Maybe that brokerage account is half full. 

As the markets ramp up for a new presidential administration come January, advisors are quickly studying the tea leaves trying to understand its potential impacts. Will a trade war lead to another bout of inflation? Will geopolitical conflicts hamper the global economy? Charles Schwab’s incoming chief executive officer Rick Wurster, however, says he’s done dwelling on the negative. 

“There are constant challenges in the world economy, but there’s a lot of good happening right now, too,” he told The Daily Upside. For example, stock markets are hitting all-time highs and investors are more informed and engaged than ever, he said. That means more money in the markets and plenty of opportunity for advisors to help clients manage their financial lives. “There’s a bull market for advice in this country,” he said.

Wurster, 51, has been at Schwab since 2016 and president since 2021, and is now set to take the helm of the almost $10 trillion discount brokerage that boasts more than 36 million brokerage accounts in January. Sitting CEO Walt Bettinger, who led the company since 2008, is heading into retirement. “We’ve been around for 50 years, and for 49 of them, we’ve only had two CEOs,” Wurster  said. “It’s big shoes.” 

We sat down with Wurster on the sidelines of the Schwab Impact conference on a drizzly morning in San Francisco. 

TDU: How is the advice industry changing?

Rick Wurster: There’s been a real evolution that occurred over time where advisors just take on more and more of a client’s life. An advisor might have done a little bit of planning and managing of the assets, and then it became a lot more planning. Now, we’ve gone into a period where advisors think about the client holistically. They think about tax, trust and estate issues. They talk about charitable giving and the role that plays. 

My expectation is that you will see advisors handling that whole spectrum of capabilities that clients are looking for. It’s only going to expand and it could go into other areas like health and wellness, which is an area that I see advisors potentially embarking into. It’s just a continual evolution of doing more for the client.

What are the biggest opportunities for advisors? 

The markets have gone up so much that people have more money than they might have expected. Now, they want help and advice. What’s the right amount to spend in retirement? How do I pass the money on? And within that demand for advice, the independent model is clearly winning. It’s growing faster than any other segment, and that’s because as fiduciaries, they can sit on the side of the client, and in an un-conflicted way, do what’s right for them. 

How will AI impact advisors?

The person-to-person relationship is the pinnacle of building trust and being able to help a client. But we can’t help every single client. We’ve got 15 million clients and we have a person-to-person relationship maybe with 2 million of those. Some 60,000 times a month, we have a representative spending more than three minutes searching our knowledge network for information for a client. With the AI capability we’ve built, they can do that in seconds. At some point, AI will allow us to build a deeper relationship with those that we can’t have that person-to-person relationship with. 

But I do not think AI is going to replace the advisor — no more than it’s going to replace a spouse. It allows us to better serve clients and will allow us to serve clients that we couldn’t serve directly before. To me the advisor-investor relationship is a personal one. It’s an intimate relationship where you’re putting your trust in someone to take care of you. 

What’s one thing no one is talking about?

Just how many positive things are going on in the world right now. There’s a lot of concern about this or that at the moment, but we’ve got a stock market that has hit all-time highs. A group of investors in our country that have never been more engaged in stock markets and investing than they are today. We’ve got more ways to provide education and training to younger investors, to help them get engaged than ever before. And we’re seeing a large number of our new clients come in at very young ages. 

Sometimes we over-focus on the things that are not going well. To me, being around all these advisors, every one of them is making a real difference in the life of a client every single day. They’re making a big difference in their lives, and to me, that should be celebrated.

One of the quickest ways into the US is through Canada. 

CI Financial has agreed to be taken private in an all-cash deal with Mubadala Capital, a subsidiary of the Abu Dhabi Investment Authority, that values the Canadian asset manager’s enterprise at about $8.6 billion. The purchase represents a 33% premium to CI’s closing price last week, according to a statement. The massive Toronto-based wealth manager, which runs Corient Private Wealth in the US, will continue to operate under its current structure and management team, and will be independent of Mubadala’s other portfolio businesses. 

Mubadala’s full takeover might just be the remedy CI Financial was looking for after years of buying major RIAs across the US.

Big Deal, Eh?

CI Financial has been on an M&A tear in recent years, which has left it with plenty of debt and a share price that hasn’t moved much in the past three years. The strategy caused S&P Global Ratings to cut the firm’s debt to junk in 2023, according to Bloomberg.

That same year, CI sold a 20% stake in its US advisor division to a consortium of investors that included the ADIA. The company has acquired dozens of firms with billions of dollars in assets under management: 

• Just this month, Corient closed on a deal to buy Ensemble Capital Management, an RIA headquartered in San Francisco with about $1.77 billion in AUM.
• CI Financial added 15 RIAs to its US private wealth business in 2021 alone, including Bluestein, Gofen, and RegentAtlantic.
• The company now oversees roughly $180 billion in its US wealth management arm, according to company reports.

“Mubadala Capital invests with a long-term outlook and represents long-term capital — providing stability and certainty for CIʼs clients and employees,” CI’s Chief Executive Officer Kurt MacAlpine said in a statement. 

Coming to America. The deal marks not only Mubadala’s largest acquisition to date, but one of the biggest direct investments into North America by a Middle Eastern group. Earlier this year, Mubadala closed a similar deal, acquiring just over 90% of the equity of credit manager Fortress Investment Group that was held by Japanese conglomerate SoftBank.

The Fed keeps lowering rates, but long-term bond rates keep going up?

That’s bond investing for you, where the market can be notoriously hard to predict and almost impossible during an election year. That’s because bonds are a much larger market than equities and much less gamified. The global bond market was worth $140 trillion — about 20% larger than the global stock market — at the end of 2023, and is impacted by multiple trends all at once. But, regardless of which part of the curve and what direction an advisor expects rates to travel, there are ETF strategies that can help. 

Read more.