Bloomberg Audio Studios, podcasts, radio news.
Schwab shares. I'm just taking a look at them shares of the Charles Schwab Corporation. They're up about one percent in today's session. Stock is trading higher after the company reported earnings earlier today this morning. It did report a surge and average daily trading volume in the fourth quarter, and that's happening as retail investors really sought to take advantage at the end of a strong year of the stock market. We did see some big moves there. Hey,
to talk about the quarter and the outlook. Great for Tim and I to be back with Rick Worster. He's president and CEO of the Charles Schwab Corporation. He joins us from their headquarters in Westlake, Westlake, Texas. Rick, Great to have you back with us.
How are you. I'm doing really well. Nice to be with you, Carol and Tim. I always enjoy it. Well.
We are so glad to have you back with us. It feels like twenty twenty six is often running. I'm just curious though, I want to talk about the last quarter, and you guys did note about clients conducting a lot more of their financial lives at Schwab doing different things wealth management, trading, and banking. So talk us a little bit more about how the quarter wrapped up and where you saw them engaging more.
As a record quarter for us as a firm, our earning screw fifty percent year over year, our revenue was up twenty two percent year over year, and we saw net new client assets to the firm of five hundred and nineteen billion dollars on the year, including an all time record quarter in the fourth quarter of one hundred and sixty three billion dollars. And importantly, what we are seeing is a bull market for convenience, not just in
financial services, but I think across most industries. The way that reflects itself for us is a desire for clients to have more of their financial life conducted with one institution, and we've been the institution for many that they're turning to. We can help them with their investing needs, we can help them with their trading needs, with their wealth needs, with their banking and lending needs, and so Brian bringing together a client's financial life, we're able to help them more.
When we do that, there satisfactionally actually increases in our business growth so it's a win for them because we're bringing convenience, and then it's a win for us because we're doing more business with them and doing more to help them in their financial life.
You mentioned financial lives, and you just went through a whole list of things that people do with these apps and services. What about prediction markets? Can you talk a little bit about whether you're planning on exploring options for customers When it comes to prediction markets. It's all the rage right now, as you very well know, and you.
Thought we were going to warm you up, we weren't. We're just going right in.
First, I distinguished between prediction markets and gambling being able to forecast employment or inflation and being able to take a point of view or position on those and that could somehow heads or accentuate the positions in your investment portfolio. And I think as that those were born, I think that makes sense within the context of an investment portfolio, and we're absolutely open to having that on our platform,
those types of prediction markets. At the moment, it's not high on our client's list of things they want to innovate for them, and so we've been focused our innovations in other areas that are more interest to clients. But
I distinguish that between that and sports gambling. And if you look at ninety five percent of the volume of what people call prediction markets is actually just sports gambling, and that's not something that is we're keenly interested in getting into for a very simple reason, which is our mission as a firm is to make clients better off in their financial life. And less than five percent of people who go on to one of these gambling apps take out more money than they put in in the
first place. That's the complete antithesis of what we do at schwab. Our client's wealth is at an all time high, the level advice we're giving them is that an all time high, and the amount we're doing to try to help them is that an all time high. So we'll leave the sports gambling, which constitutes ninety five percent of the prediction markets volume. We'll leave that to the gambling houses, to the van Duals, the DraftKings, and the Robinhoods.
So it's funny, it's interesting that you say Robinhood. We'll get back to that because I think Robinhood would probably like to position itself as a competitor to Charles Schwab in a lot of areas, if we stick with the ninety five percent of what you believe prediction markets of sports gambling, what is the five percent that is of interest to you that we could potentially see at one point on Schwab's platform, give us some examples there. Well.
I think if you want to take a position on what the employment report's going to be, you know, at the end of the month, or how inflation's going to print, those things could have an impact on your portfolio. If you have a big bond position, you may have interest in what's going to happen in the inflation report, and it's a simple way of taking a position based on a yes or no position, and so that could be
of interest to clients. But the reason I think we see haven't seen much volume in those and the reason why ninety five percent of the volume is in sports gambling, is because if you want to take a position on the employment report or the inflation report, there are countless ways to do that, and financial market participants already doing that, whether it's in the bond market, in the futures market
through options. There's plenty of ways to do that today and I think that's part of the reason why the true idea of prediction markets really haven't taken off, and why the firms that offer this have pivoted to sports gambling, because there's a lot more interest in that than there is in taking a position on the employment or inflation report.
All right, So then safe to say, Rick, if you were a betting man, I would guess that there's nothing in terms of a prediction market on the Schwab platform in the next year or so, or maybe never.
Well, we've been innovating at a very fast rate. Twenty twenty five was all about how do we meet the wealth lending active trading needs of our clients, and we had significant innovations in every one of those areas. We went to twenty four by five trading for our active traders. We continued to make our mobile app even stronger for those that want to actively trade and do so via
the mobile app. For our wealth clients, we launched new tax trusts and the state capabilities, including an investment we made in com to bring trust capabilities directly to our clients. We've launched a series of new capabilities for our advisor clients, and in particular really leaned into innovations around making it easier for them to work with us. All of those are things that we think are far more impactful to our clients' ability to grow their wealth than prediction markets.
And when we go out and survey our clients about what they want from us, prediction markets is low on the list, So it's something we are actively looking at. I think at some point in the future we will have true prediction markets at some point, but it's just not high on our innovation list because we're firmly focused on those innovations they're going to have the most impact on our client's.
Wealth, right Unlike something we talked about when we were at SWAB Impact with you in November that you had just done a deal which would give investors access to private companies, as was buying Forge Global, So I get that's more of a priority for clients.
Yeah, I think you go back to the eighties when I believe it was KKR that did the first leveraged buyout. Institutions have been benefiting from the diversification and the return enhancement from alternatives investments, and in the past decades or multiple decades, they're really wealthy have also been able to participate in those return and diversification benefits, but the everyday retail investor has not been able to. And our Forge
acquisition was really about democratizing investments and alternatives. We're now going to be able to bring it to all of our investors in multiple different forms and allow them to participate in private markets the way institutions and the very wealthy have been able to. And we're thrilled to bridge that gap and excited for what that could mean for our client's wealth.
Hey, hey, Rick, one thing we've got to bring your attention to. It's just a headline that cross the Bloomberg, and we're seeing markets turn around and rally pretty substantially on it. We see a straight move up on all of the major equity averages. We're now up nearly one point two percent on the S and P and up almost one point four percent on the Nasdaq one hundred. President Trump, who's in Davos and meeting with European leader, says he has so you won't impose Greenland limited tariffs
on February first. But the headline that really think got markets moving was that the President says he's got a framework for future deal on Greenland with NATO. And I guess I want to bring this into the conversation because I feel like when Tim and I and you were together at Tuama Impact in Denver, it was pretty upbeat. I think about the market environment and the outlook, and there's been a lot that's happened here in twenty twenty six.
It feels like volatility is back. I'm just curious, you know, have any of the assumptions about the White House and policy and changes changed in your view, And I'm just curious what you make of something like this from the President that definitely has the markets moving to the upside.
Yeah, I don't think any of that surprises us. We're still within you know, percent or two of all time highs and markets. I think there's going to be geopolitical noise from time to time. If you've read the book The Art of the Deal, I think it begins with starting big in your requests and then negotiating to something that that is workable for both parties. And my guess
is that may be the playbook that's followed here. But for our clients, we're not seeing an undue amount of concern And this is a kind of environment in which we thrive because we're not just an investment app. We're so much more than that. We took thirty million calls from clients last year and answered them in less than
thirty seconds. We're in all many local communities across this country with actual people that are there to help coach our clients and how to navigate periods like this and how to see through the noise and be diversified and stick with it for the long term so that they can build their wealth. So whatever markets and geopolitics bring, we're going to be ready for it, and it's going to help us distinguish what we stand for here at Schwab, which is helping our clients grow their wealth.
You know, we had some reporting in recent days about the New York Stock Exchange exploring ways for twenty four to seven trading of certain assets, and I'm curious crypto kind of paved the way for that because a lot of people can trade crypto twenty four to seven. What do you think of the ability for people to trade stocks twenty four to seven.
Well, I think we're very open to that and would certainly participate. We're already twenty four by five today. We see very little market activity or very little client activity outside of market hours. It's usually only a couple of a percent. The vast majority of trading happens within the market hours, and I think the market hours are a feature,
not a bug. And what I mean by that is by limiting the marketing hours the market hours, you draw people in at the same time and create a lot of liquidity so that spreads are tight and trading efficiency is very high. I think the convenience of twenty four to seven is certainly very appealing, but we need to make sure that those trades are done in a way
that makes sense for clients. And you know, as we see clients trade on our twenty four by five platform, we make very certain that they trade in a way that they're recognizing the higher spreads, and we make that very clear to them and they live with that for
the convenience. But we just need to be careful as we go to twenty four by seven that we don't lose the efficiency of the market and the benefits of getting everyone into the market at around the same time, which is great for trading efficiency.
Hey, Rick, super quick ten seconds. It feels optimistic this year.
I think so there's a lot, you know, the economies on strong footing. Market's been up three years in a row. Unless something changes, things look pretty good. Well.
We certainly look forward to coming back to you throughout the year and checking in on it. Rick, thank you so much. Happy New Year, Rick Worster. He is the Presidency of the Charles Schwab Corporation, joining us there from Texas.