Letter from the CEO

“Our ‘Through Clients’ Eyes’ strategy is working – arguably better than at any other time in our more than 45-year history.”

Walt Bettinger 
President and Chief Executive Officer

Walt Bettinger, President and Chief Executive Officer, The Charles Schwab Corporation

A Year of Bold Moves

Greetings! It is an honor to craft my twelfth Annual Report letter to you, my fellow stockholders. As always, my goal is for this letter to be clear and straightforward—written with minimal jargon, corporate speak, and trendy buzzwords. The litmus test for my letter is whether it reads as if I were corresponding with a business partner who has been out of touch for the past year. And, as always, please let me know if I’ve achieved this goal.

The best way I can define 2019 is to say:

‘Through a series of significant investments, we executed on our strategy—Through Clients’ Eyes!

And as a result, our clients and stockholders were rewarded in 2019, and should be rewarded for years to come.’

Although the year was mixed from an environmental standpoint—with strong equity markets (the S&P 500® returned 29% excluding dividends) yet rapidly falling interest rates—your company took bold steps designed to serve more clients, enhance our scale, and deliver quality returns to long-term stockholders. And the emphasis here is on the long term. Even as we continued to focus on the long term in 2019, our stockholders were rewarded as our stock price grew from $41.53 to $47.56, and stockholder returns were further boosted by our regular dividend payments.

Our strategic moves are typically made with planning horizons stretching for years—and oftentimes even decades. And the planning that goes into these moves typically occurs over similar time horizons. This long-term orientation has served us well and continues to be a defining hallmark of Schwab.

Value of Schwab Stock and S&P 500® Index


2019: A Winning Strategy - "Through Clients' Eyes"

At Schwab, we operate with a fairly simple approach to business: the Golden Rule. If we serve clients and prospects the way we would like to be served, they will choose to do more business with us. The Golden Rule is at the heart of our corporate-wide strategy, which is the commitment to seeing “Through Clients’ Eyes” and acting based on our “Virtuous Cycle.”

“Through Clients’ Eyes” means that we constantly strive to make decisions that best serve our clients. And the execution of our strategy through the “Virtuous Cycle” rewards our clients, employees, AND stockholders. Of course, the impact of our “Through Clients’ Eyes” strategy is not measured in a single quarter or year. Rather, it is a philosophy that serves as our North Star.


Schwab's Virtuous Cycle

Note: All growth metrics are 2019 vs. 2018.
*Estimated annualized cost savings for clients from strategic pricing moves announced in October 2019.


Does this straightforward way of doing business work? Absolutely. Serving others as we would want to be served is timeless. And as a result, clients continued to reward us in 2019 by investing their hard-earned money with us at record levels:

  • New-to-firm households in our retail business reached 477,000;

  • New brokerage and banking accounts climbed to 1,801,000;

  • Core net new assets totaled $211.7 billion; and

  • Our total client assets at year-end were $4.04 trillion.


Total Client Assets (in Billions At Year-End)

2019 Total Client Assets - Schwab

When looking back at 2019, I believe the year will be defined by four key decisions we made:

  1. The elimination of web and mobile trading commissions for U.S.- and Canadian-listed stocks and ETFs, as well as the elimination of base charge on options

  2. Our ongoing investment in the digital transformation of our firm

  3. The announced acquisition of USAA’s brokerage and managed portfolio accounts

  4. The announced acquisition of TD Ameritrade

As always, we reached these decisions by seeing “Through Clients’ Eyes.”

Eliminating Commissions for Web and Mobile Investing

Eliminating commissions for web and mobile investing is consistent with the original vision Chuck Schwab had when he started our company over four decades ago. Chuck wanted to open the world of investing to more Americans. He wanted to disrupt the notion of sales-oriented brokers pushing stocks with outrageous stories in an effort to generate large commissions. He wanted to bring Wall Street to Main Street.

And while we have consistently lowered commissions over the past four decades, eliminating them altogether for web and mobile trading was the logical ultimate conclusion. Removing the final barrier to investing in the growth engine of America—our stock market—is the very definition of “Through Clients’ Eyes.”


Decline in Equity Commissions


2019 - Decline in Equity Commissions - Schwab
Effective October 2019, commissions for all U.S.- and Canadian-listed stocks, ETFs, and options online and mobile trades were reduced from $4.95 to $0.00; options trades are still subject to the standard $0.65 per-contract fee.

In October 2019, the month we eliminated commissions, clients and prospects opened 142,000 new brokerage and investment accounts with us—an increase of 31% over September 2019’s totals. And in the month of December 2019 alone, our clients entrusted us with $30 billion of net new assets! Of course, paying a $4.95 commission wasn’t a barrier for all investors, but we knew that it mattered to someone just starting to save and invest. So we removed that barrier.


Total Brokerage and Banking Accounts

(In Thousands)

2019 - Growth in brokerage accounts - Schwab

Not surprisingly, as we have experienced many times over the years when we’ve taken bold and innovative actions, our numerous competitors have not stood still. Were we disappointed? No, of course not. The ultimate winners in our decision to eliminate commissions were investors—a perfect example of our “Through Clients’ Eyes” strategy in action.

What remains fascinating to me is that one innovation we introduced several years ago remains unique. None of our competitors has chosen to match our Satisfaction Guarantee for our clients. Our approach is simple: If we do not delight our clients, or if they are dissatisfied with any aspect of an eligible program or service, for any reason, we will refund 100% of the fees or charges they paid us. As I have said many times, at Schwab we have the courage to stand behind what we do for clients. Shouldn’t everyone?

"We made our digital experience top priority, and it paid off. The Schwab Mobile app was ranked #1 by J.D. Power for Wealth Management Mobile App Customer Satisfaction."

The Digital Transformation of Schwab

Now there are some buzzwords! The “digital transformation” of Schwab. What does that mean? And isn’t every company either undergoing a digital transformation or starting out based on digital experiences? Let’s cut through the noise and hyperbole together.

Our digital transformation simply means serving clients better! That’s it. No spin. No complexities.

When clients are able to interact with us as they prefer—live, on the phone, on their computer, or on their mobile devices— that’s better service!

When clients can complete in seconds tasks that used to take minutes, that’s better service!

When we can understand our clients’ needs better than ever—and even anticipate their needs—that’s better service!

And when we can reduce what it costs us to serve clients— and pass some of those savings back to our clients in the form of better value—that’s better service!

In 2019, we significantly enhanced the experience of our Schwab Mobile app with a range of new capabilities and functionalities that enable clients to better personalize their digital experience. Over 1.2 million clients are now using the mobile app (an increase of about 25% since December 2018), and in any given month, 30% to 40% of our clients choose to interact with us only via a mobile device.

As we anticipated, third parties are recognizing our efforts. In 2019, our investing website was ranked a Leader, ranking highest for usability by Forrester Research, and our mobile app was ranked #1 by J.D. Power for Wealth Management Mobile App Customer Satisfaction, in addition to maintaining a 4.8 out of 5.0 rating in the App Store®!

For the independent Registered Investment Advisors (RIAs) we serve, we introduced an online account-opening capability that they can offer their clients either through Schwab Advisor Center® or through one of the popular third-party platforms used by many advisors. While this capability was new in 2019, already more than 20% of advisors have leveraged it, which eliminates paper and inefficiency from the client onboarding process.

We also launched a redesigned online status capability that provides advisors detailed information about the status of client service tasks. Over half of all advisory firms we serve are already active users of this enhanced online status experience, which not only provides real-time visibility, but also allows RIAs to take immediate action to address any issues or missing items right from the status screen.

The hundreds of millions of dollars we are investing in our digital transformation have real benefits for our clients and our operating efficiency. And there is much more to come. In fact, I would suggest that if this were a baseball game, we would only be in the second or third inning in terms of all that we can accomplish to better serve our clients.

Why are we investing so heavily in our digital transformation? Because “Through Clients’ Eyes” means we will value our clients, we will be respectful of their time, and we will strive to make every interaction they have with us as efficient and high quality as possible.


“Enhanced digital capabilities provide the visibility and the tools needed to make strategic, efficient decisions.”

Acquisition of Certain Assets of USAA’s Investment Management Company

In July, we announced that we had entered into an agreement to acquire certain assets of USAA’s Investment Management Company, including brokerage and managed portfolio accounts. Many observers have focused on the $90 billion in client assets and over one million investment accounts that we expect to gain as a result of the transaction, but we believe the importance of the acquisition extends far beyond those benefits.

Rather, the real story is the long-term referral agreement (commencing when the acquisition closes) between the two firms, with complementary cultures and strong commitments to serve others. USAA is renowned for its mission focused on service to its clients, known as members. USAA members are the military men and women—and their families—who protect our nation, our way of life, and our values with selfless service to others.

Moving forward, the close alignment of USAA’s mission with Schwab’s “Through Clients’ Eyes” strategy and our vision to be the most trusted leader in investment services makes Schwab an ideal place for USAA to refer its members for their wealth management and brokerage needs. And we believe our complementary missions will encourage many USAA members who are not currently investing through USAA to become Schwab clients.

Acquisition of TD Ameritrade

In late November, we announced that we had entered into an agreement for The Charles Schwab Corporation to acquire TD Ameritrade Holding Corporation in an all-stock transaction. We believe the combination of our two firms— both innovators in providing services for a wide range of investors and RIAs—will create a stronger firm than either company could become on its own.

Integrating elements of TD Ameritrade’s trading platforms with the depth and breadth of services offered by Schwab will create a dramatically better investing experience. And combining the best of TD Ameritrade’s platform for serving RIAs with our robust platform and capabilities will help those advisors continue their impressive growth path.

Although the transaction isn’t expected to close until the second half of this year, and integration efforts are expected to take three years after closing to complete, we are excited about what this combination will mean for investors and independent advisors in terms of both service and value.


In last year’s letter, I committed to you that we would remain focused on our strategy of operating your company “Through Clients’ Eyes.” In fact, for each of the last 11 years I have made that same commitment to you in my Annual Report letter.

And once again, I commit to you that our strategy will remain consistent. Our “Through Clients’ Eyes” strategy is working— arguably better than at any other time in our more than 45-year history. Existing clients are responding and entrusting us with their hard-earned dollars. And we are welcoming all kinds of new clients—younger investors, older investors, new investors, experienced investors, and highly affluent investors alike—who are trusting Schwab with their money at record levels.

Our tactics will continue to evolve to meet client needs. In some years, we may lower prices; in some, we may make large investments in our capabilities; and in other years, we may make acquisitions that will enable us to better serve investors and independent advisors. And in some years, as in 2019, we may do all three.

But through all of the years—through the ups and downs of interest rates and the stock and bond markets—our clients know they can count on Schwab. You can count on us to make decisions and operate your firm “Through Clients’ Eyes.” That consistency is the hallmark of your company as we surpass the $4 trillion mark in client assets served.

It is an honor to serve you, our valued clients, stockholders, and employees. Thank you for your ongoing trust and confidence!


Walt signature





Walt Bettinger
March 4, 2020