Top Asset Manager Says Letting AI Create Trading Strategies Is a ‘Fool’s Errand’ — Warns It’s ‘Not a Safe Way’ to Access Your Money

Charles Schwab Corp. (NYSE: SCHW) is blocking AI agents that log into client accounts, even as it rolls out its own AI assistant and lets clients connect their own AI models to its servers under tight controls, CEO Rick Wurster said on the company’s third-quarter earnings call on Thursday.

Schwab Blocks Unauthorized AI Agents

Wurster said that AI is going to make the financial lives of clients “easier but noted that it has to be safe.

“We are blocking unauthorized agents who try to log in on behalf of clients,” said Wurster. “It is not a safe way for our clients to access Schwab." Wurster also said he gets a daily report that tracks how many times the company had to block AI agents. He noted that “it’s not many because I think people aren’t using it in that way in their financial life."

Schwab intends to let clients connect their own large language models to its Model Context Protocol, or MCP, servers. "We are allowing LLMs to connect, but we are controlling the experience," Wurster said. The company noted that a pilot letting traders connect through Anthropic’s Claude has begun.

Schwab’s own AI assistant, Charley, is due for all clients in the coming months. Charley “uses a constellation of underlying LLM models," said Wurster. He expects it to become "an important front door to Schwab" over time.

Asked by a Deutsche Bank analyst whether Schwab might build AI trading tools for clients, Wurster said customers can already build strategies through LLMs and APIs, but Schwab is not likely to supply the algorithms. "I don’t see us getting into the business of trying to create trading strategies on behalf of clients," he said. "I think it’s a fool’s errand and could lead to a lot of trouble."

In addition, Wurster noted that AI is already paying off. "I think AI is already driving part of our revenue gains," he told a JPMorgan analyst, citing trading volume: "there is some correlation there." Separately, Wurster also dismissed fears that AI will drain deposits, saying that "the more people use AI, the more cash they hold." However, Schwab did not provide information on these.

Charles Schwab reported adjusted earnings of $1.69 per share, beating analysts’ consensus estimate of $1.66. Meanwhile, the company’s revenue climbed 17% year-over-year to a record $7.17 billion, nearly matching the consensus estimate of $7.19 billion.

JP Morgan Highlights Risks of AI Agents

Earlier this week, JP Morgan Chase & Co.‘s (NYSE: JPM) CEO Jamie Dimon also addressed the risks of AI agents. He said that JPMorgan uses them internally “to do good things.” However, Dimon noted that the bank will not let “just any outside agent” inside the company, calling that "too risky for clients and for JPMorgan."

Dimon warned that people “don’t want rogue agents, and there could be thousands of them." He added that people who use agents “should understand there’s a liability transfer.” Dimon also said regulators should prepare for the possibility that bots and agents cause harm.

Separately, Dimon cautioned that AI agents allowed to make payments for customers would need their bank codes, putting the agents inside the bank with no assurance that they will act in customers’ interests.

AI agents going rogue is a growing concern among the industry and regulators. Financial regulators in the U.S. and Europe are intensifying their examination of AI, focusing on whether cyberattacks, autonomous systems, or inadequate controls could destabilize banks and markets.

Shares of Charles Schwab closed 2.73% lower at $94.16 on Thursday, while after hours the stock was up 0.33%. Year-to-date, the stock has declined about 5.76%.

Image via Shutterstock