Bloomberg Talks
00:00:02 · Carol Massar, Rick Wurster, S2, Tim Stenovec
[00:00:02] S0: Bloomberg Audio Studios. [00:00:04] S1: Podcasts. [00:00:05] S0: Radio. News. Rick Wurster is back with us. He's president and CEO of the Charles Schwab Corporation. Good to be back with you. [00:00:13] S2: So fun to be here. Thanks for having me on. [00:00:14] S0: It's great to have you here. I feel like, go back a couple years, AI was not necessarily the focal point. [00:00:20] S2: It is now. Is anyone talking about it here at the conference? [00:00:22] S0: Yes. You guys in particular. What's happened? What's the conversations, Rick, that you guys have internally? [00:00:30] S1: Well, it's been a huge accelerant to our business and I think to all the advisors here. And I think it's primarily helping us in a couple different ways and helping the advisors in a couple different ways. Number one, it's helping us be more efficient and effective with clients. It's streamlining operations. It's helping advisors be more prepared for meetings to recall what the last discussion they had with a client was or what's important to that client. And at the same time, I think it's creating new pathways to engage clients. And for all of us here at this conference, It will allow us to reach new clients that we couldn't have before with a personal relationship. [00:01:01] S3: Well, one way you're doing that is by investing in Nevis. The booth is just right over there. We talked about this quite a bit yesterday with some members of your team. A year ago, you were sitting with us. You had just acquired Forge Global. Is this investment in Nevis part of something bigger?
00:01:01 · Tim Stenovec, Rick Wurster, Carol Massar, S2
[00:01:01] S3: Well, one way you're doing that is by investing in Nevis. The booth is just right over there. We talked about this quite a bit yesterday with some members of your team. A year ago, you were sitting with us. You had just acquired Forge Global. Is this investment in Nevis part of something bigger? [00:01:13] S1: Well, it's part of us trying to nail the basics for our advisors. Our biggest advisors have pretty sophisticated technology stacks. And what Nevis, I think, can do for them is provide an operating layer that makes it easy for them to work across their tech stack and integrate into us. And so what we're trying to do with our investment in Nevis is create ease for the advisor and make it even easier for them to work with us which hopefully give us a preferred position in being their custodian of choice. [00:01:41] S0: How do you think about AI and being cautious? Because I think we're in this narrative around the AI spend. Look at Alphabet today, erasing about half a trillion dollars in market cap. And I think there's increasingly the conversation about return on investment and will it all pay off? So how do you think about your moves, whether it's partnerships or doing deals, and what makes the most sense versus kind of watching how this ultimately plays out and what will be the ROI for everybody? [00:02:07] S2: Well, for us, we start with what's the end game? What are we trying to accomplish?
00:02:07 · S2, Rick Wurster, Carol Massar
[00:02:07] S2: Well, for us, we start with what's the end game? What are we trying to accomplish? [00:02:10] S1: And at Schwab, it's all about delighting the client, whether it's an advisor or a direct retail client. And so we've been placing our emphasis on how do we bring AI to our clients in a way that helps their financial journey and their investment life. And I think there's a plethora of ways that that can happen from stitching together more of their investment life in one place, to having insights that they wouldn't have before, to making all these advisors more productive with their clients. So We'd like to start with the end goal, and I think AI has a really big role to play in all of that. [00:02:39] S0: I'd love to know what you think about all of the bubble conversation that's been out, whether it's Ken Griffin of Citadel, some concerns, and then there are others who are pushing back over at Blackstone saying, no, no, no, we've got to keep going. You've seen a few market cycles. What do you think?
00:02:39 · Carol Massar, Rick Wurster, Tim Stenovec, S2
[00:02:39] S0: I'd love to know what you think about all of the bubble conversation that's been out, whether it's Ken Griffin of Citadel, some concerns, and then there are others who are pushing back over at Blackstone saying, no, no, no, we've got to keep going. You've seen a few market cycles. What do you think? [00:02:55] S1: Well, it certainly feels like a boom, and we've had several years of great returns, which is terrific. In terms of a bubble, one thing that gives me some confidence that maybe we're not in a bubble is there is a tremendous number of stocks that I think are either fairly valued or undervalued. And you certainly see stocks that are highly valued. Their fundamentals are incredible and they're creating an entire new market, new way of working. It's not surprising that they have high valuations attached to them. And at the same time, there's so many companies that I look at, I'm like, wow, this company is cheap. [00:03:29] S0: Yeah. [00:03:30] S3: So to that end, I mean, we spent a lot of time over the last two days talking about AI in terms of advisor services and what it can do for RIAs and ultimately the end client. But what is AI doing for you at Charles Schwab right now on your back end that's making you more efficient? [00:03:44] S2: It's helping us all over the place.
00:03:44 · S2, Rick Wurster, Tim Stenovec, Carol Massar
[00:03:44] S2: It's helping us all over the place. [00:03:45] S1: I visited a branch in Austin, Texas last week, and I sat with one of our financial consultants. Their job is to sit with clients and help their financial dreams come true and play an important role. That financial consultant told me that the AI tools we had put on his desktop saved him two to three hours a day. And so what he's able to do with those two or three hours a day is go see another family, go talk to another couple trying to retire, an individual trying to buy their first house. That's two or three hours he's getting back every single day to help more clients. [00:04:14] S3: Are you seeing it show up on the bottom line at all in terms of earnings? [00:04:17] S1: Absolutely we are. We for sure have... Fewer people per client answering phone calls. [00:04:23] S0: Wow. [00:04:24] S1: We're able to serve more clients with each of our financial consultants. Now, we're still net positive from a hiring standpoint, but we're more efficient. We have 1,600 more people than we had two years ago, so we're growing. But if you look at the number of people we have per client, per client account, we continue to scale our business. And AI has been an important part of that. [00:04:45] S0: So making you more efficient in certain areas, you are hiring. Where are you hiring?
00:04:45 · Carol Massar, Rick Wurster, Tim Stenovec, S2
[00:04:45] S0: So making you more efficient in certain areas, you are hiring. Where are you hiring? [00:04:49] S1: We are hiring a lot of client-facing people. And the interesting thing I'm seeing about AI, and there's so much talk about it, and justifiably so, at the same point, relationships matter either just as much or even more. And when I look at all the statistics in our business, relationships are driving more growth in technology. When we have a financial consultant relationship in a branch like we have here in Boston, and we have a client relationship, that client relationship grows three times faster than when we don't have that person-to-person relationship. Likewise, our RRA business is the fastest growing segment of our business. And that is entirely fueled by the relationship these wonderful advisors have with their end clients. [00:05:29] S0: So kids, go get a liberal arts degree, right? What do you think about? What do we tell the next generation in this environment? [00:05:37] S1: Well, I think EQ matters a lot, no matter what you choose to do. And I think there's probably lots of ways to learn EQ. [00:05:43] S3: So I want to talk a little bit, there's a lot we want to get to with you, but you know at this point that when you sit down with us, I'm going to ask you about prediction markets. [00:05:50] S2: There was a market on that.