Bloomberg Businessweek Weekend: November 7th, 2025

Episode Transcript
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Speaker 1 (00:00):
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. Bloomberg Business Week Daily
with Carol Masser and Tim Steneveek on Bloomberg Radio.

Speaker 2 (00:23):
Hi, everyone, welcome to a special edition of Bloomberg Business Week.
We are looking at some of our favorite guests from
the Schwab Impact twenty twenty five event held this past
week in Denver, Colorado. This event brings together advisors from
around the country and those in the industry that support
them with services and tools.

Speaker 3 (00:41):
Coming up, we're going to hear from some familiar names
folks like Liz Anne Saunders and Kevin Gordon and more.
Plus so look at how AI is changing the investing landscape.

Speaker 2 (00:51):
Yeah, we're going to talk about AI a lot. We
begin with Schwab CEO Rick Wurster. Well some deal flow,
Charles Schwab agreeing to buy Forge Global Holdings. It's a
marketplace for buying and holding shares at private companies. It's
about a six hundred and sixty million dollars deal we're
talking about forty five dollars a share, that's about seventy
two percent above the closing price on Wednesday. So delighted.

(01:11):
I didn't expect to be talking to you so soon,
but I'm delighted that you made time for us. Rick Worster,
of course, president CEO of Charles Schwab here at Impact
twenty twenty five. It is your annual event for independent advisors,
and I'm sure that they're kind of curious about this deal.
Why now and why this company?

Speaker 4 (01:29):
Well, we're thrilled to be able to democratize access to
private investing. This is a market that forever has been
for the high net worth and the ultra high networth,
and with the acquisition of Forge, we'll be able to
bring access to private companies to every investor. And so
we're thrilled about that. Second, it continues our history of innovation,
and our innovation has always centered around what we what

(01:50):
can we do to provide more access, more opportunity to
our clients so they can grow and improve their net worth.
So we're just thrilled about this. And Forge was to
the firm we really wanted to work with.

Speaker 2 (02:01):
It's been a lot of speculation about this company.

Speaker 4 (02:03):
Yes, as you know, yes, well, you know there's stock
who's down ninety percent off its highs and at the
same time, they're the leader in the private company marketplace,
and so for us to be able to acquire the
leading company that has.

Speaker 5 (02:14):
The deepest relationships with the private.

Speaker 4 (02:16):
Companies and who have the stock opportunity, it's just phenomenal
for us.

Speaker 2 (02:21):
Rick, was it a bit competitive? And I'm just thinking
about the premium that you guys paid. I'm thinking of
was it Morgan Stanley just did a deal to buy
equity Zen, which is another similar platform, So it does
feel like big firms are jockeying to provide this access
to their investors. So was there pressure to do this
deal and get it done now?

Speaker 4 (02:38):
Well, as a public company, Forge has to run a
process and so absolutely this was a competitive process.

Speaker 2 (02:44):
They've been pretty I think transparent about this.

Speaker 3 (02:46):
Yes.

Speaker 4 (02:47):
From our standpoint though, we think we're paying a very
reasonable price where it's five times revenue less than what
we trade on a revenue basis, and the opportunity for
us in private markets is so much bigger than what
we're paying for the company. We're paying six hundred and
sixty million dollars for the company. This market could be huge,
and when we bring our forty six million clients to

(03:08):
this marketplace, I think the opportunity to grow our economics
is significant. But most importantly and why we did this
deal was not about making money.

Speaker 6 (03:16):
Relative to the purchase price.

Speaker 4 (03:17):
It was about democratizing access to private investing and to
helping our clients grow their wealth.

Speaker 2 (03:24):
Will this only be for accredited investors or what's the
plan in terms of new product placement or product offerings
to offer it up to the retail investor.

Speaker 4 (03:33):
What I'm so excited about is we're going to have
an opportunity for every type of investor to invest in
alternatives with this acquisition. Well, three ways that clients can
invest today. We already have for both our rias and
retail clients a menu of alternative managers, the leaders that
you're aware of, some of the big names in private
equity and venture capital. That's one way our clients can invest.

(03:54):
The second way is through this acquisition of Forge, which
owns an asset management company, we will in the first
core of next year, launch an indexed fund that is
an index of the sixty biggest private companies and any
investor with any wealth if they have interests in that,
we'll be able to invest. And then third, for accredited investors,
we will have a marketplace opportunity for those investors to

(04:16):
buy individual private companies and invest in those companies directly.
That does require you being an accredited investor.

Speaker 2 (04:24):
A couple of questions I want to ask you, So,
how does it kind of improve your ability to win
more wallet share when it comes specifically to clients. We
know that retail investors have been clamoring for more access
to private markets.

Speaker 4 (04:38):
I think we've gone I.

Speaker 2 (04:40):
Know it's not about money, yeah, or I know it's
not about in terms of the price you paid, but
it is about right, Like you want to make sure
your clients are happy and they're getting all the offerings.
So I'm just curious, how does it help you win
more share?

Speaker 4 (04:53):
Over the last ten years, we've become a premier destination
for high net worth and alternate high networth clients. And
the reason for that is we have a product offer
that can't be matched, whether it's access to privates, lending
capabilities that are straightforward, fast efficient with great rates, wealth
support on their tax, trust and estate needs, and access
to live individuals to speak to. They can walk into

(05:15):
one of our four hundred branches all across the country,
have a conversation with a real life person about their
financial needs, have a discussion about financial planning and what's
going on in their life. And so we really have
become over the last decade a premier destination for high
network clients. And this acquisition just adds to our capabilities.

Speaker 2 (05:32):
What about from your rias? And I think about all
the independent advisors who are here. This is what this
event is all about. So how much does this kind
of help them in their pitch to clients? And I'm
just curious, is this to some extent in response to
what you've been hearing from independent advisors?

Speaker 4 (05:45):
It absolutely is, And this is a game changer for
us in the RIA space. Today, we have five trillion
dollars of RIA assets that we custody. One point two
percent of them sit in alternatives. We know there's more
demand that number probably should be closer to five, six
or seven percent, And with this acquisition, we've now given
them three different ways to get invested, and I expect
over the coming years we'll see that one percent grow

(06:07):
more towards the five percent. So the rias are thrilled.
They've wanted us to do more and alternatives, and I
think with this acquisition.

Speaker 6 (06:13):
We've nailed it.

Speaker 2 (06:14):
And you said the new client offering, it's next year,
we'll see it early part of next year.

Speaker 4 (06:18):
Well, Forge is up and going today, so hopefully some
of our clients will go find it and start getting
invested if that's what they want to do.

Speaker 3 (06:24):
But but I.

Speaker 2 (06:25):
Have non accredited I think about like.

Speaker 4 (06:27):
That will We're going to launch the fund in the
first quarter of next year, that's the current plan, and
then we'll continue to roll out their services in the
coming months.

Speaker 2 (06:34):
Again, you know, the other side of this rick is,
you know, concerns about hurdles in terms of transparency and
investors really understanding what they're buying when they tap into
anything in the private markets. So are there any kind
of hurdles that you anticipate, regulatory or otherwise.

Speaker 4 (06:48):
That's why we really wanted to work with Forge, Okay,
because Forge is the market leader in providing robust research
to clients, and so clients will be able to access
that level of research through four. In addition to that,
we've also stood up a team of alternative investment experts
at our firm that any client can call and talk
to about, you know, a question they have about a

(07:10):
type of alternative or a particular investment that they want
to make. And so we really are trying to do
everything we can to support clients. This is a great
opportunity for clients to be diversified, to grow their wealth
in a new asset class. But at the same time,
we want to make sure we do everything we can
that they for them to be able to do this
in a thoughtful, well researched way.

Speaker 2 (07:32):
Is there a company you're most excited about that's on
the Forge platform or that might be on the Forge platform.

Speaker 7 (07:36):
At some point?

Speaker 2 (07:37):
I mean, there's opening, there's anthropic. Is there any company
that you're really excited about?

Speaker 4 (07:42):
Not a particular one I'm interested in, but I am
thrilled that there are a lot of people on our
platform and a lot of people that listen to your
show that are active in markets and they want to
get into cracking because they love crypto or you know,
they love el On Musk and want to get into SpaceX.

Speaker 2 (07:56):
So that sex is another one.

Speaker 7 (07:58):
Yeah.

Speaker 4 (07:59):
I think that's what so interesting is that we find
a lot of our investors do have these passions and
now they're going to be able to invest in them
through private companies.

Speaker 2 (08:07):
So we know you took over in January, this is
your first deal. Is there more em and a to come?

Speaker 6 (08:11):
Like?

Speaker 2 (08:12):
How are you thinking about what else you need to
bring under the Schwab umbrella.

Speaker 4 (08:15):
Well, with forty six million clients on our platform, we
have an incredible opportunity to continue to add capabilities to
serve and meet more of their financial life. The average
fifty year older than fifty year old client has seven
financial services relationships in their life, so we want to
add more and more capabilities so they can handle more
of their financial life at Schwab. And as we add

(08:37):
those capabilities, we'll either build them, we can partner, or
we can buy and so we'll look at all three
of those. But we want to round out our capabilities
and do everything we can to stand behind our clients
and make a difference in their financial life.

Speaker 2 (08:48):
And just one last question, mostly small, probably tack ons.
I mean, you guys already have digested a large company,
so I'm just curious or could it be a pretty
significant and an a deal.

Speaker 4 (08:57):
You know it's going to depend when again and we'll
look at build by partner based on what capabilities we
want to add, but I think we're open to just
about anything. We want to grow our company. We want
to do the best job we can serve in clients.
We want to make a difference in their lives, and
if there's a company or capability out there that we
can add to our platform that's going to make a difference,
we're going to do it well.

Speaker 3 (09:18):
The market environment right now, we want to dive right
in there, because really this week we've heard from different
Wall Street executives that an overdue collection of weighed on
the market this week so reduced expectations at that rate, cuts,
a prolonged government shutdown. Michael Burry added to the negative
tone with his disclosure of farish wagers on talent here
and Nvidia. How do you see today's environment from sort

(09:38):
of a risk reward perspective.

Speaker 4 (09:40):
We try to focus our clients on the long term.
I think that owning securities and assets over long periods
of time will generally go up. It's really hard to
get the timing of markets down because you have to
make two correct calls.

Speaker 5 (09:54):
First.

Speaker 4 (09:54):
You got to nail it to get out at the
right time, which is really hard. In the strength of
the kind of market we've had in the momentum, we've
had to get out at the right times incredibly hard,
and then you've got to be able to get back
in at the right time or you miss out. I
was down in Charlotte, North Carolina, visiting with some clients
and I heard from one client who back in twenty

(10:14):
sixteen didn't like the presidential administration and so had sold
out of stocks. And this was back when we were
having a pullback, and they said, would now be a
good time to get back in the market, and they'd
set out a huge amount of gains over a short
term point of view. We try to have clients avoid that.
Clients can stay in the market and tolerate some volatility.
We think over the long run that gets rewarded because

(10:35):
it is so hard to call the markets both when
to get out and when.

Speaker 3 (10:37):
To get back in.

Speaker 2 (10:38):
So as you walk around the floor and you're talking
to advisors, I mean, what are they talking about, you know,
in terms of timely advice that you're getting maybe from
the advisors and what they are kind of hearing from
their clients.

Speaker 4 (10:53):
I think one of the most pressing topics from investors
today is how to navigate concentrated positions, the S and
p's as it's concentrated, as it's.

Speaker 2 (11:02):
Ever been right, the mag seven, the big tech, Yes.

Speaker 4 (11:06):
And it's created a tremendous wealth for lots of retail investors,
and now they're wondering how to diversify their portfolio and
to do so in a way to minimize their tax burden.
And there's all kinds of strategies that they can work
with their advisor on to create a more diversity portfolio
without having to pay a tremendous amount in capitalating.

Speaker 2 (11:23):
How hard is it, though, that when clients are like,
but why would I want to get out of Nvidia
when I've seen what they've been doing for how many years?

Speaker 8 (11:30):
Like?

Speaker 2 (11:30):
How tough is that? Because we constantly have conversations of
people saying it's time to you know, broad nab back
off the big tech, and then it's the big tech
with so much momentum.

Speaker 4 (11:39):
Well, you're absolutely right, and it's a really hard conversation
to have and oftentimes we don't win it, but we
want to make sure the client is cognizant of the
risk and the choice that they're making and to be
fair to those investors, they've been right by sticking with
their concentrated position for the most part, because the names
that have driven the market higher have been the same
ones here for a while, and so many people are

(12:01):
stuck with it and they are sitting on more gains
and they might have anticipated.

Speaker 3 (12:04):
So let's go further into the retail trader, because they've
grown about twenty percent of the US equity market today.
I'm curious about sentiment trends, like how the structure of
this trend, how resilient are retail traders in an eventual downturn. Why.

Speaker 4 (12:18):
I think retail traders have been the ones leading the
market higher and have been the ones buying the ditch.
And I think they were out actually in many ways,
out ahead of the institutional buyers. And so I think
you have a retail buyer that has strong hands and
we'll stick through the market. So we'll see how it
all plays out. But markets go up and down, and
retail investors will inevitably, you know, make some decisions in

(12:40):
there that's best for them.

Speaker 3 (12:41):
That's Rick Worster, president and CEO of Schwab, coming up
more from our conversations at the Schwab Impact twenty twenty
five events in Denver, Colorado.

Speaker 2 (12:51):
Up next, we hear from Schwab Chief Investment Strategist Liz
Anne Saunders and what she expects in markets for the
rest of the year.

Speaker 3 (12:57):
This is Bloomberg.

Speaker 1 (13:02):
This is Bloomberg Business Week Daily with Carol Masser and
Tim Steneveek on Bloomberg Radio.

Speaker 2 (13:09):
We are back here on a special edition of Bloomberg
Business Week. It's all about some of the highlights from
Schwab Impact twenty twenty five. It was held this past
week in Denver, Colorado. It's all about bringing together financial
advisors from around the country. Those in the industry too
that support them with various applications, services and tools. And

(13:30):
up next we hear from a voice that has followed
financial markets, Tim for a long long time.

Speaker 3 (13:34):
Our conversation on markets with Schwab Chief Investment Strategist Liz
and Saunders.

Speaker 9 (13:39):
I'm so glad you're here.

Speaker 10 (13:40):
Thank you.

Speaker 9 (13:41):
Welcome to our cozy, little event.

Speaker 2 (13:45):
Five people.

Speaker 3 (13:46):
It's not cozy and it's not little, but we are
happy to be here. It's a huge event. It was
huge last year in San Francisco. It was huge before
that in Philadelphia, you were shaking your head when I
was saying everything is awesome.

Speaker 6 (14:00):
Well, it's it's a.

Speaker 9 (14:01):
Bit of a tale of two markets.

Speaker 11 (14:02):
You've got cap weighted index returns and the lack of
any significant downside, particularly since the April eighth closing low.

Speaker 9 (14:10):
But here's an example.

Speaker 11 (14:12):
The average member within the SMP just since April eight
has had a sixteen percent now actually seventeen percent draw down.
The average member within the Nasdaq since April eighth, when
the nasdac's up fifty some odd percent, has had a
average maximum drawdown of thirty six.

Speaker 2 (14:28):
So this breath isn't there.

Speaker 11 (14:30):
The breath isn't there, But there's a lot of churn
and rotation going on under the surface that you don't
pick up if you're only looking at the index level returns.

Speaker 2 (14:40):
Are we starting to see signs where investors are kind
of questioning some of the valuations that are out there,
the AI spend and whether we're getting the return on
investment on it. Tell us you're thinking.

Speaker 9 (14:50):
OK, I think the margin of era has narrowed a bit.

Speaker 11 (14:54):
There's obviously sensitivity, whether it is diminution in return on
US capital, whether you're seeing pressure on margins obviously, the
concern about the circularity of financing and the fact that
so far that's a real thing.

Speaker 2 (15:09):
I mean, we are kind of blown away. What feels
like it's all in the family.

Speaker 3 (15:13):
Yeah, here's five billion dollars, so you can buy five
billion dollars with the stuff from us, right, You guys.

Speaker 11 (15:17):
Like Bloomberg had this incredible visual that I think made
it on Michael Burry's post.

Speaker 9 (15:26):
Yes, but it's that is such a great visual.

Speaker 11 (15:29):
I've seen more simplistic ones of a power strip with
the plug plugged into the power strip.

Speaker 2 (15:37):
Yeah, but that's exactly true, right.

Speaker 11 (15:38):
And I think you know, the boom so far has
been financed out of cash flows. It's been largely equity financed.
But now you've got as to just pick on the
MAG seven cohort MAG seven free cash low growth has
gone from more than sixty percent year over year six
quarters ago to now two quarters in a row of
negative and so you're starting to see more deals financed

(16:01):
with that.

Speaker 9 (16:02):
That's not necessarily a bad thing. It's just a different environment.

Speaker 2 (16:06):
But that I do want met in alpha that right,
didn't they just recently do with oversubscribe, Like there's lots
of investor interests, but I do like, I don't know,
Liz what we just have to keep an eye.

Speaker 11 (16:14):
On it, or I think you evaluation is a is
a tough one. I think valuations and I'm going to
say this generally, not just specific to AI stocks or
Max seven. It's not a market timing tool. It's more
it's more a temperature gauge than it is a timing gauge.
It's almost an indicator of sentiment. There are times where

(16:37):
valuations can get stretched, and they can get more ridiculously stretched,
and the market still has a long runway ahead of it.
So I think it represents some of the anks that's
coming into the.

Speaker 9 (16:47):
Narrative right now.

Speaker 11 (16:49):
But it doesn't necessarily pretend impending doom. It's just a
it's a cost saver AI and it boosts margins. So
we had we had the really focus solely on the
hyperscalers and the chips, and then more recently it's gone.

Speaker 9 (17:04):
Into the energy usage in the data centers.

Speaker 11 (17:07):
Now, I think where you're actually getting meat on the
bones in terms of productivity statistics, in terms of the
beneficial to costs is the users of AI.

Speaker 9 (17:19):
And I think that is likely to continue.

Speaker 3 (17:21):
But then does it create this destructive element in our
society as a result of those entry level jobs, those
white collar jobs, those blue collar jobs that end up
being completely eliminated. I mean, I know we're talking about
a future that none of us can see. But we
had an interesting conversation with David Weston last week and
he was basically like, how do we have this payoff

(17:44):
without the money savings from getting rid of all these employees.

Speaker 9 (17:47):
Basically, I think that we're.

Speaker 11 (17:49):
In a moment of creative destruction to quote Trumpeter. Yeah,
and that happens anytime we have a major innovation or
we've shifted our economy from being an ag economy to
industrial industrial to innovate.

Speaker 9 (18:00):
And that happens. But ultimately new types of jobs are created.

Speaker 11 (18:04):
I actually think that companies that don't adopt AI are
going to have more job losses. I think what we
need to bring in is what AI doesn't yet provide
and maybe won't ever, you know, the seeds creativity and
culture and community and connection context. So I think there's

(18:26):
still I still think AI. Yes, it is replacing certain
kinds of jobs, but I think it's replacing tasks more
than it's replacing full occupations. But I think workers have
to adapt to it and adopt it and bring it
into their lives or they will be left behind.

Speaker 3 (18:46):
You know.

Speaker 2 (18:46):
I pulled up my phone because someone came up to
us and Dwayne, who is a financial advisor, he's here,
and he said, you guys did something on AI. I did.
We did something at an event and we had somebody
who showed how to use AI and you said. After that,
I went home and started playing machacchi.

Speaker 3 (19:03):
Because I have the panel you did at this conference
last year in San Francisco.

Speaker 2 (19:07):
No, it wasn't. No, I don't think so.

Speaker 3 (19:09):
Okay, well it was something, but anyway, there's a lot
of stuff.

Speaker 2 (19:11):
But what he said is he was able to ask
a questions. Do analytics so much faster? It was accurate
And he said it just took less time and I
actually produced better returns for my clients, which was pretty
cool stuff.

Speaker 11 (19:27):
It is a game changer. But the hallucination rates are
still high enough. There are low school digits, but high
enough that I think it was Gene Munster, he spoke
right before me at a recent conference. Who who said,
you know, llms are like an intern. They do a
lot of them work for you, but you kind of

(19:48):
have to check their work.

Speaker 2 (19:50):
Got to keep an eye on them next six to
twelve months. What do you think the investment environment looks like.

Speaker 11 (19:56):
I think these bifurcations that have pervaded the economy, even
the inflation data and obviously the stock market, I don't
see a.

Speaker 9 (20:03):
Convergence to any significant degree.

Speaker 11 (20:05):
I think you're going to still see those bifurcations, whether
it's from a capex perspective, AI or non AI, asset
owners versus non asset owners, high income consumers versus low
income consumers, tariff impact goods versus non tariff impact goods
from an inflation standpoint, and then obviously all those by vifircations.

Speaker 9 (20:22):
What I would watch for that may be interesting is
we could have.

Speaker 11 (20:26):
A situation where if some of the megacap names, some
of the leadership names, continue to have some sort of
pullback phase, watch what the rest of the market does.
I don't think it's going to be extreme as late
twenty twenty two. But what was interesting about that low
in October of twenty twenty two relative to the low

(20:46):
prior to that in June of twenty twenty two, is
that when you had the real crush, there was greater
participation under the surface.

Speaker 9 (20:54):
That's what you want to look for.

Speaker 3 (20:55):
That SCHWAB chief investment strategist Liz and Saunders. We turned
out to our common conversation with Schwabs Jelina Kerr, head
of Advisor Experience in Wealth Solutions.

Speaker 12 (21:04):
My world is responsible for all things digital and investment products,
banking solutions, and how you harness those together and help
advisors extend them into their client base, especially the ULTRAHI
network clients.

Speaker 5 (21:16):
Who demand a lot of it a lot.

Speaker 3 (21:19):
I was just I was shocked to see you've been
at SCHWAP for more than thirty years.

Speaker 9 (21:22):
I'm an old timer.

Speaker 3 (21:23):
You're on the advisor services trading desks. The role of
an advisor thirty years ago versus now, I mean those
are like.

Speaker 2 (21:31):
Two different jobs, vastly different.

Speaker 3 (21:33):
Yeah, what are the expectations right now versus what they
were thirty years ago?

Speaker 12 (21:37):
The expectations are, frankly a little overwhelming due to the
complexity of AI technology. Trying to figure out how to
scale your business and still serve your clients. Those two
things don't always just flow together seamlessly, right, and so
the demands on advisors to really understand all the solutions
that are out there. I think can get overwhelmed. I

(21:57):
mean it gets overwhelming for me and I do it
every day in my day to day job. So I
think just their ability to think and learn on their
feet as they're talking to different clients who have different needs,
because that customization trend is no joke.

Speaker 2 (22:13):
Either does AI help with customization or does AI help
you in your world at all?

Speaker 12 (22:19):
AI does help us in our world. We are taking
it more from an internal view right now. So think
about our service professionals trying to enable them, making sure
they serve advisors. We've got an a knowledge assistant that's
powered by AI note taking those sorts of basic tasks
we are using in house, and we are working with
advisors to make sure they know what's out there and

(22:39):
how they can take advantage of it right in a
safe way.

Speaker 9 (22:42):
Right, you want to measure twice, cut once when it
comes to.

Speaker 2 (22:46):
So, yeah, we're still finding our way.

Speaker 3 (22:48):
What about alternatives? This is not a world that thirty
years ago, you know, people were thinking about private credit,
venture capital, private equity in their portfolios. Yeah, now it's
like what that's table sticks, It's no.

Speaker 2 (23:00):
Longer high yield as being like kind of something out there.
It's very different, it is, and alts are a huge
part of that.

Speaker 12 (23:07):
I think some of the complexity though, is how do
you connect the alts to the rest.

Speaker 9 (23:11):
Of the portfolio.

Speaker 12 (23:12):
If you've got a sixty forty alts have a role
to play there, but it's not very seamless or operationally sound.

Speaker 9 (23:19):
At this point.

Speaker 2 (23:20):
What do they want in terms of alternative I mean,
when we think about alternatives, we think about real estate,
you think about some hard assets. I'm just curious, though,
in a world where crypto is a bigger part of
investing the private markets world, is it just it seems
like NonStop that people have talked about for the last
few years. What do they want in terms of alternatives?
It really runs the gammut. I mean, I don't want
to give you an answer that's a non answer.

Speaker 12 (23:41):
But in a way, when you think about some advisors
who are just really wanting to start inserting it, but
they want to do it in a very well known
name way, then you've got all the other all the
way to the other end of the spectrum. Advisors who
are creating their own right alts and weaving that into
the platform. But what we're most hearing is they want
model flexibility and scale, so they want to be able

(24:02):
to pull the alts into the model, do all the
management and construction of all of those things in an
automated way. And with a liquid securities, that's a bit
of a challenge, but we're all working through it.

Speaker 2 (24:13):
There's some great leadership with some of our partners.

Speaker 3 (24:16):
But that's so important for your clients because those are sticky.
Those are what cause clients not to move to a
different RAA. That's right, because you can't just get out
of them.

Speaker 9 (24:27):
No, no, you cannot.

Speaker 12 (24:28):
And I think that's why advisors are at their heart
right their fiduciary responsibility is to make sure their clients
know they are a liquid you're going to be in
this for a while, and they want to make sure
they're educating their clients so that they're not hitting a
point where the client's like, oh, yeah, give me.

Speaker 2 (24:43):
All that money.

Speaker 3 (24:44):
Sorry, can't do it right now.

Speaker 5 (24:46):
So advisors have always been careful and cautious.

Speaker 12 (24:49):
But given the fact that these have now gone from
like a traditional five percent component of the allocation to
ten to twenty, like it's growing and it's out there.

Speaker 2 (24:57):
Chilia just got about twenty five to thirty seconds as
you walk the floor. What are you hearing from advisors
that you're just picking up on in terms of trends
with themes and just quickly yeah, really quickly.

Speaker 12 (25:07):
Automation which does tie back to the AI thing, but
automation of those tasks construction management, transactional things that are
not adding value and using API connectivity to do that.
It's table stakes, yet people need help implementing them.

Speaker 2 (25:25):
That's Jillianna Kerr, Schwab's head of Advisor Experience and Wealth Solutions.
Coming up more from Schwab Impact twenty twenty five held
earlier this past week. Up next, we move on from
equities to fixed income and hear from Schwabs Kathy Jones.

Speaker 3 (25:38):
This is Bloomberg.

Speaker 1 (25:43):
Tim Stenoveek on Bloomberg Radio.

Speaker 2 (25:51):
Let's get back to some of our conversations that were
this past week at the Schwab Impact twenty twenty five event.
It was held in Denver, Colorado.

Speaker 3 (25:59):
We turn now to our conversation on fixed income with
Schwab's chief fixed Income strategist Kathy Jones.

Speaker 7 (26:04):
You know, in general, the economy seems to be chugging
along great. Okay, it's not great for everybody, but in
aggregate it's good enough. Inflation is stuck at three percent
and kind of edging higher.

Speaker 9 (26:18):
Where do we go from here?

Speaker 7 (26:20):
If you've got inflation at three percent maybe moving up
in a four percent ten year yield, you know that's
equilibrium right now.

Speaker 9 (26:28):
We need something to change.

Speaker 2 (26:30):
And do you think it's going to change?

Speaker 7 (26:33):
I think in twenty twenty six we'll probably get enough
slow in growth and some easing and inflation that will
seeields come down. But I think the market was just
way over its skis expecting the FED to cut over
and over again. And it is very difficult to forecast
all the time. But now between Daras on tarosof no data,

(26:59):
policy shut down, policy making shut down, you know, I
think the market's just.

Speaker 9 (27:06):
Kind of the bomb.

Speaker 7 (27:07):
Markets kind of just going going, WHOA, we're pretty well priced.
Let's just sit here and wait for things to happen.

Speaker 2 (27:12):
Well, So then does that increase the chances Kathy, you
think of the having a policy misstep here.

Speaker 7 (27:19):
It's certainly a possibility, But I think my impression that
I get from Paul and from many of the other
members is look, we're back to that's navigating on a
cloudy night thing. Right, we don't have information, the Papa
head isn't clear, and we've taken a couple of steps.
We're not restrictive anymore. So now we pause and we

(27:41):
wait and see what happens. Would go slow.

Speaker 2 (27:43):
I'm a sailer and I've navigated at night and it
can be kind of not so great. You can hit
a rock, or you could hit something because you just
don't read something correctly, or things can be smooth sailing.
So is there a chance though that I don't like it?
I think so many people are shocked at that the
economy is still growing and we're kind of doing all right,

(28:05):
and the market continues, the equity market to hit highs,
not necessarily what everybody was predicting a few months ago.
But I just do wonder what's the thing we could
be missing?

Speaker 7 (28:16):
Well right now, financial conditions have been very supportive, and
I think that's another reason the Fed can kind of wait.
They're saying, well, where there's no evidence that the level
of interest rates is holding back the economy, people can
borrow as much as.

Speaker 2 (28:31):
Like housing still yeah, maybe, but I mean, you.

Speaker 7 (28:35):
Know, even housing starting to kind of recover because prices
are adjusting.

Speaker 2 (28:39):
So, you know, what is the thing that gets us?

Speaker 7 (28:44):
It's never the thing you're looking at in ther face, right,
it's the thing.

Speaker 2 (28:48):
You don't know.

Speaker 7 (28:49):
I'm worried about the buildup of that, you know, behind
the scenes and the shadow banking.

Speaker 6 (28:55):
System, private credit, you know, to some extent.

Speaker 7 (28:59):
We know that the quality isn't great there, and we
know that some some firms are struggling.

Speaker 3 (29:05):
So how would how would a crisis like that in
private credit manifest?

Speaker 7 (29:11):
You know? I think the issue is who's lending to
the private credit folks?

Speaker 3 (29:15):
Don't the banks lend to the private credit folks? Yeah,
so right, what's their exposure?

Speaker 7 (29:20):
Well, we don't know, you know it because private credit
is private. You know, it's hard to know the quality
of the assets in any given day.

Speaker 2 (29:30):
Your face is really telling. Are you concerned that the
exposure by the banks is a lot more than we know?

Speaker 7 (29:36):
I think the banks, you know, no, I think the
banks are the major banks are fine because against their will,
they've been forced to hold a lot of capital since.

Speaker 9 (29:48):
The Basil rules, And so I think the banks.

Speaker 7 (29:52):
Are okay, but it does get to be sort of
a cascade, right, you know, one thing leads to another,
leads to another. A lot of interwoven lending takes place,
and there's hidden leverage, and that's where you worry about
things starting to change. I don't have any party to
be on the spot. I know, I don't have any
particular like this guy's gonna blow up.

Speaker 2 (30:14):
We have a story to tell.

Speaker 7 (30:16):
I'm just these are the ways in the past we've
run into trouble. Somebody gets over leveraged, as the prices
get out of whack, people are over confident, and then
things change.

Speaker 3 (30:26):
Right. So it kind of brings us back to the
FED and how the FED works in an environment such
as this, in an environment where it's not getting much data.
We did hear from Lisa Cook this week. She said
she sees the risk of further labor market weaknesses greater
than the risk of inflation. Will pick up. Chicago Fed
Presidentcy Schools we said he was more nervous about inflation.

Speaker 7 (30:45):
Who's right, Yeah, we'll sign We'll find out.

Speaker 3 (30:49):
I'll find out when we reach our destination.

Speaker 7 (30:51):
Yeah, you know, I'm more in Goldsby's camp right now.
Although the labor market is clearly softened. Some of that
is supply side, right, So we got the ADP numbers
today is a positive number. Who's just saying that that
number isn't consistent with equilibrium in the in.

Speaker 3 (31:09):
The labor So were these numbers accurate now?

Speaker 7 (31:11):
Because well, ADP is as accurate as we can we
can get right now. Yeah, but at the moment.

Speaker 3 (31:16):
But when we used to get government data, we used
to get the ADP numbers on you know, the day before,
a couple of days before, I don't even remember the world. Yeah,
we get earlier, and then we'd get the numbers from
the government and they would oftentimes not even be close
to one another.

Speaker 7 (31:33):
Yeah, and that's true. I think part of that is
ADP is private sector only. They didn't include government workers,
so there's that discrepancy, and you know, yeah, their surveys
are different, but it's all we've got to go on.
So it looks like that they're picking back up a
little bit and that's good news. The is M figures

(31:55):
of the man fractioning figures were okay today, with prices
paid continuing to fe that.

Speaker 2 (32:00):
Schwab's chief fixed income strategist, Kathy Jones. We turned out
to our conversation with Sam Kang, head of Family Office
and Premier Wealth Group.

Speaker 3 (32:08):
So you've got it's interesting because you've got a small
number of clients but a lot of assets. I mean
we're talking one hundred clients and two hundred billion dollars
in assets under management. Talk about these relationships because are
you working directly with the ultra high net worth individuals
or are their family offices serving as a conduit to you?

Speaker 13 (32:27):
Yeah, well we work with both, So updated numbers, we
are actually now at about one hundred and forty relationships.
We've now grown to two hundred and sixty billion just
within the family office, so thirty percent growth just this year.
In terms of assets, we've grown by fifty percent year
over year, So there is a huge command to your question.
We work directly with single family offices as well as

(32:50):
professor managed multi family offices.

Speaker 3 (32:52):
What is the definition right now of both hind net
worth individual.

Speaker 13 (32:55):
Yeah, so typically there's a wide range, but typically what
we see is twenty million in investable assets, which really
is about thirty thirty million in net worth.

Speaker 2 (33:05):
You know, is it often the case of just managing
everything and anything and then the past of that generational wealth. Like,
give us an idea of what this all entails, because
it's a lot of moving pieces, if.

Speaker 13 (33:18):
Correct, Absolutely, it's a lot of moving pieces. It is
beyond just financial planning and investments. It gets into reporting,
but it goes far beyond that. It gets into family dynamics,
family constitutions. Philanthropy that you just spoke about is a
key factor in terms of that estate planning. You set
family constitutions, meaning what so creating the core values of

(33:43):
a family to identify how you want to spend that
money down through in how you want to pass that
wealth bounty generations. So this is really critical, especially with
the wealth transfer that's happening. Latest reports roughly about one
hundred and twenty four trillion dollars will be changing hands
over the next two to three decades. That's roughly about
two to three trillion per year for the next decade

(34:04):
or so. So what we see is a huge demand,
especially in the ultra high net worth to create these
family constitutions so that they have a plan of how
they will pass.

Speaker 6 (34:13):
On the wealth.

Speaker 2 (34:14):
You know, it's fascinating because we always I think when
we talked about the passing on of generational wealth. We
talked about like your offspring right your kids basically, but
we've also had a lot of conversations about.

Speaker 3 (34:25):
The way you're going sex spouses depending on the agreements anyway,
go ahead and make them tight.

Speaker 2 (34:31):
No, but passing on to women who tend to live
longer and maybe their spouse their husband dies. But so
talk to us about the specifics.

Speaker 9 (34:38):
Is a lot of it.

Speaker 2 (34:39):
Big families, lots of family members, is a lot of it.
Thinking about maybe the husband passing it off to the
way give us an idea of what so.

Speaker 13 (34:48):
First of all, typically people just think it's passing down
to the second and third generation.

Speaker 6 (34:54):
What's going to happen for us is the media passing
down to the spouse.

Speaker 13 (34:57):
So as you're saying, roughly about fort five percent of
that wealth is going to go to that spouse first
and then it will get into the second and third generation. So, uh,
there's multiple families that will be involved in this conversation.
We also see, you know, when we think about the
transfer of wealth, there is a lot of conversations about

(35:20):
how you create the overall plan in terms of not
just the investments, how you think about that investments over
two to three decades. But what you want to do
with that money? And do you want to use the
fort philanthropy? Do you want to create other businesses? So
there's a lot of conversations along that line.

Speaker 3 (35:34):
Okay, let's cut to the chase here, death, divorced taxes.
Those are the things that are you know, those are
the things that are like on the redar of family offices.

Speaker 2 (35:42):
We know that.

Speaker 3 (35:43):
But I've also heard stories of like, all right, we
need the head of our family office to find a
new yacht captain right now, Bermuda. What's the craziest people.

Speaker 2 (35:54):
Who do that around?

Speaker 7 (35:55):
Yeah?

Speaker 5 (35:56):
So so what's that that?

Speaker 7 (35:58):
That is?

Speaker 14 (35:58):
That?

Speaker 13 (35:58):
That isn't the actual We've heard stories where a family
fired their entire crew. One day, they come to the
family office and they say, I need a new crew
by tomorrow.

Speaker 6 (36:10):
So this is the key distinction.

Speaker 13 (36:12):
There are a lot of independent rias that want to
get into the family office space.

Speaker 6 (36:17):
What it really is, it's the very first call that
these families make.

Speaker 13 (36:20):
So you not only need to be there for their
financial planning, their investments, but you really need to be
thorough about all the capabilities that you need to be
able to support our whole families so who are.

Speaker 2 (36:32):
The people support that do that? So are we talking lawyers, Like,
give us an idea of who has to be all
involved in that?

Speaker 13 (36:37):
Yeah, So at the center and think of it as
a hubbet spoke model. Right, So if the center is
a trusted advisor, we call that more of an expert generalist.
That person then would reach out to lawyers, it state planners.

Speaker 6 (36:52):
It could be.

Speaker 13 (36:54):
Aviation loans, it could be bill paid, lifestyle constant services,
healthcare conct of years.

Speaker 6 (37:02):
So it really goes the complete spectrum.

Speaker 3 (37:06):
Hey, last question, our team reporting that at least a
fifth of the world's five hundred richest people now have
a family office helping preserve fortunes totally more than four
trillion dollars. That's according to the Bloomberg Billionaires Index. That
was surprising to me. Why don't they all have family offices?
Only a fifth of them do?

Speaker 13 (37:19):
Well, I think there's more and more interest in creating
that family office. So along that lines, it's estimated that
seventeen trillion is within the ultra high network market, but
only about five to six trillion is managed by a
family office.

Speaker 6 (37:34):
So I do think that there is a growing trend
for these services.

Speaker 3 (37:37):
That's Sam Kang, Schwab's head a family office and premier
wealth group that does it for this hour of the
special edition of Bloomberg Business Week, looking at some of
our favorite conversations from Schwab Impact twenty twenty five in Denver, Colorado.

Speaker 2 (37:51):
We're not done yet, still to come. More on markets
with Schwab's head of macro Research and Strategy. We're talking
about Kevin Gordon.

Speaker 3 (37:57):
Plus Fred Kaine, or managing direct of Relationship Management for
DAF Giving three sixty. We'll discuss the growth of charitable
giving and use of donor advised funds. You're listening to
Bloomberg Business Week.

Speaker 2 (38:10):
I'm Tim Stenebek and I'm Carol Masser.

Speaker 9 (38:12):
Stay with us.

Speaker 2 (38:13):
Today's top stories and global business headlines are coming up
right now.

Speaker 1 (38:21):
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. Bloomberg Business Week
Daily with Carol Masser and Tim Steneveek on Bloomberg Radio.

Speaker 2 (38:43):
We're back on a special edition of Bloomberg Business Week.
It's all about some of our conversations from the Schwab
Impact twenty twenty five event held this past week in Denver, Colorado. Now,
this event, held every year, is all about bringing together
registered investment advisors, financial advisors from across the United States
and those in the industry that support them with services

(39:04):
and tools.

Speaker 3 (39:05):
We begin with our conversation this hour Wishwab's head of
macro Research and Strategy, Kevin Gordon.

Speaker 2 (39:11):
There's kind of this internal turmoil right now in terms
of the environment. Is it inflation we have to worry about.
We saw that companies announced the most job cuts for
any October and worth in two decades. This from Challenger,
Gray and Christmas, and they did talk about an AI
component to it. I can't figure out where we are.

Speaker 10 (39:31):
What do you think?

Speaker 15 (39:32):
You know, It's like the flavor changes almost literally every day.
I mean it was much more labor driven. You had
the Challenger data you mentioned, but you also had data
from Avellio Labs, which has become much more important to
look at in terms of private sector providers and what
they're looking at for job growth. And what they showed
for October was the decline of nine thousand for payrolls.
But you know, for me, the labor market stuff is

(39:53):
almost this hall of mirrors because all of the different
indicators tell you completely different things as to what's going
on the the labor market. If you look at claims data,
which we're not getting at the national level, but if
you aggregate everything at the state level, it still looks
relatively healthy. It's stayed relatively low and stable. If you
look at ADP for October surprise to the upside. If
you look at something like Rebellio though week, if you

(40:14):
look at something like Challenger, also weak. The interesting thing
with Challenger is, and we always try to make this
important distinction and emphasis for investors there layoff announcements. They're
not exactly cuts themselves. So there is a little bit
of a lag there in terms.

Speaker 3 (40:28):
Of what you can expect. Yeah, oftentimes ninety days, right.

Speaker 15 (40:31):
Plus I think the one thing that is I will
say maybe a little bit more worrisome with the one
for October relative to what we saw earlier this year,
because there was a huge pickup and Challenger job cut
announcements earlier this year, but most of that was at
the federal level that was focused on what everything was
going on regarding do this one's a little bit more
broad based. As you mentioned, with the AI overlay, the
concentration for the sectors was mostly in tech and warehousing.

Speaker 6 (40:52):
So clearly this costs.

Speaker 2 (40:53):
Cutting going on by companies, which is never a good feeling, no,
And I think what's what's been interesting so far It's
been relatively where it's gone sector by sector.

Speaker 15 (41:02):
It hasn't been broad based across the economy, which I know.
I've talked about this with you guys a lot and
Lazanne you know who I work with closely on this,
are the sort of this concept and thesis of rolling
recessions in the economy. You're still experiencing that to some
extent where it's not filtering up to the to the
surface and it's not aggregating together to give you a
full blown traditional recession. But it's still happening at pockets.

Speaker 3 (41:22):
We know where as Lizan, we all call our Lizanne
Saunders too. That's the Lizann you're referring to. So Kevin
going from the corporate world and thinking about, Okay, what
are companies doing with employees, How are they hiring, how
are they firing, how are they announcing this to consumer
spending because the consumer powers this economy. Yeah, we're getting
some troubling anecdotes. What do you see?

Speaker 15 (41:44):
You know, what's interesting is that when you look at
I mean, this is where the labor market's so crucial
to understand the differences between the stock and the flow.
So the stock of labor is still relatively healthy. I mean,
you look at a mostly fully employed America and that's
where we're at.

Speaker 6 (41:57):
Any of the layoff.

Speaker 15 (41:58):
Activity we've seen, it's just at the mark and relatively minimal.
So if you see relatively low layoffs despite a very
low hiring rate, which we're basically at cycle lows, the
fact that the stock of labor is strong means that
the aggregate income growth month to month, assuming you stay employed,
is relatively strong. So that's why real spending is still positive.
But to your point about some of these anecdotes and
some of these cracks under the surface, they are starting

(42:21):
to widen a little bit more, especially if you look
at that bottom half of the what everybody calls now
the K shaped sort of economy.

Speaker 2 (42:27):
There are economists look at that bottom wrong.

Speaker 15 (42:29):
You could break it down by wealth level, I like
the FED data and looking at sort of percentile levels.

Speaker 2 (42:34):
Of well in terms of overall economic growth and what
the FED like, how do you think about This is
the tough part because you know there's a social answer
and then they're sight well.

Speaker 15 (42:42):
The multiplier effect up the wealth and the income spectrum
is just much stronger.

Speaker 10 (42:46):
That's just the math.

Speaker 15 (42:47):
And when you look at how well asset markets have
done over the past couple of years, even this year,
the bounce from the April lows, I mean, if you're
benefiting from that as an asset owner, we have household
exposure to equities at an all time high, beyond where
we were just slightly, but still beyond where we were
at at the peak in two thousand. So the wealth
effect and the power of the market in terms of
an economic driver has become quite strong and quite potent.

(43:09):
So I think when you add that together with what
is traditionally an economy that has become more or I
shouldn't say traditionally, but over time has become more powered
by that wealthy cohort, then you've got a pretty strong effect.

Speaker 3 (43:20):
When you say full employment, do you how do you
define that? And how does the FED define that?

Speaker 15 (43:24):
Because relatively low and employment rate to history compared to history,
there has been a little bit of an uptick. But
you look at that and you look at overall payrolls
and we're still right around you know, all time time.

Speaker 3 (43:33):
But does it mean the person who's who's has the
computer science undergraduate degree is working in computer science or
working at Chipotle?

Speaker 6 (43:40):
Oh yeah, exactly.

Speaker 15 (43:41):
Fully, the question just sort of in nominal terms, looking
at it face value, a job being a job, whether
that job is perfectly matched with what the person is doing.

Speaker 3 (43:49):
That's a little bit of how do we measure that well,
because it doesn't that seems like a concern right now.

Speaker 15 (43:54):
Well, then I think is going to show up, probably
start to show up a lot more within the next year,
in a lot of the labor flows that we're going
to get because one of the you know, one of
the longer term concerns I have for the labor market
is what's happening right now in some of the churn
with the pretty significant decline in immigration, but also not
sort of the lack of replacement a lot of a
lot of those jobs.

Speaker 6 (44:11):
We're just not seeing that happen. And you see that.

Speaker 15 (44:13):
Happening in you know, youth unemployment, black unemployment, it's really
starting to spread in some of those pockets. So the
areas that were supposed to benefit, you know, throughout this year,
as you had more of a domestic strengthening in the
in the fate of born labor force, it's not yet happening.
So it's a little bit lagged. I hope it's delayed
and not completely derailed. But I think in the next year,
figuring out replacements for a lot of those lost jobs,

(44:34):
that's going to be key.

Speaker 3 (44:35):
And the reason I brought up the Chipotle computer science
exactly well, always aungry, but that was what's be cited
in that New York Times article back in August. Yes,
computer science degrees having trouble finding those computer science jobs.

Speaker 2 (44:45):
It's kind of this interesting environment we are when we
look at the labor force. Hey, one of the things
I want to ask you your team shared with us
that you believe Tina is back, and it's not the
Tina that we think about. There is no alternative in
terms of like US difequities. Yeah, but it's something we
started off with US government data. It is important no alternative.

Speaker 3 (45:03):
I mean the depth and the breadth of the government data.

Speaker 15 (45:05):
You just can't imagine and I think, you know, so far,
thank goodness with the markets have been sort of, maybe
in a negative way, whistling sort of passed the graveyard
of no government data, but you know, they've been able
to manage through with corporate earnings. I think that's been
a nice bridge to get us to when the shutdown ends.
I think though, you know, the longer this goes on,
I think what we have to keep in mind, and
what we've really been emphasizing to our clients is that

(45:28):
you know, when you don't collect this data, yes you
can go back and retroactively get it, but it's not
going to be clean. So you're going basically almost a
quarter without this really key data. So you're going to
have a delayed third quarter GDP report, you're going to
have missing data in a way for the fourth quarter,
and then you have benchmark revisions coming in February, which

(45:48):
kind of throws another wrench into this.

Speaker 3 (45:50):
That's Kevin Gordon, Schwab's head of macro Research and Strategy,
on site at Schwab Impact twenty five.

Speaker 2 (45:56):
We turned out to our conversation with Schwab's Lisa Salvey,
head of Bususiness Consulting in education. We held a Bloomberg
AI Finance summit. It was just last month. We asked
attendees in financial services, which area do you believe augentic
AI holds the greatest potential to impact? And of course
the agentic AI. We're talking about AI systems that can
autonomously and maybe sounds a little scary, but autonomously plan

(46:20):
and execute multi step tasks with minimal human oversight. Yes,
that's a definition.

Speaker 3 (46:23):
That's great.

Speaker 2 (46:24):
But I know, I know, take over my world. I'm
ready for it. So here's what the folks at that
summit said the findings. Sixty two percent, Tim said the
greatest potential would be an automating repetitive complex tasks and workflows.

Speaker 3 (46:36):
Twenty three percent said generating alpha through faster deeper insights,
eleven percent supporting strategic decision making across the enterprise, and
then four percent Carol personalizing client experiences at scale.

Speaker 2 (46:47):
All right, so let's see what our next guest has
to say. She worked within Nebedda Advisors and their firms.
Lisa Salvey's head of business Consulting and Education at Schwab
Advisor Services. What did you think about those results?

Speaker 16 (46:57):
They're interesting to me I'm I lead a marketing study
here for ORAS specifically, it's like industry leading amount of data.
We had about thirteen hundred firms participate this year. Sixty
eight percent of our firms are using AI in some form.
Twenty twenty five obviously that was the year of the
note taker, right, so that's kind of the story. I

(47:17):
think it's on like a basic level, they're using it.
It depends, so basic is just not taking right. And
then now we're seeing more integration into the CRM system,
so we're starting to see that and it's starting to populate.

Speaker 2 (47:30):
Tasks and next steps.

Speaker 16 (47:32):
So a lot of firms are saying that's saving them
thirty minutes per client meeting, so that's a real ROI
we're seeing, which you don't always see with AI all
the time up to you know, I had one firm
last week tell me two and a half hours of
time savings.

Speaker 9 (47:46):
So that's kind of the year what we've seen this year.

Speaker 16 (47:49):
I think next year is going to be more of
a two pillar type of year where you're going to
see a lot of bottoms up type of projects and
kind of citizen programming with the AI tools that are
available within firms. But We're also going to start to
see looking at larger scale projects that can actually build
a transformative change or time savings in the organization. That

(48:12):
will be approached more like a project agentic agents and agentic.
That's kind of we're we're just stepping into that.

Speaker 2 (48:21):
Pa're trying to play with that.

Speaker 9 (48:23):
Some firms have it. Yeah, it's still very rare.

Speaker 16 (48:27):
I think what I would like to see firms do
is really start to focus on well, two things.

Speaker 9 (48:31):
The boring one the data.

Speaker 16 (48:33):
You got to get that data really good because AI
doesn't fix that data, it just amplifies it.

Speaker 3 (48:39):
Oh we know, yeah, I know, what about the finding
alpha part of this, because that's interesting.

Speaker 16 (48:46):
I don't hear that very much from registered investment advisors.
I don't hear as much on the investment side. I
hear it more on reading research reports giving them something
to react to and on the poor fullio management site.

Speaker 2 (49:01):
I will say one advisor came up to us and
was talking about actually something I had done at a
different event where somebody showed a demo and then got
into like AI in a big way and said it
did a lot of things like computations, different things and tasks,
and he was able to create better performance for his
investors because it just happened quicker and there are things

(49:23):
he wouldn't normally maybe do or spend the time on
because he just couldn't, and that he did and then yeah,
it did create It's interesting, it's where are you comfortable?

Speaker 9 (49:32):
So, yeah, a lot of advisors.

Speaker 16 (49:34):
Are not wanting it to hit the client yet. Yeah,
so that's where that's going to be where we see
some progression. But if you can create really comprehensive plans
and advisors need to be prepared to their clients are
going to start doing it and come in with something
and that they're going to have to react to.

Speaker 3 (49:53):
When do you think we start talking about AI, Like
we don't talk about the Internet today, the idea that
it's just this layer of technology that we're all using.

Speaker 10 (50:01):
I think I think it's still changing so rapidly.

Speaker 16 (50:05):
We're still seeing so many changes that we're going to
be talking about it for a little while, especially as
we get to that agentic layer. So first we're going
to have projects. Then we're going to have agents that
just do things like one off tasks like read a
research report on its own and email it to you
without you asking it to do it. Then we get
to what you guys were talking about at the beginning,
the agentic layer. We have a whole bunch of these

(50:27):
like bots that are doing things on their own and
making decisions.

Speaker 6 (50:30):
We have a ways to go that.

Speaker 3 (50:32):
Schwab's Lisa Salvi, head of Business Consulting and Education. Coming up.
More from our conversations at the Schwab Impact twenty twenty
five event in Denver, Colorado.

Speaker 2 (50:41):
Up next, we hear from Omar Agular. He is the
CEO of Schwab Asset Management.

Speaker 3 (50:47):
That's next. This is Bloomberg.

Speaker 1 (50:54):

Speaker 2 (51:02):
Back here on Bloomberg BusinessWeek Daily, looking at some of
our favorite conversations and highlights from the Schwab Impact twenty
twenty five event it was held to him this past week.
Of course in Denver, Colorado. It was a little chilli
out there, well it was.

Speaker 3 (51:14):
Yeah, it's Colorado. It's the foothills of the Rockies.

Speaker 2 (51:18):
That's so true.

Speaker 3 (51:19):
Yeah, three hundred days of sunshine a year though, so
it's not bad.

Speaker 2 (51:22):
No, it's nice to be out west.

Speaker 3 (51:24):
We turned now to our conversation with Omar Aguilar, CEO
of schwab Asset Management. Well, let's talk about this year,
because as we were chatting ahead of this interview, you
made the joke, I wish we could just end the
year right here, because it's been a good year. It's
been a good year, but what is that portend for
the next you know, two months.

Speaker 17 (51:41):
It's been great for investors. It's been great for investors
to actually see that. I would probably say there were
many points throughout the year where we all wish things
were actually going to be different, and I don't think
anybody anticipated, you know, that we're going to be at
the stage, you know, so far into this year. You know,
from the beginning of the year, the uncertainty around administration
to liberation day to recovery to you know, the rise

(52:03):
of AI, to the economy, the consumer, all the way
to where we are now. It's such such as being
a ride that I think investors have taken advantage of.

Speaker 2 (52:12):
You know, I was thinking about your background and I
just want to lay that what you've got twenty five
years of investment management experience and equity markets. You've seen
a lot of cycles, and I know, I think I
often reach out to you guys to ask you about this.
What do you make of some of the recent stress
that we've seen omar whether it was concerns about credit,
some of the regional bank issues. Again, we've heard different
stories about whether or not credit concerns were something that

(52:35):
might linger for a little bit. And then there's the private,
you know, credit market. So how do you see it
and do you see it at all impacting kind of
the tone of trade and activity on your platforms?

Speaker 3 (52:45):
Yes, it is.

Speaker 17 (52:46):
It is interesting because yes, I have seen a lot
of technics.

Speaker 2 (52:50):
I have too, So we're just like a good bottle
of wine.

Speaker 3 (52:54):
You know, my gray hairs, you know, you know I
take a pride of it.

Speaker 17 (52:58):
But but yes, you know, it's interesting because you know
what we what I have seen historically, is you actually
go through the source of what is actually maybe the
reasons why something cracks. There will always be in every
single cycle, you know, areas of rest that are what
we call ideasyncratic.

Speaker 3 (53:13):
That's just such a fancy word, but you.

Speaker 17 (53:15):
Know what that means is that there will always going
to be things that will happen that will make people nervous,
and we just need to understand whether it's systemic or
is just isolated to a certain area. Interesting enough, you
mentioned about, you know, the particular the credit market. You know,
the credit market has been incredibly resilient since two thousand
and eight, and I think when you look at the
current even the high yield market, you know, is not

(53:38):
as junky as it used to be. You know, I
remember back in you know, two thousand and five, two
thousand and six or two thousand and you know one
in two thousand and two, those were periods where you
will really feel that there was a lot of delinquencies,
there was a lot of rest, there was a lot
of uncertainty around them. When you look at it today,
you know, the delinquencies are growing, but not outside of
the normal you will have in this part of the cycle.

Speaker 2 (54:00):
Is think that's not happening well.

Speaker 3 (54:01):
And a lot of that has to do with corporate America.

Speaker 17 (54:04):
You know, their balance sheets are fairly, fairly strong, and
the amount of leverage that you see in corporate America
has is basically to the lowest in many decades. So
what that actually means is that yes, companies that are
taking excess leverage to steps risk and they're more risky
and the way they manage their business. You know, they're
clearly more at the risk end, but the majority of
America it's actually pretty solid in terms of how they

(54:25):
manage their balance sheets. And in fact, a lot of
the reasons we were talking about, you know, in other
forums about the reasons why tires have not been having
the impact as big as it has been is because
profit margins have been very, very benign and have been
not been affected as much.

Speaker 3 (54:41):
So does that mean that it's only a matter of
time before we actually see inflation as a result of
these carets. When these companies say we're not gonna we're
not going to pad the impact anymore with our with
our healthy profit margins, we're ready to pass these on, well.

Speaker 17 (54:55):
We're ready seeing some of that. We're ready seeing two things.
One is we're ready seeing companies that are they're not
going to have a choice, but actually passed through those
increasing process to the consumers. You know, we have seen
those companies that have the biggest you know, opportunities and
the biggest, widest margins. They are they're already good, but
there are ones that are getting a squeeze and a
squeeze we're already see some of that already in the

(55:17):
early parts of this earning season. The second part that
we're serving is consumption, you know, consumers and the demand
destruction starting to happen.

Speaker 3 (55:26):
You're starting to see a little bit in.

Speaker 17 (55:27):
Terms of like you know, airlines and the tickets and
you know, you see that actually on my way here
for the first time the plane was not full. That
that was unique because you know, for the entire year,
you know, you always go there and it's actually big,
big chunk of it. So you can see a little
bit of that consumption starting to just get affected by it.

Speaker 3 (55:46):
This happened to us last month on our way back
from Los Angeles. The person at the gate said, this
is crazy. It's been full pretty much until now. The
flight was empty heading back.

Speaker 2 (55:56):
Yeah.

Speaker 3 (55:56):
Again, it's an anecdote by hearing it from airlines yet.

Speaker 2 (55:58):
But the airlines have and so smart about keeping those
planes packed right, and so to me it seems like
a clear indicator. I know, I said, you've seen a
lot of cycles, but I think about your background Lehman Brothers,
Merrill Lynch. These are firms that are no longer around,
you know, post GFC, the Great Financial Crisis, so I
guess I always try to think, you know, what are
we missing in an environment where so many people are

(56:20):
like it's okay, it's okay, it's okay, and I'm like,
what are the possible risks do you think for investors
in this environment?

Speaker 3 (56:26):
Well, we have seen and actually we saw this in
the last six weeks.

Speaker 17 (56:31):
If you if you look at the performance of those
companies that did not do not have positive earnings, negative
earnings companies in small and MidCap sectors, they outperform by
almost twenty percent in.

Speaker 3 (56:43):
A short period of time. So what is called the
junk rap.

Speaker 17 (56:46):
And in many cases, the concern is that this component
of excess goes into areas that goes like that, and
that volatility is not healthy.

Speaker 2 (56:54):
Omar, thank you, always always appreciated. Omar Agailar. He's CEO
and CIO of Schwap Asset Management. All right, so let's
share some numbers with you.

Speaker 9 (57:01):
Check this out.

Speaker 2 (57:02):
Sixteen thousand independent advisory firms, five trillion ten in assets
under management.

Speaker 3 (57:07):
That's the business that John Beatty overseas. He's managing director
and head of Schwab Advisor of Services. He joined us
on site here at Schwab Impact twenty twenty five in Denver, Colorado. John,
you've been at Schwab for close to thirty years.

Speaker 5 (57:18):
Let's say twenty eight, Just so tell myself too. Okay,
it's twenty.

Speaker 3 (57:22):
Eight, twenty eight years. You've been a member of the
advisor services team for sixteen years. It's correct an ria
today versus what it was sixteen years ago. They want
different things.

Speaker 5 (57:33):
Well, it's amazing.

Speaker 14 (57:34):
When I first joined Schwab twenty eight years ago in
the advisor business, we custodied a one hundred billion dollars
for assets. Now it's five trillion dollars.

Speaker 3 (57:42):
So that just gives you where is that in market share?

Speaker 14 (57:45):
So advisor services Charles Schwab has about forty four percent
market share of independent advisors, doubled the nearest competitor.

Speaker 5 (57:53):
So we were first to the space back.

Speaker 14 (57:56):
Then almost thirty eight years ago and have really focused
in on it and made a main priority here at Schwab.

Speaker 5 (58:03):
And we've been rewarded by our clients with their growth.

Speaker 3 (58:05):
You know, my in laws are we're talking about their
financial advisor, and I was telling about this conference that
I was coming to, and they said, we had a
choice when we signed up with this financial advisor who
we wanted as a custodian. We could choose Schwab, we
could choose another company. Is that that was surprising them.
I didn't know that RIA has had relationships with different custodians.

Speaker 14 (58:28):
Yes, RA industry is the industry of independent advisors, and
independence means that they have choice is who their providers are,
whether that's custodian or asset management, fintech providers in their
back office. I think that is actually the secret sauce
in the RAA space and that everybody has to be
at their best every day to maintain their seat at
the table, whether it's us as a custodian against our competitors,

(58:52):
or a fintech provider in the back office an asset manager.
So everybody's at their best. That means consumers are getting
a great experience.

Speaker 2 (58:59):
Keeps everybody lead me and competitive. So what do investment
advisors really need from you guys today?

Speaker 14 (59:05):
So really, where the hallmark is, where the foundation and
relationship is our custody experience, which means opening accounts, moving money,
doing trades. The basics that the advisors want to be
brilliant in how.

Speaker 2 (59:16):
They serve their clients, so easy, secure, what.

Speaker 14 (59:19):
Easy, secure, accurate, All of those things matter important and
the last thing an advisor wants to do is have
their custodia or any of their providers embarrass them in
front of their clients. So we have to be at
a ninety nine percent accuracy rate and everything we do
for advisors, and that's why we're winning in the marketplace
is those brilliant experiences that we provide.

Speaker 2 (59:39):
What's the toughest thing in making sure that you guys
are hitting on all those things, the accuracy, the security,
all of it.

Speaker 14 (59:45):
Yeah, it's really the move from paper to digital and
that's that's a change management thing in our industry. So
we've made great progress in the last five years on that. Now,
for example, moving money wires ACCH transactions, we're ninety three.
It's the ability to move money overnight without a wire,
got it?

Speaker 3 (01:00:04):
Yes, forget me.

Speaker 14 (01:00:05):
Yeah, it's an industry academ Sorry about that, but we're
at ninety three percent rate there where just five years
ago that was less than fifty percent. So what what
what digital brings is it brings faster, more accurate, less
errors in the ecosystem, new accounts. You know, we're opening
on a digital platform at about a fifty to sixty
percent rate. We'd love to get that in the eighty

(01:00:26):
to nineties, so that brings modern experiences for the investor.

Speaker 5 (01:00:30):
As well as the advisor.

Speaker 3 (01:00:31):
I was talking to one of the independent advisors before
our program started and he was telling me, He's like, Okay,
I've got this whole machine that runs Linux, that just
runs my Bloomberg terminal, separate machine, separate keyboard. Then I've
got my other two monitors, so two monitors over there,
and then I've got my other two monitors with basically
the Schwab dashboard and everything that that Schwab offers that

(01:00:52):
I can then offer to clients.

Speaker 4 (01:00:54):
What is that?

Speaker 3 (01:00:55):
Oh, it's what is that tool? What is that dashboard?

Speaker 14 (01:00:57):
So our website is the place where we serve advisors
digitally Schwab Advisorcenter dot com.

Speaker 5 (01:01:04):
In that tool, you'll find all.

Speaker 14 (01:01:06):
The logistics of custody, moving money, opening accounts. We have
trading capabilities on that website and a lot of other
features that advisors can dig in. You know, the industry
has changed over over the years, and now we have
our I rebounld capability, which is a is a automated
rebalancing tool.

Speaker 5 (01:01:24):
We have model market center where advisors can tap into
pre built portfolios.

Speaker 14 (01:01:29):
So advisors are really looking to outsource some of the
things that you used to do in house so that
they can use their time in other ways with investors
around planning a state tax, those value added places.

Speaker 2 (01:01:42):
How much in terms of advisors from what you guys
are seeing, how much are they doing like face to
face or phone calls or actual conversations versus so much
that they can do either digitally, Like I'm just curious what.

Speaker 5 (01:01:52):
That mix is.

Speaker 2 (01:01:52):
Well, it has to be a combination that they want
to free up time to do yes, yes.

Speaker 14 (01:01:56):
And there's nothing that replaces being in person with your client.
And we had Kesseleigh talking about the need for social interaction.
So what really advisors are trying to bring is a
recipe of digital experiences that take the less value activities
moving money and transactional work so that they can use
their in time person with clients on more of the

(01:02:18):
intellectual psychological aspects of investing. AI very briefly, Yes, going
to be really important as we go forward. Now, Yet, well,
we see advisors about fifty percent of advisors are already
using AI enabled tools in their back office. These are
things like recording meetings with clients and taking notes. We

(01:02:38):
see them using tools to read contracts and give summariason.
So it's basic AI, but it's the beginning. And you
know this is an entrepreneurial community and so they're leaning
into these types of services.

Speaker 2 (01:02:51):
How much back and forth is they're with advisors and
you guys about what we need in terms of AI.

Speaker 5 (01:02:56):
It's about our ecosystem.

Speaker 14 (01:02:57):
We want to AI enable them on the custody side,
and then they need to AI enable their experience with
their clients related to the portfolio and other aspects. So
it's going to play a big role in this industries
we go forward, John, thanks so much for joining us.

Speaker 2 (01:03:09):
Their chatbot that's like, hey, Chuck, how do I do this?

Speaker 14 (01:03:13):
We have a knowledge center tool that our service reps
use that is a and I enabled that makes us
smarter on the phones with advisors.

Speaker 5 (01:03:20):
We'll turn that onto advisors at some point.

Speaker 2 (01:03:22):
Okay, not yet, once the learning is done right, all right,
some baby, thank you so much, really appreciate it. Managing Director,
head of Advisors Services at Schwab.

Speaker 3 (01:03:31):
Coming up more from our conversations at the Schwab Impact
twenty twenty five events in Denver, Colorado. Coming up Fred
kaine Or, managing director of relationship management for DAFT Giving
three sixty talking about the growth of charitable giving and
the use of donor advised funds.

Speaker 2 (01:03:47):
That's coming up next. This is bloomber.

Speaker 1 (01:03:54):

Speaker 2 (01:04:02):
We're back here on Bloomberg Business Week looking at some
of our favorite conversations. It was all happening at Schwab
Impact twenty twenty five, the event held in Denver, Colorado
this past week.

Speaker 3 (01:04:12):
We turn now to our conversation with Fred Knor, Managing
director of relationship management for DAFT Giving three sixty. We
talked about a lot, specifically the growth of childable giving
and the use of so called donor advised funds.

Speaker 8 (01:04:25):
A donor advised fund is essentially an account set up
to facilitate charitable giving. A donor advice fund is comprised
of three different components, contribute, invest, and grant, so a donor,
with the support of its advisor. His advisor or her
advisor contributes cash, securities, appreciated assets including real estate, collectibles,

(01:04:46):
private business interests, and alike. We accept those contributions, we
liquidate them. If they're appreciated assets, we deposit them into
the account. They invest those assets for growth while they're
in the account, and then when they're ready to grant
them to the charity of choice, they can do so
in a matter of a couple of days. And the
beauty of the account is from a contributions perspective, it
affords the donor and immediate fair market value tax deduction

(01:05:09):
at the time that the contribution is made, and they
potentially avoid capital gains tax that they would otherwise pay
if they were to sell those assets first and donate
the pro sits into the account thereafter.

Speaker 3 (01:05:19):
Should everybody be considering donor advised fonds or do you
need to have a certain level of wealth for it
to make sense?

Speaker 2 (01:05:24):
It's going to say yes, yes, really though really yes.

Speaker 3 (01:05:27):
I mean now, it's a good question.

Speaker 8 (01:05:28):
A lot of people think that, you know, a donor
advice fund account is set up for the ultra high
net worth and the ultra wealthy, and the answer is no,
it's not. There's no minimum to open an account. You
can have an account with effect a zero balance. Many
people open an account for testamentary purposes. They will fund
it upon their passing to fulfill their charitable legacy. When
you're young, you don't necessarily have a lot of assets
to give to charity. So you don't have to give

(01:05:50):
five thousand, ten thousand to open an account. You can
open it with a zero balance, and you can fund
it over time when you have the assets.

Speaker 3 (01:05:55):
Ready to give.

Speaker 2 (01:05:56):
But why open it early if you don't really have
anything to contribute to it.

Speaker 8 (01:05:59):
It's a great question uestion. And they do it for
a variety of different reasons. Like I said, one is
when it's used for testamentary purposes. When a person is
planning their legacy. When they're planning sort of they're trying
to think about what they want their legacy, charitable legacy
to be beyond their lifetime, they would fund upon their passing.
The donor advice Fund account would be named as at
fishary of their trust or their estate, and an amount

(01:06:20):
would be put into that with the understanding of exactly
how and where they want that be distributed to charities
of choice.

Speaker 3 (01:06:25):
So that's what I want to talk about is control here.
How much control does the person who put the assets
in there, who had the assets who don'tate the assets
have where those assets go or where that money goes.

Speaker 6 (01:06:35):
That's a great question.

Speaker 8 (01:06:36):
So technically, when the assets are put into the donor
device fund account, they relinquish control of those assets because
those assets we are, as you said at the beginning,
we are a five oh one C three nonprofit. They
are effectively making a contribution to a nonprofit organization, and
at that time they relinquishly control those assets. However, they
are the ones that recommend the investment strategy when the
assets are in the account, because we want to make

(01:06:57):
sure that they're invested in a manner that's consistent with
their personal goals and objectives. And they recommend grants when
they choose to have grants go to the charities that
they choose to support. So in other words, it's not
them making the grant. They are recommending to us, as
the if you will, owners of those assets, where they
want those grants to be made and how, and so
while they reliquist the control for a variety of reasons,

(01:07:19):
when they actually make the contribution, they make the recommendations
on how to invest and where, and they make the
recommendations on where to.

Speaker 2 (01:07:26):
Grants and when so two questions, where do they Where
are folks often saying here's where we want those assets invested,
and then where are they saying they want to donate.

Speaker 8 (01:07:36):
That's a great question, and there are a number of
different investment options and it really is up to ultimately
the donor and the advisors supporting the donor on how
they choose to balance their portfolio in terms of an
investment strategy.

Speaker 2 (01:07:48):
Many of because I wonder if it's about growth or
it's just about maintaining the principle or a little bit
of both.

Speaker 8 (01:07:52):
Yes, it's both. Mostly it's both. People want to do
a variety of different things. They want to maintain the balance,
they want to grow it over time. And an interesting
is is we have seen almost four billion dollars in
growth and incremental growth as a result of utilizing a
very effective and prudent investment approach while the assets are
in the account, so above and beyond what they've contributed.

(01:08:12):
As a result of, you know, really effective and thoughtful
investment of those assets, we've seen about four billion additional
dollars ultimately made available to go to charities.

Speaker 2 (01:08:21):
So I interrupted you, so where are folks investing? And
then where are they donating, so they're investing in a
variety of ways.

Speaker 8 (01:08:26):
Some people want to invest around impact investing, for example,
they want to do things with SRI s G.

Speaker 6 (01:08:31):
Actually that's even growing.

Speaker 8 (01:08:33):
Impact is an evolving term and it means different things
to different people, but yeah, that's a big thing. Others
are investing in sort of much more conservative investment options
where they're much more focused on maintaining the balance and
making sure that you know, it's not subject to the same.

Speaker 3 (01:08:47):
Investment volatility as others.

Speaker 8 (01:08:48):
So it really the answer to your question is that
they're investing in whatever way they feel most comfortable investing
those assets if it's for impact and that impact has
you know, as social returns in addition to financial return
and in other cases it's just really maintaining the balance,
making sure that they have those assets there to be
able to grant a charity whenever they choose, and.

Speaker 3 (01:09:08):
Then ultimately where does that money go.

Speaker 6 (01:09:10):
So yeah, so then the third component is granting.

Speaker 8 (01:09:12):
So we allow grants to any organization that is a
five oh one C three nonprofit and good standing with
the IRS. Our database. We rely on the IRS database
that is about two million strong right now. So really
it's up to and it's in the flexibility of solution.
It goes to wherever they choose to support it. It
could be their house of worship, it could be their
alma mater, it could be providing grants to disaster relief

(01:09:36):
organizations when floods occur in Texas or fires occur in California.
So it's really incredibly flexible in terms of where and
how they grant it.

Speaker 2 (01:09:43):
Any place that they cannot donate just real.

Speaker 8 (01:09:47):
Quickly, it's not really as long as it's a five
oh one C three a nonprofit organization and good standing
with the irs generally speaking, those that we fulfill those
grant recommendations.

Speaker 2 (01:09:58):
All right, so appreciate this is really fun. Fred, thank
you so much.

Speaker 6 (01:10:01):
Thank you guys very much for the time.

Speaker 2 (01:10:02):
He is managing director of Relationship Management for DAFT Giving
three sixteen independent five oh one C three Public Charity
fully known as Schwab Charitable Tim and I here at
Schwab Impact twenty twenty five. Now you might recall over
the summer it was in August President Trump signing an
executive order directing the Labor Department to reevaluate guidance to
fiduciaries to get them more comfortable with including private credit,

(01:10:24):
digital assets, and other alternative assets in their retirement plans. Now,
the SEC may also issue some new rules or guidance
to change the definition of accredited investor or qualified purchasers.
There's a lot going on that could open up a
lot of different types of assets to retail investors. It's
something that we've gotten into with the Schwab CEO and.

Speaker 3 (01:10:44):
Kind of on pause right now, at least at the
SEC level because the government shut down. Yes, but still
this seems to be the direction that things are.

Speaker 2 (01:10:51):
Moving all right. We have a great guest to get
into on all of this with some thoughts and here
at Denver in Denver at Schwab Impact twenty twenty five,
Kyla Culver, she's head of real and Controls for Schwab
Advisor Services. Good to have you here. There's a lot
going on that could change, or there's a lot that
is going on that means we won't see changes. How
are you assessing kind of the regulatory environment and things

(01:11:12):
that could change what investors can be investing in.

Speaker 10 (01:11:16):
So I feel like for advisors it's a lot of
whiplash right now. If we look at the prior administration
and SEC Chair Gensler, there was constantly new rules coming out,
and it was just like regulation overload for people. And
now under Paul Atkins, we're expecting to see a reduced
pace of regulation. So we see it as a good

(01:11:37):
opportunity for advisors to really focus on getting back to
basics and making sure that their compliance programs are up
to date, that all of their ADVs are accurate, what
are as they're disclosure documents that have to file with
the SEC. Really just making sure that like their house
is in order so that because if we're not under
a constant flood of new things coming out and then

(01:11:59):
you know, we heard you talking about about the executive
order related to four to one k's and being able
to hold alternatives different things in four to one K accounts.
That's something that you know, some advisors have interest in
for their clients, and it's going to really depend on
the plan, Like is this something that the plan chooses
to allow for that client or you know, for their

(01:12:21):
plan participants, or does the plan not want.

Speaker 2 (01:12:23):
To allow that.

Speaker 3 (01:12:24):
What direction do you see that moving in? If it
does get approved, if it if it happens, if the
SEC says okay, this is totally fine. Is everyone going
to be Is it going to be like us having
stocks and bonds.

Speaker 9 (01:12:33):
In our life?

Speaker 10 (01:12:33):
I don't think it will be for everybody.

Speaker 3 (01:12:35):
I think that we see it well everybody at the option.

Speaker 10 (01:12:38):
Well, it's going to be up to the plan administrator.
So who's ever sponsoring that plan. They're the fiduciary. They've
got the ability to say you're allowed to invest in X,
or you're allowed to invest in you know, not allowed.

Speaker 3 (01:12:51):
So would I be at the company level for a
certain company and it's employees, or would it be at
the whoever they decide as the planned administrator like an
empower for example, it's.

Speaker 10 (01:13:01):
Really like the planned sponsor who's choosing that.

Speaker 2 (01:13:04):
So why would a plan sponsor say no? Why would
a plan sponsor say yes?

Speaker 10 (01:13:09):
I think they would say yes if they wanted to
give their their participants, you know, additional choices. Some plan
sponsors may say no. You know, we see it on
the Schwab side where we've got some plan sponsors that
have opted into our Personal Choice Retirement account offering where

(01:13:29):
you can basically have your four oh one K and
you know, self direct it invest in stocks and bonds
and things that are outside of the allocate the plan allocation.
It just really depends on their their comfort level. Like
from a conservative perspective, you might say, we want to
stick more with you know, these funds that we've chosen.

Speaker 3 (01:13:48):
Is it a good thing?

Speaker 9 (01:13:51):
I think it's you know, choice.

Speaker 10 (01:13:53):
Is always a good thing. So more freedom of choice.
But as long as people are doing it smartly with it,
you know, the advice of an investment advisor. I think
it's a sparked decision, but I think there's always additional
risk there.

Speaker 2 (01:14:08):
Well, the risks are right in terms of all assets.
Some things are not as liquid or as others, and
you need to understand that if YNGI to be able
to get out of something it's not liquid like stocks
and bonds exactly in many ways.

Speaker 10 (01:14:21):
And that's why I think doing things with the advice
of a professional versus just you know, your friend told
you this was a good investment, it makes more sense
that way.

Speaker 3 (01:14:31):
On the regulatory front, and having advisors have less regulation
right now, does more fall on them in terms of
making sure that they're doing what's right because those those
regulations aren't necessarily in place, and I know kind of
a judgment for me to say, you know, quate regulations
with right, that's not what I need to do. But

(01:14:51):
we know, we know the DNA that that Paul Atkins
has the SEC chair when it comes to this stuff,
and he's much more laisse faire than other SEC in
the past.

Speaker 10 (01:15:00):
Yeah, So what what we keep reminding advisors of is
just because there's you know, all this noise about deregulation
and less new regulations, you still have to follow the
fiduciary duty you still have. You know, there's still regulations
on the books, there's still rules. Who still have to
do all the things and be making sure you're in

(01:15:22):
the best interest of your client. So just because it's
a more like laise fair kind of environment doesn't mean
you still don't have principles that you have to adhere to.

Speaker 2 (01:15:32):
That Schwab's Kayla Culver, head of Risk and Controls over
at Schwab Advisor Services.

Speaker 3 (01:15:37):
And that does it. For this special edition of Bloomberg
Business Week featuring some of our conversations and the highlights
from the Schwab Impact twenty twenty five from the Schwab
Impact twenty twenty five event in Denver, Colorado, this past week.

Speaker 2 (01:15:49):
For all of them, be sure to check it out
at Bloomberg dot com and wherever you get your podcasts. Hey,
and also be sure to tune into Bloomberg Business Week
Daily Monday through Friday starting at two pm Wall Street
Time on Bloomberg TV, Bloomberg Radio, and on Serius XM
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Speaker 3 (01:16:11):
You can also watch our daily broadcast on YouTube. Just
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Speaker 2 (01:16:25):
Find our Bloomberg BusinessWeek Daily podcast at Bloomberg dot com, Apple,
or wherever you get your podcasts, and the latest edition
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Bloomberg dot com and always always on the Bloomberg terminal.
I'm Carol Masser and.

Speaker 3 (01:16:38):
I'm tim Stenaveeck. Have a good and safe weekend, everyone,
stay with us. Today's top stories and global business headlines
are coming up right now.

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