CFO commentary

Schwab strives to keep our stockholders and analysts informed of the firm’s bigger financial picture. Hear from our CFO.

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Periodically, Peter Crawford, our Chief Financial Officer, will use this forum to provide insight and commentary regarding Schwab's financial picture. For any questions, please contact Investor Relations via email or call: Richard G. Fowler, senior vice president: 415-667-1841

The commentary in this section speaks only as of the date specified below. The company makes no commitment to update any of this information.

Latest Commentary

CFO Commentary

October 1, 2019

Today, we announced our decision to reduce online trade commissions for U.S. and Canadian-listed equities and ETFs to $0, and to reduce the base charge on options to $0, as well. As noted in the press release, this action is consistent with the principles on which Chuck Schwab founded this company nearly 45 years ago and with the “Through Clients’ Eyes” strategy we have followed ever since then – which have made the Charles Schwab Corporation so successful.

In this CFO Commentary, I want to address two questions that I know are top of mind for many in the investment community – why we did this, and what it means for our financial results.

Why did we take this step, and why now?

Most importantly, it’s the right thing to do for clients, removing one of the last remaining barriers to making investing accessible to everyone and continuing our tradition of challenging the status quo on behalf of individual investors. Additionally, it’s the right move from a competitive standpoint. There has been a clear pause in the so-called commission wars among the “traditional” e-brokers since the price reductions we made in 2017. At the same time, we are seeing new firms trying to enter our market – using zero or low equity commissions as a lever. We’re not feeling competitive pressure from these firms…yet. But we don’t want to fall into the trap that a myriad of other firms in a variety of industries have fallen into and wait too long to respond to new entrants. It has seemed inevitable that commissions would head towards zero, so why wait? We have a business model that doesn’t depend on commission revenue, a long-term orientation and a history of being willing to disrupt ourselves based on client needs and competitive dynamics. That’s exactly what we are doing here – we’re making these pricing changes because we believe they enhance both our value proposition and our competitive positioning, encouraging the consolidation of client assets and trades at Schwab.

What does this mean in terms of our financial results?

Looking at recent activity, we estimate that this pricing reduction is equivalent to approximately $90-100 million in quarterly revenue, which roughly translates to 3-4% of total net revenue. Note, however, that commissions per revenue trade (CPRT) have been falling for multiple years, so the potential revenue impact in coming quarters could very well be smaller, holding all else equal.

It would have been easy for us to kick the can down the road, to hold off on responding to the proliferation of free commission offers for another quarter, another year. Especially considering the somewhat mixed macro environment. But that approach is not what has made us successful for over four decades. Chuck Schwab built this company with a culture based on listening to our clients, maintaining a healthy respect for competitors, being willing to disrupt ourselves when appropriate, and prioritizing long-term growth and success even if near-term results are impacted. These are the qualities that have made us a premier asset gatherer in our industry, and that continue to help us deliver long-term value for our clients, our employees, and our stockholders.

Forward-looking statements

This commentary contains forward-looking statements relating to the impact of the announced pricing moves on the company's value proposition, competitive positioning, and consolidation of client assets and trading at Schwab; the estimated impact on quarterly revenue and total net revenue from the pricing reduction; and long-term value. Achievement of these expectations and objectives is subject to risks and uncertainties that could cause actual results to differ materially from the expressed expectations.

Important factors that may cause such differences include, but are not limited to, the effect of pricing changes on client acquisition, retention, and asset levels, including cash balances; the company’s ability to accurately assess the elasticity of client demand for trading services; general market conditions, including the level of interest rates, equity valuations and trading activity; competitive pressure on rates and fees; client use of the company's investment advisory services and other products and services; the company's ability to monetize client assets; regulatory guidance; client sensitivity to interest rates; the effect of adverse developments in litigation or regulatory matters and the extent of any charges associated with legal matters; any adverse impact of financial reform legislation and related regulations; and other factors set forth in the company's filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.

Past Commentaries

August 14, 2018

As we announced in our second quarter earnings release, we crossed the $250 billion asset threshold1 for heightened regulatory requirements, ending the period at $262 billion in consolidated assets. While we don't believe the consequences will be disruptive to our business model or our strategy, I wanted to share a brief overview of what crossing this threshold means to Schwab and how we have been preparing over the last few years. Read more >

February 14, 2018

In our January SMART report released today, we noted a $7.2 billion outflow from a mutual fund clearing services ("clearing") client. Since we expect several additional large clearing outflows in early 2018, I wanted to share some context on the business and discuss the potential effect on our reported client asset flows (noticeable) and revenues (immaterial).  Read more >

December 22, 2017

Today, President Trump signed significant tax reform legislation into law and I wanted to spend a moment focusing on the potential impacts to Schwab's effective tax rate. As you may know, we have historically paid close to the full statutory federal corporate income tax rate, so the benefits are likely to be significant – though the new law does include the disallowance of some Schwab-relevant deductions.  Read more >

February 28, 2017

Today we announced another reduction in our online equity, ETF, and option trade commission rates, following moves we announced just a few weeks ago on February 2nd.  With this second action coming right on the heels of the first, I thought it might be useful to share some context regarding how they both fit within our financial planning for 2017.  Read more >

January 19, 2016

Those of you who follow The Charles Schwab Corporation closely may receive our quarterly financial results through a wire service/email, a market data aggregator, or simply by checking our corporate website.  This morning, we began making our results available via another widely-used platform: Twitter.  You can find our page on  with the handle @CharlesSchwab.  Today's activity includes a Tweet noting the availability of fourth quarter 2015 results with a link to our press release, and follow-ups sharing the headlines from this morning's announcement.   Read more >

December 14, 2015

Today we released our November Monthly Activity Report.  While we produced another month of solid client metrics, we have no illusions about another press release stealing the show later this week.  As you know, the Federal Reserve is widely anticipated to begin raising interest rates on December 16th.  We have seen economic and employment reports meet expectations, FOMC minutes evolve, and member speeches show increasing conviction.  Read more >

September 15, 2015

We issued our SMART report for the month of August today, and between the client metrics shown there and the trading data that we've already posted it's clear we've been busy.  With the elevated market volatility late in the month, our clients made extensive use of our branches, phone-based service centers and online capabilities to help keep their investing on track.  Many of them engaged with our financial consultants and subject matter experts to ask questions about how their assets enrolled in our advisory solutions are positioned, as well as assess their holdings and determine what, if any, action should be taken.  Read more >

August 14, 2015

By now, you may have noticed that we recently made a few changes to our disclosures, and I'd like to make sure everyone is aware of these developments as well as provide context for how they help tell our story.  As a large savings and loan holding company, our required reporting has expanded significantly in recent years.  In addition, as Schwab evolves, we revisit our reporting and strive to keep it closely aligned with the everyday workings of the business.  In the second quarter of 2015, we added a new Other Regulatory Disclosures tab to our corporate website, made changes to the Asset Management and Administration Fees (AMAF) table in our earnings release package, and included some new information in our 10-Q filing.  Read more >

January 16, 2015

As we announced in our earnings release today, our Q4 '14 financial results included two nonrecurring items related to the company's non-agency residential mortgage-backed securities (RMBS) portfolio: net litigation proceeds of approximately $28 million and net losses of $8 million from selling securities totaling approximately $500 million. Taken together, these items increased pre-tax income by approximately $20 million, or $.01 per share. With the financial crisis well behind us, it's been a while since we've needed to discuss these securities, so I wanted to walk through some history and share a perspective on these recent developments.  Read more >

October 15, 2014

Concurrent with our Earnings Release today, we are inaugurating a new approach to reporting on our clients' trading activity intra-quarter.  We have retired the inclusion of trade reporting in our Monthly Market Activity Report ("SMART") and are now providing a weekly look at trading activity, including revenue, asset-based, and other trades, which is posted on the Investor Relations landing page on .  Read more >

July 16, 2014

As you look through today's earnings release, you might notice that the size of our balance sheet (shown in the Financial and Operating Highlights table on page 5) hasn't changed much since year-end 2013, continuing to hover around $144 billion. That's unusual for us–for example, the company's balance sheet grew by approximately $8 billion during the second half of 2013. Given the factors influencing this situation, I wanted to share some perspective on current client behavior and ramifications for our capital management going forward.  Read more >

March 31, 2014

As I mentioned in my last post, here are a few more thoughts on the evolution of client behavior during the market recovery, which is now a full five years along: With the S&P 500 up over 170% from its lowest point in the first quarter of 2009 and setting new records, it's not really surprising to see investors put cash back to work in the markets. There are, however, some interesting aspects to the way our clients have reallocated their holdings across products and asset classes during the recovery thus far.  Read more >

March 14, 2014

The S&P 500 Index bottomed at 676.53 on March 9, 2009, so we are now a full five years into the market recovery.  As the recovery has strengthened in recent months, we have been asked more often about individual investor engagement, with the questioner usually equating engagement with trading activity.  Read more >

January 16, 2014

This is my inaugural CFO Commentary. I expect to use this site regularly to provide perspectives on Schwab's financial picture, including color on our performance and details on topical issues. Over time, I can see sharing more significant financial information that might be better discussed in a forum like this, versus press releases or other forms of communication.  Read more >

 

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