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Schwab’s CEO sees a future brokerage looking like Uber

(Bloomberg) — Financial firms need to take more cues from Silicon Valley, according to Charles Schwab Corp. Chief Executive Officer Walt Bettinger.

Consumers want their banks and brokerages to offer technology with the same level of personalization you get from ride-hailing and food-delivery apps, Bettinger said in an extensive interview this week after Schwab reported fourth-quarter results.

“What customers expect of their experience at their financial-services company is shaped by their experiences at Uber, DoorDash or Amazon,” Bettinger said.

Schwab, a 50-year-old firm with client assets of more than $8 trillion, boosted the brokerage industry and eliminated commissions just months before the pandemic turbocharged trading by individual investors and rival TD Ameritrade’s $26 billion. announced the acquisition of

Bettinger, 61, discusses the difficulties of linking the two large companies together during the era of remote working, Schwab’s relocation from San Francisco to Westlake, Texas and what it takes to offer the firm direct crypto trading, among other topics. Will happen.

The interview has been edited and condensed.

What are the biggest changes coming to your industry in 2022?

We are only dealing with overall trends that may have accelerated in the pandemic. The willingness of customers to engage in multiple ways, as opposed to just in person, is something the pandemic has pushed through. Their experiences outside of financial services are creating customer expectations. They’re comparing financial-services firms to Amazon or Uber, and they’re looking for those kinds of experiences.

What lasting impression could the pandemic leave in the financial-advising business?

Trust is still often best built through live interactions with an organization or with an individual. But once that trust is built, customers are more interested and ready to do so in a virtual way. We are growing so fast, in the last year alone more than 3 million new families are being added. We get into the way of hiring people, but customers are open to connecting and interacting in different ways than ever before.

Record trading levels are falling since January 2021. what comes next?

Inevitably we go through periods of trading spikes. You reach a new normal, and that new normal becomes greater than before. This is exactly what we are today – in a range that is probably normal for a market that is either not moving to record levels or a dramatic bear market on a consistent basis.

It’s important to note that when we acquired TD Ameritrade, these volumes are multiples of what they were at the time. We have been operating twice where we thought we would be after five years of acquisitions.

What are the challenges of integrating TD Ameritrade into Schwab?

We are making the largest integration in the history of the investment-services industry in the midst of the pandemic. This makes communication more difficult. This makes relationships infinitely more difficult. We are on track for our timing, which is primarily scheduled for the second half of 2023.

TD Ameritrade has some world class platforms. Thinkorswim is a great trading platform. But what makes Schwab available to Thinkorswim is different, with more than 33 million customers.

Smaller brokers are attracting young investors. How will Schwab compete?

Our average clientele in that young population comes to us with $25,000 to invest. We are conquering a different type of investor, one with a significant amount of money for someone of that age.

You moved your headquarters to Texas. Did the pandemic affect real estate plans?

In this day and age I’m not 100% sure what the definition of HQ means. Most of our people are working from home. Virtually any employee who wants to work remotely will be able to do so as long as the situation doesn’t completely prevent it.

For a firm growing as fast as us, it’s probably less that we’ll reduce our footprint and more so that we won’t have to add as much, despite our significant recruiting.

Will Schwab get into crypto?

Crypto is hard to ignore, isn’t it? This is very important today. We have a number of ways that clients can invest in crypto today. What we do not offer is direct trade. We would welcome the opportunity, if the opportunity presents itself, from a regulatory standpoint. There is a tremendous void in that space today for a firm like Schwab. Transaction costs in crypto trading are exceptionally high, with spreads exceptionally high.

Personalized investing is becoming more popular. Why?

The next place we’re going, no doubt in my mind, is personalization for every investor. Distributors who have close relationships with end customers are going to be in a much stronger position. Instead of being available only to those who have millions of dollars, distributors like Schwab, with our size, need to take this down to a more modest asset level.

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