Episode summary
Wealth Manager Stocks Sink as Traders Flee Next AI Casualty | Bloomberg Businessweek
Bloomberg Businessweek Daily
· · Hosts: Carol Massar, Tim Stenovec · Guests: Neil Sipes, Kathy Jones, Cheryl McKissack Daniel, Mark Gongloff
Summary
Robinhood’s earnings disappointed on revenue and key trading lines, sending the stock lower, but the guest argued the bigger question is whether retail engagement holds up as crypto cools and customers age. He said Robinhood still earns about 60% of revenue from transaction-based sources and noted that prediction markets are now a meaningful new revenue stream, even if they are mostly sports betting in practice. He also framed Robinhood and Charles Schwab as very different businesses today, with Robinhood’s average account balance around $12,000 versus Schwab’s north of $200,000.
The show then turned to the AI-driven selloff in wealth-management stocks after a tax-strategy tool from Altruist sparked fears that automated advice could pressure advisers. The guest said the reaction looked overdone because firms like Schwab, Morgan Stanley, Raymond James and LPL already use AI to boost adviser productivity rather than replace the human relationship. The discussion also widened into the broader “AI scare” trade that has hit other sectors.
Later, a fixed-income strategist said markets are reacting too quickly to headlines, while a climate analyst argued the EPA’s planned rollback of greenhouse-gas authority is legally fraught and economically shortsighted. He said climate costs, grid stress and energy demand from data centers make the issue increasingly central to business and investment decisions.
Key takeaways
- The guest said Robinhood gets about 60% of revenue from transaction-based sources, making crypto, options and equities trading crucial to the story.
- Prediction markets now represent roughly 5% to 10% of Robinhood run-rate revenue, but the guest said 90% of that is effectively sports betting.
- The guest argued Robinhood and Schwab serve very different customers, citing average account balances of about $12,000 versus more than $200,000.
- On AI in wealth management, the guest said the selloff in Schwab, Raymond James and LPL looks exaggerated because firms are using AI to improve adviser productivity, not eliminate advisers.
- The climate analyst said the EPA’s attempt to undo the endangerment finding is constrained by legal precedent and ignores the growing economic cost of climate damage.
Notable quotes
“the immediate reaction is that we know that Robin Hood is is sort of building a franchise in the you know in the shadow of Schwab”
“today Robin Hood as we know it earns about 60% of revenue from transactionbased sources”
“the client profile on Robin Hood just is very different. We talked about $12,000 average account balances”
“AI isn't new in wealth management. You've had big players like Schwab, Morgan Stanley talking about, you know, AI initiatives”
“those are you know relationship driven businesses that yes can be shifted by AI or actually enhanced we think by AI rather than disrupted”
How the episode opens
Bloomberg Audio Studios, podcasts, radio, news. This is Bloomberg Business Week Daily, reporting from the magazine that helps global leaders stay ahead with insight on the people, companies, and trends shaping today's complex economy. Plus, global business, finance, and tech news as it happens. The Bloomberg Business Week Daily podcast with Carol Masser and Tim Stenbec on Bloomberg Radio.
We're going to talk about Robin Hood because the company just out with earnings shares actually moving lower in the after hours. The company reported net revenue for the fourth quarter that missed the average analyst estimate coming in at $1.28 billion. uh transactionbased revenue missed expectations. Options revenue came in below expectations. Equities revenue came in above expectations. Net interest revenue came in slightly below expectations. Adjusted operating expenses came in uh below expectations. Is everyone keeping up?
Yeah. Yeah. And we got a little bit about outlook, right? Ces 2026 adjusted operating expenses uh and SBC 2.6 billion. That's a little bit or 2.6 billion to 2.73 billion. So, uh, again, that stock we're looking at a decline of about 6% here in the aftermarket.
I want to bring in Neil Cypes. He's a financials analyst for Bloomberg Intelligence or the Bloomberg Intelligence financials analyst. He joins us here in the Bloomberg Interactive Brokers studio.
Robin, it's it's an amazing story of what the company's been able to do over the last few years and um, go from being this upstart to competing with the biggest names uh, that are out there. expectations going into this were relatively high even though the shares have been under pressure of late but down 8% in the after hours. What's your immediate reaction?
Yeah, so I think the immediate reaction is that we know that Robin Hood is is sort of building a franchise in the you know in the shadow of Schwab we'll call it right.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- ai disruption
- wealth management stocks
- automated financial advice
- rates and monetary policy outlook
- financials earnings
Companies and tickers mentioned
- RJF
- SCHW
- LPLA
- HOOD
- MS
- Raymond James Financial Inc.
- Charles Schwab Corp.
- LPL Financial Holdings Inc.
- Robinhood Markets
- Altruist Corp.
- Morgan Stanley
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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