Company Statement

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Schwab Statement on SEC’s Reg BI and other regulatory interpretations

June 5, 2019

Schwab's position on SEC’s Regulation Best Interest and other regulatory interpretations

  • Charles Schwab has long supported regulatory proposals aimed at protecting the interests of investors by holding our industry to a high standard: acting in a client's best interest when giving investment advice, and managing and disclosing any conflicts of interest.
     
  • More specifically, we welcome the U.S. Securities and Exchange Commission’s efforts to clarify and enhance regulations aimed at protecting investors’ best interests, while preserving investor choice and access to the markets.
    • In particular, we support SEC Chairman Jay Clayton’s announcement today of a “Main Street” investor education campaign aimed at helping investors understand the differences between working with broker-dealers and investment advisors.
       
  • We are currently reviewing the details of SEC’s Regulation Best Interest and other regulatory interpretations issued today, and will have further perspective and commentary after analysis of the commission’s actions. We provided a number of recommendations on the proposed rules to enhance investor protection and provide more clarity to investors in several comment letters (including our Aug. 6, 2018 comment letter) and are hopeful the Commission incorporated many of those recommendations into its final rule.
     
  • We look forward to helping our clients – retail investors and independent Registered Investment Advisors alike – to understand what the new regulations and interpretations of existing regulations mean for them.
     
  • Independent of any regulatory mandate, we have taken a number of actions that reflect our ongoing client-focused approach, providing industry-leading value, breadth of choice and investment advice that's aligned with clients' best interests:
    • We have lowered costs including trading commissions and mutual fund expenses and minimums. More details are available here.
       
    • We offer a Satisfaction Guarantee. Unique in our industry, our Guarantee states that if for any reason clients are not completely satisfied, we'll refund their fees or commissions and work with them to make things right.
       
    • We streamlined our compensation structure. We implemented refinements to our incentive plans so that any pay differentials support our commitment to do what is best for our clients. Our Financial Consultants' compensation varies based on the time and complexity of the services they provide rather than the revenue earned by the firm based on what a client decides to purchase. And we fully disclose how we pay our representatives.
       
    • We continue to act as a fiduciary when recommending or managing client assets in all of our fee-based advisory programs, whether they are for retirement accounts or not.
       
  • Regardless of any regulatory changes, our commitment remains the same: we will continue to strive to offer clients the same breadth of choice in our product and service offerings that we have today, and we will continue to act with our clients' best interests in mind. We've worked hard to align our interests with theirs.
     
  • We are proud of our role in helping all investors achieve their goals, and look forward to continuing to comply with regulations aimed at ensuring that they are well served and well protected.
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