Schwab Trading Volume Swells to End Strong Year for Markets 

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1:27IBM. JPMorgan Chase Bank N.A. Member FDIC. Copyright 2026. JPMorgan Chase and Company. Bloomberg Audio Studios. Podcasts. Radio. News. You're listening to Bloomberg Business Week with Carol Masser and Tim Stenevek on Bloomberg Radio. Schwab shares. I'm just taking a look at them. Shares of the Charles Schwab Corporation. They're up about 1 % in today's session. Stock is trading higher after the company reported earnings earlier today, this morning. It did report a surge in 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.

2:10We 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 Worcester. He's president and CEO of the Charles Schwab Corporation. He joins us from their headquarters in Westlake, Texas. this. 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 2026 is off and 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.

2:47So talk to us a little bit more about how the quarter wrapped up and where you saw them engaging more? Well, it was a record quarter for us as a firm. Our earnings grew 50 percent year over year. Our revenue was up 22 percent year over year. And we saw net new client assets to the firm of$519 billion on the year, including an all-time record quarter in the fourth quarter of$163 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.

3:29And 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 by bringing together a client's financial life, we're able to help them more. When we do that, their satisfaction actually increases and our business grows. So it's a win for them because we're bringing convenience. And 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.

3:58What 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 a 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 to go right in. First, I distinguish 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 hedge or accentuate the positions in your investment portfolio. And I think as those were born, I think that makes sense within the context of an investment portfolio.

4:33And we're absolutely open to having that on our platform, those types of prediction markets. At the moment, it's not high on our clients' list of things they want us to innovate for them. And so we've been focused on our innovations in other areas that are of more interest to clients. But I distinguish that between that and sports gambling. And if you look at 95 % of the volume of what people call prediction markets is actually just sports gambling. And that's not something that 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.

5:09And less than 5 % 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 of advice we're giving them is at an all-time high. And the amount we're doing to try to help them is at an all-time high. So we'll leave the sports gambling, which constitutes 95 % of the prediction market volume, we'll leave that to the gambling houses, to the Vanduels, 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.

5:49If we stick with the 95 % of what you believe prediction markets is sports gambling, what is the 5 % 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.

6:24And 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 95 % 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 are 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 than there is in taking a position on the employment or inflation report.

7:03All 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. 2025 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 24 by 5 trading for active traders. We continue 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, trust, and estate capabilities, including an investment we made in wealth.com to bring trust capabilities directly to our clients.

7:47We 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 that are going to have the most impact on our clients' wealth.

8:21Right. Unlike, you know, something we talked about when we were at Schwab Impact with you in November, that you had just done a deal which would give investors access to private companies. This was buying Forge Global. So I get that's more of a priority for clients. Yeah, I think you go back to the 80s 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, you know, in the past decades or multiple decades, the really wealthy have also been able to participate in those return and diversification benefits.

8:57But 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 clients' wealth. Hey, Rick, one thing we've got to bring your attention to, it's just a headline that crossed the Bloomberg, and we're seeing markets turn around and rally pretty substantially on it.

9:28We see a straight move up on all of the major equity averages. We're now up nearly 1.2 percent on the S &P and up almost 1.4 percent on the NASDAQ 100. President Trump, who's in Davos in meeting with the European leader, says he won't impose Greenland limited tariffs on February 1st. But the headline that really, I think, got markets moving was that the president says he's got a framework for a 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 Trump Impact in Denver, it was pretty upbeat, I think, about the market environment and the outlook.

10:07And there's been a lot that's happened here in 2026. 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, a percent or two of all-time highs in 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 is workable for both parties.

10:45And 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 the kind of environment in which we thrive, because we're not just an investment app. We're so much more than that. We took 30 million calls from clients last year and answer them in less than 30 seconds. We're in 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.

11:15So 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 24-7 trading of certain assets. And I'm curious, crypto kind of paved the way for that because a lot of people can trade crypto 24-7. What do you think of the ability for people to trade stocks 24-7? Well, I think we're very open to that and would certainly participate. We're already 24 by 5 today. We see very little market activity or very little client activity outside of market hours.

11:58It'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 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 24-7 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 24-by-5 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.

12:39And they live with that for the convenience. But we just need to be careful as we go to 24 by 7 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, 10 seconds. Feels optimistic this year? I think so. There's a lot. You know, the economy is 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.

13:09Happy New Year. Rick Worcester, he is the president and CEO of the Charles Schwab Corporation, joining us there from Texas.

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