Rick Wurster hopes acquiring private shares marketplace for Schwab on the cheap will help RIAs sell pre-IPO shares, but the firm burns cash, and needs dire automation, distribution upgrades
The Schwab CEO is spending just $660 million for Forge Global, but says 46 million client accounts and $11.6 trillion in client assets will turn it into a strong distribution platform.
6 min read
Brooke's Note: The one undeniably cool wirehouse brokerage product out there that might even make an RIA envious is the tranche of pre-IPO shares that a Wall Street firm passes along to its brokers. It's a rare bone thrown. If Schwab can put those shares into the hands of RIAs – minus the strings attached – then it deserves kudos. Of course, luck would have it that IPOs are a bit on the wane. Companies stay private longer or forever. And with private share exchanges like Forge Global, the incentive for IPO liquidity presumably dips. If private shares trade like public shares on Forge etc., why go public? Regardless, this deal by Rick Wurster, who timed its announcement to perfection for IMPACT, is a plus. It's also like Motif, local and cheap, making it questionable whether to call it a ‘build’ or a ‘buy.’ Never mind. It checks a major box.
Rick Wurster just pulled a rabbit out of the hat for RIAs who will now be able to offer everyday investors access to private, pre-IPO company stocks -- through Schwab.
The Charles Schwab Corp. CEO agreed to acquire Forge Global Holdings, Inc. (FRGE) in a transaction valued at a dirt cheap $660 million. But the 10-year-old San Francisco firm needs a heap of investment in automation and distribution after nine years of mostly burning cash.
Forge's valuation is virtually the same ($627 million) as it held in April 2021 when Wells Fargo bought a small stake. It's also only about $300 million more than $357 million of capital private equity investors poured into it since its founding in 2016.
In its entire existence, Forge investors have bought and sold just $17 billion in private company shares, but Schwab undoubtedly may have the answer to that anemic flow.
“Access to Schwab’s 46 million client accounts and $11.6 trillion in client assets creates a strong distribution platform for private securities,” said Wurster in the release.
"…We expect meaningful growth in this space and believe our platform will become a go-to venue where retail investors discover new investment opportunities.”
Market clout
Schwab is betting that RIAs – currently guests at its annual IMPACT 2025 event in Denver – will be thrilled to offer investors access to private shares of SpaceX, Stripe, Open AI and other emerging companies.
Rival Fidelity declined to comment, but its website touts access to “private markets” for investors with $5 million or more, albeit through indirect exposure in funds.
Rick Wurster explains his first M&A deal in RIA terms and uses data points to bolster his case that Charles Schwab's 46 million client accounts can dominate private share markets
Schwab has a less obvious advantage in private market – besides its 16,000 RIA firms and 46 million investors, says Seth Stuart, ex-TD Ameritrade alts executive who is now a consultant on financial products.
“When Chuck comes to SpaceX and says: we want these shares, it's different than when Forge is doing it.”
Learning curve
Forge is on the verge of breaking its dependence on humans as go-betweens for the purchase and sale of private shares, its CEO Kelly Rodrigues said in July on firm's most recent analyst call.
“The most significant learning curve is around figuring out how to negotiate with a counterparty in an automated way,” he said on the call.
“That's non-existent in the market at this point in time. So, we're really excited about that feature specifically and others that will come.”
But, for now, Forge's humans are handholding the algorithms, Rodrigues acknowledges.
Story Timeline
“We've got what we believe to be the most sophisticated and high- service-level broker teams that have been assembled, and we've been at this for over a decade,” he said.
“This is a belief that both informs the way the process is designed and automated, but it's also got standby resources that will help every step of the way.
Schwab forges ahead into private investments with Forge Global acquisition, but risks may outweigh benefits for clients and the RIA industry
"We're seeing that the participants who are engaging with [Forge counterparty automation software] now are learning how to use it.”
Asset management
Rodrigues also highlighted another Forge advantage, the firm's emerging asset management arm.
“We've built an asset management and AUM around these fund structures over the last few years that we've been reporting it. We're close to $1.4 billion now.”
The Forge SEC ADV states that investors pay “a quarterly management fee of 0.50% per calendar quarter (2.0% annually).”
In a Yahoo! Finance interview, Wurster, a former Wellington asset manager, exulted Schwab's roll out of “40-Act funds” that own the 60 biggest private companies with Forge.
Rubbing Shoulders in San FranciscoForge and Schwab are San Francisco neighbors. Forge just leased 21,800 square feet at Four Embarcadero Center. Schwab's alternative investments effort – headed by Kunal Patel – is based in the 211 Main Street building in the South Financial District, near the Embarcadero. Schwab is apparently on the verge of signing a lease in San Francisco's financial district for more space at 425 Market Street. |
Low reserves
Meanwhile, Forge evolved from a private company to its IPO by way of a 2022 SPAC merger with Motive Capital Corp.
Getting to break-even has proved more difficult.
Forge had a net loss of $67.8 million, after losing $91.5 million in 2023. As of June 30, it had $81.8 million of cash and cash equivalents on hand.
Those low cash reserves are reflected in a recent low Forge share price. It traded as low as $6.60 as recently as April 2025, after spiking to over $500 in May of 2022. It closed today at $44, up 68% for the day.
Drilled by an analyst on the July call about when Forge might finally hit breakeven, James Nevin, chief financial officer, did his best.
“So we've not given guidance on when we'll achieve that next year,” he said. “I think the point to make is that we are increasingly confident that, that is going to be a reality in '26.”
With Schwab as its white knight, Forge likely just made good on Nevin's promise.
Rely on RIABiz? Tell Google.
Naming us a preferred source puts our reporting first in your Top Stories and AI Overviews. Takes one click, and only you see the difference.