Past CFO Commentary

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

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  Here's a link to our initial report:

For more than 20 years, the SMART has included a monthly look at client trading, providing a perspective on how clients are interacting with Schwab and the markets, as well as an update on a revenue driver for the company.  During this time, Schwab has evolved to a firm offering a broad range of investment and cash management solutions, to both self-directed investors and those seeking help and/or advice, a firm where the number of client revenue trades plays a less important role in assessing our financial and operating performance.  'Headline' online equity trade pricing has declined to commodity-like levels, and clients are increasingly comfortable with relationships where trading is included, such as Schwab Wealth Advisory™, and platforms where we generate revenues based on balances rather than transactions, such as Mutual Fund and ETF OneSource®.  For example, revenue trades made up 57% of overall trading activity during the third quarter of 2014, down from 60% last year and 67% in 2011.  With our evolution, we have built more diversified sources of revenue—asset management and administration fees and net interest revenues are currently approaching 3 times the size of our trading revenues.

For these reasons, as well as our belief that trading activity remains over-emphasized as a proxy for investor sentiment, we've determined it's time to remove that metric from the monthly report.  That change makes room in the SMART for other measures of client activity that have grown in relevance over the years.  Of course, supporting our clients' trading needs clearly remains an important element of our business model, and their trading behavior continues to provide insight into their mindset, so we recognized the importance of continuing to share the data in some form.  As you can see in the new trade reporting layout, moving that activity to the IR section of enables us to deliver additional detail and increased frequency for our intra-quarter reporting.  We've also established a rolling 13-week history so the current quarter-to-date picture is always readily available.  The quarterly summaries of trading activity will continue to appear in the earnings release tables.

The space we've freed up in the SMART has been used to reorganize the report for clarity and to add data relating to advised asset balances, three new measures of client activity—inbound calls, website logins, and cash as a percentage of client assets – and the overall level of interest-bearing assets at the firm.  The redesigned format is included in our third quarter earnings release tables:

Taken together, our changes to trade reporting and SMART content should provide the investment community and other members of our external audiences with better insight regarding intra-quarter client activity at Schwab and the drivers of our three main revenue streams.   We plan to maintain the current 10th business day target for SMART releases, and the trade report should be available every Tuesday (or second business day) for the prior week.

Charles Darwin famously alluded to the process of animals dropping scales, webbed toes, feathers, or a myriad of other features in the course of their evolution from one species to another.  Well, it's time for Schwab to shed the skin that has defined us for decades.  Good-bye to monthly trade reporting, and hello to a better representation of the Schwab of today.  We remain committed to updating the company's reporting over time to better reflect the firm's evolution.


Schwab Wealth Advisory™ ("SWA") is a non‐discretionary investment advisory program sponsored by Charles Schwab & Co., Inc. ("Schwab"). Schwab Wealth Advisory, Inc. ("SWAI") is a Registered Investment Adviser and provides portfolio management for the SWA program. Schwab and SWAI are affiliates and are subsidiaries of The Charles Schwab Corporation.