Episode summary
Charles Schwab CEO Rick Wurster on Q3 results: A record quarter in serving clients
Summary
Charles Schwab reported a record third quarter, with revenue and earnings at all-time highs, $190.4 billion in new assets, core net new assets up 38% year over year, and total client assets reaching $13.3 trillion. Rick Wurster said the quarter was strongest in serving clients, citing record engagement, trading activity, and satisfaction scores.
The stock’s drop after earnings, he argued, reflected investor concern about two issues: artificial intelligence and net interest margin. Wurster said the market is misreading AI as a headwind when it is actually an accelerant for Schwab, and he said the lower NIM of 3.04% was mainly the result of strong client loan growth outpacing deposit growth.
Wurster also framed the broader market as healthy and underpenetrated, with more people owning equities and holding a larger share of net worth in stocks than ever before. He said Schwab plans to lean into that trend with technology plus human advice, including a new AI assistant called Charlie, while blocking unsafe agent-driven account access and avoiding sports betting-style prediction markets.
Key takeaways
- Rick Wurster said Schwab’s third quarter was a record both financially and in client service, with all-time high revenue and earnings.
- He said the stock weakness reflected investor concern about AI and net interest margin, but that AI is an accelerant for Schwab rather than a threat.
- Wurster said the 3.04% net interest margin was squeezed by stronger loan growth than deposit growth, not by a deterioration in client behavior.
- He said investors are using leverage mainly for tax-aware long-short strategies, while overall client leverage rates have not changed much.
- Schwab plans to roll out Charlie, an AI assistant, and use MCP connections so clients can interact safely with their own LLMs.
- Wurster said Schwab will offer prediction markets on financial events, but not sports, because it does not want to be in the gambling business.
Notable quotes
“MOST IMPORTANTLY, IT WAS A RECORD QUARTER IN SERVING CLIENTS. WE WERE THERE FOR CLIENTS”
“I THINK THE MARKET IS MISSING IS THAT AI IS A BIG ACCELERANT TO OUR COMPANY RATHER THAN A HEADWIND”
“OUR NET INTEREST MARGIN IS BEING DRIVEN BY REALLY STRONG LOAN GROWTH FROM OUR FROM OUR CLIENTS”
“THE MAJORITY OF THAT WAS DRIVEN BY TAX AWARE, LONG SHORT STRATEGIES”
“WE ARE BLOCKING UNAUTHORIZED ACTIVITY. SO WE DON'T WANT PEOPLE JUST GIVING THEIR PASSWORDS TO THE AGENT OF THEIR CHOICE”
How the episode opens
Welcome back everybody. Charles Schwab reporting record revenue in the third quarter. You can see the stock this morning up by about a half a percentage point. It was down by a couple percent yesterday. Joining us right now is the company's president and ceo rick worcester. And rick thank you for coming in this morning.
Thanks for having me.
I watched the stock pretty with a lot of interest yesterday because the numbers that you guys put out were pretty phenomenal. You beat on the top line, you beat on the bottom line. You're looking through all of the things that happened with this.
Let's see a new asset haul of about $190.4 billion that some analysts were describing as humming. You had core net new assets up 38% year over year. Total client assets of 13.3 trillion at the end of the quarter.
That was an increase of 15% year over year. When the numbers first came out, though, the stock dropped by about 5% before kind of coming back through the conference call and other things. What happened?
What were investors looking at?
Sure. Well, it was a record quarter and we're thrilled about that. Most importantly, it was a record quarter in serving clients.
We were there for clients. We've had a record level of engagement from them in terms of their trading activity, their interaction with us. Their satisfaction scores are at an all time high.
So for a company that's so client focused, it's rewarding to see that record level of client engagement. It translated into our financial results all time high revenue, all time high in earnings. I think the stock is reacting to two things this year.
One has been there's concern around ai. And what I think the market is missing is that ai is a big accelerant to our company rather than a headwind.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- q3 earnings
- retail investor
- ai impact
- client service growth
- market outlook
Companies and tickers mentioned
- SCHW
- Charles Schwab
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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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