Schwab Seeks to Provide Retail Investors Access to Private Companies

Charles Schwab SCHW has been wanting to allow retail investors direct access to private companies. In an interview with Bloomberg Television, as published in an MSN article, SCHW’s CEO and president, Rick Wurster, said that the brokerage giant is exploring ways to permit everyday investors to buy into private companies like fintech giant Stripe and artificial-intelligence firm OpenAI.

Wurster stated, “There’s a lot more private companies today than there used to be, and fewer public companies. It makes sense to think about providing direct access to retail investors to private companies, and that’s something we’re looking at.”

He added, “We would love to see retail investors be able to participate in the growth of private companies in our country.”

Schwab’s latest comments regarding providing broader access to private firms come after the firm announced in April that it will make its new alternative investments platform, Schwab Alternative Investments Select, completely available to all its eligible retail clients who hold household assets worth more than $5 million.

Such efforts have been encouraged of late, as there has been an increasing demand among wealthy clients to tap into private market opportunities in order to meet their portfolio diversification needs.

Schwab’s Competitor Taking Similar Steps

Earlier this month, Robinhood Markets HOOD filed plans with the Securities and Exchange Commission to launch a venture capital fund, Robinhood Ventures Fund I (“RVI”), aimed to provide everyday investors access to private companies before they go public. If approved, the RVI will invest in a small basket of private companies across industries and hold them through IPO and beyond.

Robinhood’s chairman and CEO, Vlad Tenev, said, “For decades, wealthy people and institutions have invested in private companies while retail investors have been unfairly locked out.”

Schwab’s Price Performance & Zacks Rank

So far this year, SCHW shares have gained 24.8% compared with the industry’s growth of 30%.

Currently, Schwab carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

A better-ranked brokerage company is Interactive Brokers Group IBKR. Currently, IBKR carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for Interactive Brokers’ 2025 earnings has been revised 1.6% upward over the past 60 days. IBKR shares have gained 45.9% so far this year.

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This article originally published on Zacks Investment Research (zacks.com).

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