1. No category

Winter
Business
Update
February 12, 2015
Introduction
Rich
Fowler
Senior Vice President
Investor Relations
Agenda
Walt Bettinger, President & Chief Executive Officer
Terri Kallsen, EVP, Investor Services
Mark Riepe, SVP, Schwab Center for Financial Research
Break
Bernie Clark, EVP, Advisor Services
Neesha Hathi, SVP, Advisor Services
Break
Joe Martinetto, EVP & Chief Financial Officer
Close
3
Charles Schwab Corporation
Forward-Looking Statements
This presentation contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Forward-looking statements include statements that refer to expectations,
projections or other characterizations of future events or circumstances and are identified by words such as “believe,” “expect,”
“will,” “may,” “should,” “could,” “continue,” “build,” “growth,” “increase,” “deliver,” “scenario,” “can,” “stronger,” “remain,”
“potential,” “outlook,” “estimate,” “sustain,” “become,” “opportunity,” “accelerate,” “expand,” “target,” “sensitivities,” “upside,”
“intend,” “aim,” “drive,” and other similar expressions. These forward-looking statements relate to growth in revenues, earnings
and profits; growth in client assets; client demand for advisory services; monetization of assets; the launch of Schwab Intelligent
Portfolios and other innovative products and services; the sweep of existing money market fund and new advisor services cash
balances to Schwab Bank and the revenue impact; spending to grow branch footprint, financial consultants, RIA channel,
marketing and project investments and upgrade platforms; interest rate environment; gap between revenue and expense growth;
expenses; liquidity, balance sheet growth and capital formation; operating leverage; impact of fluctuations in the S&P 500 Index,
the Fed Funds rate and trading activity on the company’s results of operations; project and marketing investments and
fundamental operating expenses; profit margin; net interest margin and revenues; bulk transfers; percent of incremental revenue
to pre-tax profits; Tier 1 leverage ratio; debt issuance; stockholder dividend; and RIA channel market share and Advisor Services
asset growth. These forward-looking statements, which reflect management’s beliefs, objectives and expectations as of today,
are necessarily estimates based on the best judgment of the company’s senior management. Achievement of the expressed
beliefs, expectations and objectives is subject to risks and uncertainties that could cause actual results to differ materially from
those beliefs, expectations or objectives.
Important factors that may cause such differences are discussed 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. Other important factors include
general market conditions, including the level of interest rates, equity valuations and trading activity; the company’s ability to
attract and retain clients and grow client assets/relationships; competitive pressures on rates and fees; the level of client assets,
including cash balances; the company’s ability to monetize client assets; capital needs and management; the impact of changes
in market conditions on money fund fee waivers, revenues, expenses and pre-tax margin; the company’s ability to develop and
launch new products, services and capabilities in a timely and successful manner, including Schwab Intelligent Portfolios; client
use of the company’s investment advisory services and other products and services; regulatory guidance; client sensitivity to
interest rates; rate of capital formation; the company’s ability to manage expenses; the volume of prepayments in the company’s
mortgage-backed securities portfolio; timing and amount of severance and other costs related to reducing the company’s San
Francisco footprint; capital ratios; acquisition integration costs; net interest margin; trading activity; the effect of adverse
developments in litigation or regulatory matters and the extent of any charges associated with legal matters; and any adverse
impact of financial reform legislation and related regulations.
The information in this presentation speaks only as of February 12, 2015 (or such earlier date as may be specified herein). The
company makes no commitment to update any of this information.
4
Charles Schwab Corporation
Today’s Dial-in Number
(800) 871-6752
Conference ID: 46874393
5
Charles Schwab Corporation
Walt
Bettinger
President &
Chief Executive Officer
Three words to describe our current outlook:
7

Success – our “through clients’ eyes” strategy remains the
foundation of our growth through all cycles.

(Some) Frustration – the persistent ultra-low interest rate
environment hinders our financial progress.

Optimism – we continue to build, sustain and leverage our scale
and efficiency advantages to plan for and pursue multiple growth
opportunities.
Charles Schwab Corporation
Success: Clients trust Schwab with additional
assets and referrals…
Core Net New Assets
Third consecutive year
of core net new assets
in excess of $100
billion
(billions)
$140.8
$112.4
$124.8
2014 represented a 6%
annualized growth rate
2012
2013
IS + AS (ex-Clearing)
2014
Clearing*
Approximately 1/3 of new retail accounts come from client referrals
8
Note: Core net new assets is defined as net new assets before significant one-time flows, such as
acquisitions/divestitures or extraordinary (greater than $10 billion) mutual fund clearing transfers.
* Includes all clearing flows under $10 billion.
Charles Schwab Corporation
Success: …and continue to seek investment
advice and guidance from us.
50% of all Schwab assets are receiving some form of ongoing
advisory service, and these balances are growing faster than
client assets overall.
Assets Under an Advisory Relationship
$1.1 B
12%
Client Asset Growth
$2.46 T
$1.2 B
Total Client
Assets
$183
$155
10%
$1.2 B
$946
Q4 '13
Assets Under
an Advisory
Relationship
$1,046
Q4 '14
Q4 '13
12%
Q4 '14
Retail & other advisory solutions
Advisor Services(Institutional only)
99
Charles Schwab Corporation
Success: We’re growing client assets at a
faster pace than competitors.
Total Client Assets
Schwab is
close to
becoming the
largest publicly
traded
investment
services firm in
the U.S. as
measured by
client assets
(billions)
$3,000
$2,500
$2,498
$2,464
$2,000
$2,025
$1,500
$1,000
$672
$500
$290
$0
2009
2010
2011
Charles Schwab
Bank of America Merrill Lynch
Morgan Stanley GWM
10
Source: Publicly available company reports for each period.
2012
2013
2014
TD Ameritrade
E*Trade
Charles Schwab Corporation
Success: We achieved record revenues and
net income in 2014.
Net Income
Revenues
$1.3 B
$6.1 B
$1.1 B
$5.4 B
2013
2014
Revenue up 11%
year-over-year
11
11
2013
2014
Net income up 23%
year-over-year
Charles Schwab Corporation
Frustration: The persistence of extraordinarily
low interest rates hinders our financial
progress.
$1,427 M
MMF revenues
and net interest
revenue would
have been $3.2
billion higher on
an annualized
basis if we had
the same rate
environment as
Q2 ‘08
$1,184
$634 M
$584
$50
Q4 '14 Actual
MMF Revenues
12
12
Note: Based on Q4 ‘14 average balances.
$243
Q4 '14 Balances @ Q2 '08
Yields
Net Interest Revenue
Charles Schwab Corporation
Optimism: Our size and efficiency is a
pronounced competitive advantage…
Over the past five years,
total client assets have
grown by almost 75%…
…yet we’ve limited expense
growth to 35%, reaching
$3.9 billion in 2014...
…thereby reducing the
relative cost of serving
client assets to just 17
basis points.
Total Client Assets $2.46 T
Bank
Asset Manager
Brokerage
Bank
Deposits
$103 B
CSIM AUM
$268 B
Client
Assets
$2.09 T
140%
26%
79%
60
Expense to Average Client Assets,
2014 (basis points)
41
29
Morgan
Stanley
GWM
13
56
BofA
Merrill
Lynch
E*Trade
17 *
TD
Charles
Ameritrade Schwab
Source: Publicly available company reports for 2014.
* Includes the $68 million nonrecurring charge in Q3 related to future changes in the company’s geographic footprint, which
increased the ratio by 1 basis point.
Charles Schwab Corporation
Optimism: …making it challenging for
competitors to replicate our client offerings.
Leveraging
Scale
Expense
Management
Size
• Client assets
• Client relationships
• Distribution reach
• Broker/Dealer, Bank
and Asset Manager
Schwab is unique in
the combination of:
1. Who we can reach
14
Large,
loyal
client
base
Low
prices
Scale
2. How we can reach them
3. What we can offer them
• Expense
discipline/prioritization
• Pricing strategies
Multichannel
access
Breadth of
products
and
solutions
Charles Schwab Corporation
Optimism: Distribution and shareholder
servicing power.
Schwab ETF OneSource Assets
(billions)
158%
$29.5
$34.0
$37.7
$14.6
Feb. '13
Launch
198 ETFs
Largest commission-free
platform in industry*
64 Morningstar
Categories
$0 Online Trade
Commissions*
Q2 '14
Q3 '14
Q4 '14
The power of our brand and program enables us to receive fees for
shareholder servicing from fund managers without charging investors
trade commissions or subjecting them to incremental costs
15
* See Appendix for ETF OneSource disclosures.
Charles Schwab Corporation
Optimism: Huge monetization opportunity.
Investor Services Assets
(billions)
$183
Suite of Advisory Solutions
Advised
$1,169
Non-Advised
Investor Services Advised
Assets (billions)
$200
$150
Account Solutions
for specialized strategies
Portfolio Solutions
for comprehensive
guidance

Schwab Managed
Portfolios

Schwab Private
Client

Windhaven
Portfolios

Schwab Advisor
Network

Thomas Partners


Managed Account
Select
Schwab Intelligent
Portfolios*
$100
2010 2011 2012 2013 2014
16
Note: Advised Assets include retail & other advisory solutions.
* Launching in Q1 ’15.
Charles Schwab Corporation
Optimism: Efficiency – Schwab Intelligent
Portfolios.

Sophisticated, yet elegantly simple

ETFs selected according to rigorous criteria

FDIC insured cash allocation

Automatic rebalancing1 and tax loss harvesting2

Paperless enrollment and service

Live phone and chat support 24/7/365

No commissions, advisory or account service fees charged
We’re building a product with broad investor appeal that
can be delivered at an unbeatable price
17
Note: Schwab Intelligent Portfolios will be offered through Schwab Wealth Investment Advisory, Inc. See Appendix for Schwab Intelligent Portfolios disclosure.
1) Automated rebalancing for clients with invested assets of at least $5,000 in their account.
2) Tax loss harvesting available for clients with invested assets of at least $50,000 in their account.
Charles Schwab Corporation
Optimism: Opportunity – sweeping additional
money market fund balances to Schwab Bank
for higher returns.
Q4 ’14 Actual
Total
MMF
$166 B
@
12 bps
IF: Half of Sweep MMF
Balances Move to Bank
IF: Fee Waivers
Eliminated
(Earning Q2 ‘08 Bank Sweep Spread)
$75 B
@
367 bps
Total
MMF
$166 B
@
58 bps
$970 M
$200 M
Average Balance
$91 B
@
58 bps
$3.3 B
Annualized Revenues
Today, money fund balances are generating a fraction of what
they would in a higher rate environment. Sweeping a portion
to Schwab Bank offers even more upside.
18
Note: In Q4 ’14, total money market fund average balance was $166 B, with
approximately $150 B in sweep funds and $16 B in purchased funds.
Charles Schwab Corporation
Optimism: Competitive – client pricing
flexibility.
Online Advisory
Schwab’s Trading Revenue as a % of Total Revenues1
9%
10%
15%
Schwab
Intelligent
Portfolios
No commissions,
advisory or account
service fees
charged
2014 Actual
Revenues
reach $10B
Revenues
reach $12B
Competitors’ Trading Revenue as a % of Total Revenues2
43%
TD Ameritrade
19 Sources: 1) Schwab estimates. 2) Publicly available company reports for 2014.
26%
E*Trade
24%
UBS WMA
14%
Morgan Stanley
GWM
Charles Schwab Corporation
We see many other reasons for optimism, as
we leverage opportunities to extend Schwab’s
longer-term growth trajectory.
20

Retail distribution – accelerate client acquisition by expanding
our branch footprint and hiring more financial consultants.

RIA growth – largest market share position in fastest growing
segment of investment services.

Marketing – ensure the brand reaches targeted investors in a
higher rate, more competitive environment.

Project investments - continue investing in the future client
experience, including online advisory solutions and trading
capabilities.
Charles Schwab Corporation
The overriding theme for our outlook over the
next five years is strong optimism.
21

Our “through clients’ eyes” strategy remains the foundation of
our growth through all cycles – and it’s working.

The ultra-low interest rate environment will eventually pass, and
we will continue making aggressive moves to grow the
franchise.

We will continue to build, sustain and leverage our scale and
efficiency to pursue multiple growth opportunities ahead.
Charles Schwab Corporation
Jay Allen…
Joe Martinetto…
Terri Kallsen
22
Charles Schwab Corporation
Q&A
Terri
Kallsen
Executive Vice President
Investor Services
The Schwab Promise…
Five Key Elements of the Schwab Promise
Partnering
25
Partnering and getting to know you to
work on your terms
Advice
Understandable, relevant and
actionable advice
Choice
Broad range of investment options
from leading asset managers
Transparency
Open and honest in all aspects of our
relationship, including fees
Value
Products and services that drive down
cost for investors
Charles Schwab Corporation
Our scale is a sustainable competitive
advantage.
Investor Services at a glance
$1,352 B
total client assets
To enhance scale and
6.9 M
total brokerage accounts
growth, we will invest to
985 K
total bank accounts1
build an optimal blend of
325+
26
local branch locations
people and technology
Note: Investor Services includes the Retail Investor business, which serves individual investors directly, and businesses where we serve
individual investors indirectly through retirement plans and corporate brokerage services, and the mutual fund clearing business.
1) Represents total Schwab bank accounts – majority of which are in Investor Services.
Charles Schwab Corporation
In 2014, we observed strong business results,
especially in wealth management…
Record asset levels and growth
in Retail Investor overall1…
Client Assets
…and growth in wealth
management.
Assets in an Advisory Relationship
+8%
YoY
+11%
YoY
NNA
Affluent2 NNA
+46%
YoY
27
+40%
YoY
1) Retail Investor business only. Does not include businesses where we serve individual investors indirectly through retirement plans and
corporate brokerage services, or the mutual fund clearing business.
2) Includes Affluent clients, HNW clients, and clients enrolled in fee-based advice solutions.
Charles Schwab Corporation
…and we continue to deepen trust with our
clients,…
IS reached a record CPS1 of 49…
50
49
45
…with Schwab Private
Client (SPC) approaching
even higher CPS levels
71
CPS for
SPC
40
35
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14
28
1) Regular CPS (not value weighted by assets).
Charles Schwab Corporation
…all leading to Schwab’s external credibility.
2015 INVESTOR’S BUSINESS DAILY RATINGS – Overall Schwab Rank: #2
Customer
Service
Options Trading
Platform
Trade
Reliability
Research
Tools
#1 #1 #1 #2
Equity Trading
Tools
Mobile Platforms/
Trading
Education
Resources
Portfolio Analysis/
Reports
Investment
Research
#2 #2 #2 #2 #2
Also rated 5 stars by Kiplinger for advisory services – highlighting
strength in Wealth Management
29
Charles Schwab Corporation
Our growth will be driven by strategic
investments in people and technology.
Digital Channels (~7% Growth1)
powered by technology
Optimal blend of people and
technology
Multi-channel approach
Improved Scale
Traditional Channels (~4% Growth1)
powered by people
30
Source: Cerulli. 1) CAGR 2013-2017.
Deep Trusted Relationships
Charles Schwab Corporation
We are improving the client experience by
investing in our people.
31
1.
Financial Consultant
Support
2.
Training and Coaching
3.
Expert Guidance
4.
Branch Infrastructure
Charles Schwab Corporation
We are providing support to scale FC
capacity,…
Assistants for top
Financial Consultants
FC
Assistant
Clients
Financial Services
Professionals (FSPs)
32
Next-generation conversation
model to deepen relationships
with clients
Charles Schwab Corporation
…deepening client relationships through
training and coaching,...
Training
1200+ Client-facing Professionals
33
Charles Schwab Corporation
…and supplementing FCs with expert
guidance to serve clients better.
Expert Advice
Schwab Center for
Financial Research
(SCFR)
Charles Schwab
Investment
Advisory (CSIA)
US Economy /
Domestic Equity
Fixed
Income
Viewpoints and Publications
Investing
Magazines
34
Global
Economy
Books
Online
Expert
Commentary
Charles Schwab Corporation
We are upgrading branch infrastructure to
further enhance the client experience.
Enhancing branch
communication
Video
conferencing
Co-browsing
Enhancing financial
planning tools
35
Sales Proposal
tools
Charles Schwab Corporation
We are also investing in technology to make it
easy and intuitive for clients to work with us.
1. Active Trader Online
Experience
2. Mobile Capabilities
3. Internal Processes
36
Charles Schwab Corporation
We are improving the online experience for
Active Traders and investing in mobile.
We are launching initiatives
for Active Traders
We are enhancing mobile
capabilities
1. Launched TradeSource – features
an intuitive interface and all-in-one
page design
2. Improving options capabilities –
multi-leg options, contingent
orders, etc.
3. Modernizing trading infrastructure –
building scale for differentiated
offerings
37
Building TradeSource
capabilities on mobile
Creating comprehensive selfservice capabilities
Charles Schwab Corporation
We are upgrading internal processes to
enhance the digital experience for our clients.
Select Examples:
Easier Electronic Money Transfers
Before
4K
38
After
Reduction in number
of client calls
Paperless Statements
Before
15%
After
Reduction in paper
statements
Charles Schwab Corporation
Schwab Intelligent Portfolios – innovation to
create sustainable competitive advantage.
$400B Market
Broad Appeal
Challenger
Schwab Intelligent PortfoliosTM
Launching in Q1 2015
39
Source: Schwab internal estimates.
Charles Schwab Corporation
Schwab Intelligent Portfolios is positioned to
win in the investment management industry.
• Up to 20 asset classes
• FDIC insured cash allocation
• Automatic rebalancing1
• Tax loss harvesting2
Pay No:
• Advisory fees
• Account service fees
• Commissions
40
Note: Schwab Intelligent Portfolios will be offered through Schwab Wealth Investment Advisory, Inc. See Appendix for Schwab Intelligent Portfolios disclosure.
Photo for illustrative purposes only.
1) Automated rebalancing for clients with invested assets of at least $5,000 in their account.
Charles Schwab Corporation
2) Tax loss harvesting available for clients with invested assets of at least $50,000 in their account.
An optimal blend of people and technology
will help us deliver the next phase of growth.
41

Strong base of loyal and satisfied clients.

Growing and winning against the competition.

Sustainable competitive advantage blending people and
technology.

Confident in our ability to deliver the next phase of growth as a
modern wealth management firm.
Charles Schwab Corporation
Q&A
Mark
Riepe
Senior Vice President, Schwab
Center for Financial Research
President, Charles Schwab
Investment Advisory
We have built a research organization to
provide investors with disciplined, practical
help in achieving their goals.
Today we’ll cover:
 Introduction
to Schwab Research
 How we support Schwab business units
 How our structure creates a scalable advice
model
44
Charles Schwab Corporation
Schwab research is produced primarily through
two entities.
Schwab Center for Financial
Research (SCFR)
Charles Schwab Investment
Advisory (CSIA)
Broker-dealer employees
Affiliated RIA
Provides equity research and
financial planning/investing
strategies
Primarily performs investment
manager and strategic asset
allocation research
The Schwab Center for Financial Research is a
division of Charles Schwab & Co., Inc.
45
Charles Schwab Investment Advisory, Inc. is an affiliate
of Charles Schwab & Co., Inc.
Charles Schwab Corporation
SCFR covers equities, financial planning,
trading perspectives, and market commentary.

Equity research: Schwab Equity Ratings and Schwab Equity Ratings
International

Financial planning: tax guidance, when to use different account types

Trading enthusiast: derivatives, short horizon equity

Smart beta

Market commentary: US, international, equity, fixed income
46
Note: Example shown for illustrative purposes only. Subject to change.
Charles Schwab Corporation
CSIA focuses on strategic asset allocation and
investment manager research.

Currently have 4 SAA frameworks suitable for different needs

Mutual funds, ETFs, and Separately-Managed Accounts
47
Note: Examples shown for illustrative purposes only. Subject to change.
Charles Schwab Corporation
Our team of experienced thought leaders cover
the subjects most relevant to our clients.
48
Kathy A Jones, CFA
Chief Fixed Income
Strategist
Jeffrey Kleintop
Chief Global Investment
Strategist
Anthony Davidow, CIMA
Alternative Beta & Asset
Allocation
Randy Frederick
Trading & Derivatives
James Peterson, PhD
Charles Schwab Investment
Advisory, Inc.
Steven Greiner, PhD
Schwab Equity Ratings
Liz Ann Sonders
Chief Investment Strategist
Rande Spiegelman, CPA ,
CFP
Financial Planning
Charles Schwab Corporation
Schwab research is integral to our growing
advice capabilities.

Driven by client needs - relevance to individual investors and their
advisors

Quality

Ability to scale across investor segments and products
1990’s
Mutual
Funds
• Mutual Fund
Select List
49
Early 2000’s
Individual
Equities
• Schwab
Equity
Ratings
Early-Mid
2000’s
Early 2010’s
Today
Advice
Solutions
Fixed
Income,
ETFs,
Planning
Proactive
Ideas,
Contemporary
Asset
Allocation
• Fixed income
coverage
• ETF Select List
• Planning
modules
• Investing Ideas
• Schwab
Models 3.0
• SPC
• SMP
• Managed
Account Select
Charles Schwab Corporation
Our scale derives from three leverage points.
 Research efficiency
 Distribution
 Centralized Schwab point-of-view
CSIM
Efficiency

Self
Directed
Clients
Independent
RIAs via
Advisor Services
Schwab
Research
Expense
discipline
Prospects
Financial
Consultants in
Branches
50
Portfolio
Consultants in
Schwab Private
Client
Charles Schwab Corporation
Schwab research is applied across the
company by design,…
CSIM
Distribution

Maximize our
investment
Self
Directed
Clients
Independent
RIAs via
Advisor Services
Schwab
Research
Prospects
Financial
Consultants in
Branches
51
Portfolio
Consultants in
Schwab Private
Client
Charles Schwab Corporation
…is used by both institutional and retail
audiences,…
 License our
research to
Charles Schwab
Investment
Management
(CSIM)
 Capabilities are
also available to
RIAs through
Advisor Services
52
CSIM
Self
Directed
Clients
Independent
RIAs via
Advisor Services
Schwab
Research
Prospects
Financial
Consultants in
Branches
Portfolio
Consultants in
Schwab Private
Client
Charles Schwab Corporation
…and helps maximize the effectiveness of our
client-facing staff.
Centralized
Schwab pointof-view
53

Quality

Consistency

FCs can focus more
on relationshipbuilding
CSIM
Self
Directed
Clients
Independent
RIAs via
Advisor Services
Schwab
Research
Prospects
Financial
Consultants in
Branches
Portfolio
Consultants in
Schwab Private
Client
Charles Schwab Corporation
Our Financial Consultants and Portfolio
Consultants leverage our research in three
ways.
Asset
Allocation
Advice
Policies &
Guidelines
Security/
Product
Research
54
Charles Schwab Corporation
Centralized advice policies & guidelines help
identify appropriate solutions quickly.
Help ensure
quality, continuity,
and consistency
across the firm
55
Advice
Policies &
Guidelines
Charles Schwab Corporation
Centralized security/product research is tied to
advice policies, facilitating the selection
process.
Establish limits on
what’s
recommendable
based on our
centralized pointof-view
Security/
Product
Research
Focus attention on smaller
subset
56
Charles Schwab Corporation
Quantitative techniques power most of our
security/product research.

Quantitative techniques are scalable, flexible, stable over time,
and effective.

Broad coverage allows point-of-view on not only what we’ve
recommended but on securities that a client may hold elsewhere
or transfer in.
Equity Research
 Schwab Equity Ratings
 Schwab Equity Ratings
International
 Schwab stock lists
 Schwab Industry
Ratings
57
Mutual Fund/ETF/SMA
Research
 Schwab mutual fund
ratings
 Schwab mutual fund
and ETF Select Lists
 Managed Account
Select
Charles Schwab Corporation
Centrally-constructed asset allocation
frameworks can be adapted for the needs of
specific products or client groups.
• Strategic asset
allocation
• Investing Ideas
 Methodological
consistency
 Proactive
recommendations
based on current
opportunities
58
Asset
Allocation
Charles Schwab Corporation
“Investing Ideas” provide proactive
suggestions for varied market conditions.
59
Note: As of February 1, 2015.
Charles Schwab Corporation
5
Client-facing representatives have easy access
to current “Investing Ideas” and their supporting
materials.
View of Rep Desktop
Replay of call
introducing the Idea
A link to the
Schwab.com article
about the Idea
A downloadable
version of the white
paper for the Idea
60
Charles Schwab Corporation
6
Client-facing representatives have easy access
to current “Investing Ideas” and their supporting
materials.
View of Rep Desktop
Mutual funds
and ETFs that
can be used to
implement the
Idea
Instructions on
how to send
materials to
clients
61
Charles Schwab Corporation
6
As client preferences evolve, we have made
content available in a variety of forms.
Content available
in several formats:

Written articles

Video

Slideshows

Infographics

Podcasts
(coming soon)
62
Charles Schwab Corporation
“Quick hit” articles are posted more often to
address topics driven by current market events.
Commentary
stream driven
by current
events
63
Charles Schwab Corporation
Our content is resonating more with clients
and prospects.
“Our Perspective” Page Views
Page views are
up 33% yearover-year for FY
2014 and 59%
for Q4
Number of times
content has been
shared increased
58% year-overyear in 2014
1,200,000
Re-designed
the web page
1,000,000
800,000
600,000
2014
2013
400,000
200,000
0
Jan Feb Mar Apr May Jun
64
Jul
Aug Sep Oct Nov Dec
Charles Schwab Corporation
We build stronger loyalty by enabling clients
and prospects to hear directly from our
experts.

The most precious resource for our experts is their time.

We’re leveraging video with branch-hosted events to reach
more clients.
Old Way
Local
Market
Events
Live, inperson
speakers
• Limited reach –
only NYC and a
handful of other
cities
65
Today
Snapshot
Videos
• Increases
reach – more
frequency and
flexibility
Big Impact:

913 branch
events and
95K video
views on
Schwab.com
in 2014
Charles Schwab Corporation
We use our centralized research to provide
scalable, consistent and high-quality advice
to our clients.

Schwab Research has the breadth and depth required to support
our wealth management advice.

Our structure promotes advice consistency, quality and cost
effectiveness.

Our material resonates with audiences and is an increasingly
important tool for client acquisition and retention.
66
Charles Schwab Corporation
Q&A
Break
Bernie
Clark
Executive Vice President
Advisor Services
RIA assets have experienced double-digit
growth over the last decade.
$4.0 1
10%
CAGR
$2.4
RIA
Industry
Assets
$ trillions
S&P 500
Schwab
ASI
Assets
$2.0
$1.6
5%
CAGR2
1,468
1,212
903
$583
$348
2,059
1,046
12%
CAGR
$477
$ billions
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
1Preliminary
70
Schwab estimate. 2Excludes dividend yield.
Note: Schwab Advisor Services Institutional (ASI) assets exclude Retirement Business Services (RBS) assets. Excludes “retail assets” resulting from
Schwab Advisor Network (SAN) and Advisor Source from September 2010 forward. CAGR is the compound annual growth rate from 2004-2014.
Source: Charles Schwab; marketwatch.com.
Charles Schwab Corporation
Advisor Services continues to gather
significant net new assets.
End-of-Period Assets
$ billions
$1+
Trillion in
Assets
$66B in
annual
NNA
1,200
1,000
800
600
400
200
0
14% CAGR
506
2008
2009
692
2010
2011
1,112
839
2012
2013
2014
60
60
66
2012
2013
2014
Net New Assets (NNA)
$ billions
100
65
50
45
52
48
2009
2010
2011
0
2008
71
620
722
1,008
Note: Includes RBS assets; 2008-2010 RBS assets include an adjustment to exclude RPS omnibus assets and CBRS NNA. Excludes
“retail assets” resulting from Schwab Advisor Network (SAN) and Advisor Source from September, 2010 forward.
Charles Schwab Corporation
Advisor Services grew NNA and revenue in
2014, while increasing operating leverage.
Asset Growth
72
Revenue Growth
Operating Leverage
Net New Assets (NNA)
AS Total Revenue
Total Direct Expense per
Account
+10%
+8%
-3%
from $60B in 2013
to $66B in 2014
from $1.26B in 2013
to $1.36B in 2014
from $98 in 2013
to $94 in 2014
Charles Schwab Corporation
We have grown assets 1.5x as fast as our closest
competitor and increased our share of wallet.
ASI Share of Wallet
RIA Custody Assets ($B)
+$469B
$2.2T
2008
946
2013
45.3%
+$306B
477
532
$1.1T
Client assets
at Schwab
+$190B
261
226
Schwab Fidelity
73
TDA
54.7%
+$78B
138
71
43.8%
60
Pershing
+$34B
0
34
LPL
Client assets
custodied away
56.2%
2008
Note: ASI share of wallet estimated using RIA regulatory filings and Schwab client data.
Source: Schwab, Cerulli RIA Marketplace (for Fidelity, TDA and Pershing RIA asset estimates), LPL, Discovery database.
2013
Charles Schwab Corporation
The RIA channel continues to gain share and
organic growth remains strong.
RIA channel is expected to keep gaining
wealth management market share
AS clients on track
to double assets since 2009
Projected
share
change:
83%
76%
All Other
-7%
27%
36%
doubling
in 8-10 years
doubling
within 5 years
29%
17%
2013
24%
RIA
+7%
(including fee assets of
dually registered advisors)
doubling
in 6-7 years
2018E
Source: Charles Schwab Advisor Services 2014 Benchmarking Survey for AS clients’ growth expectations. Percentage of firms expecting to double AUM from
2009
levels over 5 years (15% CAGR), 7 years (10% CAGR) and 10 years (7% CAGR) for all firms $250M or more in AUM.
74
Charles Schwab Corporation
Cerulli Advisor Metrics, Cerulli Lodestar and Schwab analysis for RIA channel growth.
Our strategy remains focused on three
key areas that will help us continue to
succeed in the market.
1
Deliver the leading custody
and client experience
Differentiating Advisor
Services
as the
2
3
75
Attract and win new
business
Champion the industry &
help our clients grow
Leading RIA Custodian
and
Champion of
Independence
Charles Schwab Corporation
Our strategy remains focused on three
key areas that will help us continue to
succeed in the market.
1
Deliver the leading custody
and client experience
Differentiating Advisor
Services
as the
2
3
76
Attract and win new
business
Champion the industry &
help our clients grow
Leading RIA Custodian
and
Champion of
Independence
Charles Schwab Corporation
We continue to win new business from a
diverse mix of channels.
Source of ATI Teams
Other*
Regional BD
168
170
22%
10%
8%
162
133
21%
19%
9%
10%
36%
IBD
Wirehouse
2011
29%
+50%
2014 vs. 2013
34%
36%
33%
4%
$166M average
regional deal size:
46%
2012
37%
2013
48%
2014
*Other includes Banks, Institutional BDs, Trusts and Insurance.
77 Note: Percentages do not add up to 100% due to rounding.
Charles Schwab Corporation
Our strategy remains focused on three key
areas that will help us continue to succeed in
the market.
1
Deliver the leading custody
and client experience
Differentiating Advisor
Services
as the
2
3
78
Attract and win new
business
Champion the industry &
help our clients grow
Leading RIA Custodian
and
Champion of
Independence
Charles Schwab Corporation
Business Consulting helps advisors address key
business issues and prepare for future growth.
2014 Consulting Summary
Consulting Offers
Business
Consulting
Technology
Consulting
Operations
Consulting
20
Insight to Action Program
workshops attended by
455
195
59
advisors
representing
304
RIA
firms
formal consulting engagement
agreements initiated including
workshop-related
engagements and
136
direct
engagements
Program Structure
Webcast and
workshop
pre-work
Interactive
workshop
Consulting
engagement
(6 hours)
(8 to 12 weeks)
Through a series of five or
more one-on-one meetings,
consultants work with
advisors to help them
implement change within their
firms.
(3 hours)
79
Charles Schwab Corporation
Our strategy remains focused on three key
areas that will help us continue to succeed in
the market.
1
Deliver the leading custody
and client experience
Differentiating Advisor
Services
as the
2
3
80
Attract and win new
business
Champion the industry &
help our clients grow
Leading RIA Custodian
and
Champion of
Independence
Charles Schwab Corporation
Neesha
Hathi
Senior Vice President
Advisor Services
Our scale helps us deliver benefits to our
advisors and their clients.
Gathering Insights
 Largest network of RIAs in
the industry
 Advisory Boards foster
dialog between advisors and
Schwab
 Largest benchmarking
survey
 Market research capabilities
uncover proprietary insights
Developing
Technology Solutions
 Innovative technology
allows advisors to benefit
from Schwab’s scale
 Consulting engagements help
advisors grow and leverage
technology
 Custody platform serves as
a one-stop hub for advisors’
operational needs
 Annual IMPACT, EXPLORE
and SOLUTIONS events keep
RIAs current on the evolving
technology landscape
 Value-added wealth
management tools help
advisors run and grow their
businesses
 End-client access tools
allow advisors to deliver a
branded digital experience
to clients
82
Sharing Expertise
 Schwab-provided workflow
libraries help advisors deploy
best operational practices
 Curated peer reviews on
popular technology platforms
Charles Schwab Corporation
Our platform supports over 7,000 advisory
firms and over 2.3 million households.
Additional details follow
Custody and
Trading Platform
Schwab Advisor Center
Custody, account management
and trading
Schwab OpenView
Gateway
Value-Add Wealth
Management Tools
Integration with
leading 3rd party
technologies
Research
Proprietary and 3rd
party investment
research
Schwab Rebalancer
Schwab
PortfolioCenter
Integrated rebalancing
Portfolio management,
reporting & billing
Schwab OpenView
Integrated Office
Turnkey wealth
management platform
for advisors
Schwab Alliance
End-Client Access
83
Web portal for
advisors’ end-client
account access
Schwab Mobile
Connect
White-label mobile app
for advisors’ clients
Charles Schwab Corporation
Custody
Platform
Client experience transformed: innovating
custody to enhance experience and scale.
Objective
Digitize custody workflows, providing a more efficient, transparent, secure,
paperless and faster experience for our advisors and their clients
Schwab’s Strengths
 Integrates Schwab’s
workflows with our advisors,
benefitting advisors, their clients
and Schwab
Sign forms
electronically
Submit forms
electronically
Client
 Leads the industry in bringing
digital workflow solutions to
advisors
Advisor
 Delivers a state-of-the-art
digital experience to advisors’
clients
84
Authorize wires
via computer
or mobile phone
Receive account
disclosures
electronically
Charles Schwab Corporation
Advisor
Tools
Schwab Intelligent Integration: create RIA
efficiencies via deep, contextual integration.
Objective
Integrate Schwab’s real-time data with advisor’s choice of leading wealth
management tools, creating efficiencies and improving client service
Schwab’s Strengths
 Based on a flexible, open
architecture that enables plugand-play solutions
 Collaboration with leading
advisor technology providers
to develop deep integration
 Rapidly increasing adoption
among advisors
85
Charles Schwab Corporation
Advisor
Tools
Portfolio Connect: differentiating Schwab
custody while helping RIAs enhance scalability.
Objective
Help advisors efficiently manage their client portfolios, report on
performance and manage fees
Schwab’s Strengths
 Schwab Performance
Technologies is the marketleading provider of portfolio
management solutions to RIAs
 Used by over 3,500 firms
 Portfolio Connect, our next
generation solution, will enable
advisors to interact with their
clients seamlessly across
mobile, web and paper
86
Charles Schwab Corporation
End-Client
Access
Mobile Connect: enabling RIAs to enhance client
experience by Schwab’s mobile expertise.
Objective
Enable advisors to meet client expectation for on-demand, mobile account
access while offering a differentiated, customizable user experience
Schwab’s Strengths
 Advisor-branded client
experience that does not require
advisors to invest in custom app
development
 Value-priced product available
through Schwab Performance
Technologies
 Leverages Schwab’s mobile
infrastructure and expertise
87
Charles Schwab Corporation
Q&A
Break
Joe
Martinetto
Executive Vice President &
Chief Financial Officer
Our financial model is working: delivering nearterm profitability while building long-term
stockholder value.
Today we’ll discuss:
 2014
results
 2015 financial outlook
 Capital picture
91
91
Charles Schwab Corporation
Rates have once again taken center stage, along
with more volatile equity markets…
92
92

Long-term rates have declined from late-2014 levels amidst
fears of global slowdown and general “risk-off” sentiment.

Short-term rates remain largely in a holding pattern.

After solid gains last year, equity markets have struggled to hold
positive territory thus far in 2015, bouncing between gains of no
more than 1% and losses of up to 3%.
Source: Bloomberg used for rates and market returns as of 2/11/15.
Charles Schwab Corporation
…but we continue to expand our client base.
Total Client Assets
(EOP, trillions)
Schwab’s total
client assets
have more
than doubled
since the start
of the financial
crisis to almost
$2.5 trillion
93
$2.46
14%
CAGR
$1.14
2008
2009
2010
2011
2012
2013
2014
Charles Schwab Corporation
Our “formula” is working, despite the
challenging interest rate environment…
As long as economic drivers are stable or improving:
Client
Growth
NNA + market
appreciation
94
Revenue
Growth
Earnings
and EPS
Growth
Driven by client
asset growth
Stronger than
revenue growth
through expense
discipline
Charles Schwab Corporation
…with financial progress resurfacing in 2013…
Total Client Assets (EOP, trillions)
$1.95
2012
$2.25
2013
$2.46
$4,883
2014
Net Income (millions)
$928
$1,071
Net Revenues (millions)
2012
2013
95
2013
2014
34.9%
$1,321
2014
$6,058
Pre-tax Profit Margin
29.7%
2012
$5,435
2012
31.4%
2013
2014
Charles Schwab Corporation
…and our 2014 results reflecting the “formula”
hitting its stride.
(in millions, except per share
amounts)
Q4 ’14
v. Q4 ’13
Q4 ’14
FY ’14
v. FY ’13*
FY ’14*
Net Revenues:
Asset management &
admin fees
$641
5%
$2,533
9%
Net interest revenue
584
10%
2,272
15%
Trading revenue
239
3%
907
(1%)
Other
90
41%
343
45%
Provision for loan losses
(3)
N/M
4
N/M
0
(100%)
(1)
N/M
1,551
8%
6,058
11%
Expenses
997
6%
3,943
6%
Pre-tax Profit Margin $
554
11%
2,115
24%
Pre-tax Profit Margin %
35.7%
1.0 pts
34.9%
3.5 pts
350
10%
1,321
23%
$0.25
9%
$0.95
22%
Net impairment losses on
securities
Total net revenues
Surpassed our
financial
expectations:
• Double digit
revenue
growth vs.
mid-to-high
single digits
• 580 basis
point gap
between
revenue and
expense
growth, above
300-500
range
Reported:
Net Income
Earnings per Common Share
Return on Common Equity
(annualized)
96
96
12%
12%
• Pre-tax profit
of 34.9%
margin vs.
“about 34%”
*2014 full-year results include four nonrecurring items: net litigation proceeds of approximately $28 million and net losses of $8 million from selling
securities totaling approximately $500 million, both relating to the company’s non-agency residential mortgage-backed securities portfolio; a net
insurance settlement of approximately $45 million; and a charge relating to future changes in the company’s geographic footprint totaling $68 million.
Charles Schwab Corporation
Liquidity remains strong while both balance
sheet growth and capital formation continue.
(in millions)
Q4 ’13
Q1 ’14
Q2 ’14
Q3 ‘14
Total Assets
$143,642
$144,066
$143,401
$147,444
$154,633
Deposits from Banking
Clients
$92,972
$95,591
$95,688
$97,345
$102,815
Payables to Brokerage
Clients
$35,333
$32,308
$31,484
$33,131
$34,305
$1,903
$1,902
$1,901
$1,900
$1,899
Stockholders’ Equity
$10,381
$10,815
$11,170
$11,473
$11,803
Parent Cash & Cash
Equivalents
$1,330
$1,025
$957
$950
$1,043
16.7%
17.1%
17.2%
17.8%
18.0%
6.4%
6.6%
6.8%
6.9%
6.9%
15.1%
15.5%
15.6%
16.2%
16.4%
Long-term Debt
Q4 ‘14*
CSC Capital Ratios
Tier 1 Capital
Tier 1 Leverage
Tier 1 Common/Riskweighted Assets
97
97
* Preliminary.
Charles Schwab Corporation
Our 2015 baseline scenario targets sustained
investment for growth while delivering meaningful
operating leverage, regardless of rate timing.
Assuming these conditions:
 Relatively stable interest rates (no increase from late-2014 levels).
 6.5% market appreciation.
 Trading volume in line with client account growth.
Our baseline expense scenario includes:
 Project and marketing investments relatively flat to prior year.
 Fundamental operating expenses growing by approximately 5-6%.
− Salary and benefits increases to bring overall comp closer to market; bonus
funding based on performance.
− Location strategy costs, contractual increases, and volume- and regulatoryrelated spending.
98
Charles Schwab Corporation
We enter 2015 with continued momentum
despite a still-challenging macro environment.
99
Based on 2014 actuals and these drivers:
We expect these results in 2015:
 S&P appreciates 6.5%
 Fed Funds between 0-0.25%
 DARTs up 5% year-over-year
 Revenue growth in mid-to-upper
single digits
 Gap between revenue and expense
growth of at least 150 basis points
 Pre-tax profit margin of around 36%
Sensitivities:
Estimated annual revenue effects:
 Each 1% pt. change in S&P 500
appreciation
 Each 1 bp change in NIM
 Each 1 bp change in money fund yields
 Each 10K change in DARTs
 +/- approx. $15 million
 +/- approx. $15 million
 +/- approx. $17 million
 +/- approx. $30 million
Charles Schwab Corporation
Given the rate environment, we expect net interest
margin to decline slightly through year-end 2015.
Net Interest Margin
1.70%
1.60%
1.50%
1.40%
Q3 '14

Q4 '14
Q1 '15
Q2 '15
Q3 '15
Q4 '15
If interest rates remain at or above late 2014 levels, NIM should average around 160
basis points for 2015.
− Expect modest incremental pressure from lower reinvestment yields on fixed-rate
assets.
− Balance sheet growth should mitigate some rate pressure.



Vectoring more Advisor Services sweep cash to the Bank (~ $8B/yr.).
Bulk transfers to the Bank: $2.5B from broker/dealer sweep + $1B from MMFs.
At mid-January rate levels NIM could average another few basis points lower for
2015.
− We’ll assess spending based on the overall revenue mix, including trading and client
balance growth.
100
Charles Schwab Corporation
We’re prepared to accelerate investments when
rates rise…
Currently Prioritized
 If interest rates rise sometime during 2015, we’ll look at
investing in these strategic areas:
−
−
−
−
Hiring additional financial consultants
Broker/Dealer platform modernization
Client experience upgrades to Advisor Services, Bank and other platforms
Marketing
Longer-Term
 Move additional cash sweep balances from MMFs to Bank
 Expand our branch footprint to accelerate client acquisition
 Pricing flexibility
101
Charles Schwab Corporation
…while still preserving our “coiled spring” upside.
1st 100 bps move in
Fed Funds rate
$1.6 B
60 bps of incremental NIM +
MMF fee waivers eliminated


2nd 100 bps move in
Fed Funds rate
$0.8 B
$2.4 B*
incremental
revenue
60 bps of incremental NIM
For 2015, we’ll aim to deliver at least 75% of incremental
revenue from any interest rate increases to pre-tax profits.
Longer-term, enhancing our business growth may require a
greater share of incremental rate-driven revenue to be
reinvested in initiatives.
− We remain committed to reaching the highest sustainable profit margin
consistent with extending our growth trajectory.
102 * Annualized impact, based on Q4 ‘14 balances.
Charles Schwab Corporation
We intend to maintain a healthy balance sheet
with a low overall risk profile, substantial liquidity
and a strong capital position.

Continue to aim for a consolidated Tier 1 Leverage ratio of
around 7%.

Important factors include balance sheet growth, liquidity levels
and scheduled note maturities.

Potential 2015 actions under consideration include an
additional MMF/Bank bulk transfer and issuing new term debt.

Our dividend target range remains 20-30% of earnings.
103
Charles Schwab Corporation
We’ll continue to make the most of whatever
hand the environment deals us.

Our financial formula is working: client growth turns into
earnings growth as long as economic drivers are stable or
improving.

Sustained expense discipline supports our ability to deliver both
growth and continued operating leverage.

We are prepared to drive both higher profitability and increased
reinvestment as rates normalize.
104
104
Charles Schwab Corporation
Q&A
Appendix
Disclosures
Slide 15
Important Disclosures related to Schwab ETF OneSource:
Conditions Apply: Trades in ETFs available through Schwab ETF OneSource™ (including Schwab
ETFs™) are available without commissions when placed online in a Schwab account. Service
charges apply for trade orders placed through a broker ($25) or by automated phone ($5). An
exchange processing fee applies to sell transactions. Certain types of Schwab ETF OneSource
transactions are not eligible for the commission waiver, such as short sells and buys to cover (not
including Schwab ETFs). Schwab reserves the right to change the ETFs we make available without
commissions. All ETFs are subject to management fees and expenses. Please see pricing guide for
additional information.
Slides 17 and 40
Important Disclosure related to Schwab Intelligent PortfoliosTM
Schwab Intelligent Portfolios charges no advisory fee. Schwab affiliates do earn revenue from the
underlying assets in Schwab Intelligent Portfolios accounts. This revenue comes from managing
Schwab ETFs and providing services relating to certain third party ETFs that can be selected for the
portfolio, and from the cash feature on the accounts. Revenue may also be received from the
market centers where ETF trade orders are routed for execution.
107
107
Charles Schwab Corporation
Winter
Business
Update
February 12, 2015