120 --> 0:17:01.120 buyers buying those products. That's problem be the investment you want. 0:17:01.440 --> 0:17:03.400 That's simple of a philosophy. 0:17:03.200 --> 0:17:05.359