All right. Good morning, everyone. Welcome to the 2024 inaugural Schwab Institutional Investor Day. Though, for those that have been around for a while, this may look and feel a little bit like the old winter business update, but, you know, we've done our best to sort of extract it from the earnings cycle and, and hopefully allow us to come here together on slightly less busy terms, where we can focus on the long-term, you know, strategy and, and vision for Schwab. 'Cause it's- it really is a, a very exciting time for the firm, and, and of course, I'm biased, the IR guy. We work with some very energetic and enthusiastic executives and, and employees, but, you know, the firm really feels like it's set up for tremendous growth going forward.
We're really excited to have the opportunity to talk to you about that today. Now, luckily, for some of you, you're probably tired of hearing my voice over the phone, over the webcast, so we've brought a very esteemed set of colleagues, senior leaders and executives, to share that story with you today. Many of the names should feel very familiar, but we've also sprinkled in, hopefully, a few new folks that you've maybe not spent as much time with or at least as much time with recently, to really put a finer point on the story. Now, we will have, you know, Mr. Bettinger, Wurster, and Martinetto come up, outlining some of the strategic vision, some of those initiatives that we've been talking about and we're really focused on; they're gonna help us execute on that vision.
And then Joe to really, you know, outline and put a finer point on, on what has been truly a tremendous effort and successful Ameritrade conversion. Now, we're not quite done yet, but I think it, it's been a fantastic story. We'll then get a chance to deep dive on the businesses, retail and advisor services, and spend a little bit of time talking about trading, international, how we go to market from a client acquisition standpoint. Obviously, a lot of the exciting things we have going on in wealth and advice, and I know many of you down here in the first couple of rows would be a little upset if I didn't carve out a few moments for Mr. Crawford to come up and give some financial perspectives. The overall structure for the day should look and feel like those old winter business updates.
We'll kick off with that overview. We'll have a joint Q&A for Walt, Rick, and Joe. We'll then go through the different businesses and have Q&A and remarks for each of the sections. As we go into the Q&A, the structure should be the same. We'll have questions from both here in the room, as well as on the web console, so we thank you very much for all of you that have joined. For those that have been able to make the trip here to the headquarters in Texas, we will prioritize questions in the room, but Lauren will be collecting the questions from the web console. For those here, if you have a question during the time, please raise your hand.
Wait for Dylan or Grace on our team, which will be positioned in the corners, get their attention, they'll come over, and they'll hand you the microphone. Please wait for the microphone. We are doing just like the BUs. One question, no follow-up, and we kindly ask that we try to avoid the five or six or seven-part single questions. And of course, if anyone runs into any issues, particularly online, with finding the question submission on the console, which is on the left-hand side, please don't hesitate to reach out to your Schwab IR team. And of course, before we really kick off the event, we have to stop at the Rich Fowler Memorial Wall of Words. And I joked with him. I know he's watching today, and he's probably upset that I said that.
We tried to name the creek that you all came by on the water feature after him, and instead, I think he's left with what is still a very fantastic memorial for all the efforts that he provided. But the important thing about the wall here is that the world moves on, it changes, it's dynamic, so we ask that you stay in touch with our disclosures. With that, I will leave you be, and I'd like to introduce our Co-Chairman and CEO, Walt Bettinger.
Good morning, everyone. It's great to see all of you, a lot of familiar faces, and, as Jeff said, welcome. Thanks for coming to our headquarters in Texas. For those of you online, thanks for joining us. I wanted to go ahead and kick off by just spending a couple of minutes talking on what I think are two key areas before I get into the slides. The first one is just the remarkable growth story that Schwab is. When I became CEO about 15 years ago, we had just over $1 trillion in client assets. Today, $9 trillion. Our market cap was about $18 billion, today, $145 billion.
Now, I know we all liked it better when it was $175 billion, but it's tremendous progress from $18 billion- $145 billion. When I look back at the first Investor Day, the first Institutional Investor Day that I did as CEO, there was one question that was consistently asked of me, and that was: "Now that you've crossed over $1 trillion in assets, Walt, how are you possibly going to continue to grow organically? How can you possibly generate 5%, 6%, 7%, or even 8% organic growth in terms of net new assets?" And of course, what I replied at that time is exactly as we feel today. We're going to do it by focusing on a strategy of through client's eyes.
We're gonna operate around a very simple concept of the golden rule, supported by guiding principles that are consistent and that are timeless. And we're going to deliver for our clients in a manner that does not ask them to make trade-offs. If you look back over the last, just over a decade, clients have entrusted us with almost $3 trillion of net new assets. So our growth from $1 trillion-$9 trillion is not just a market phenomenon, it is organic growth driven by the trust that millions and millions of clients have placed in us. Is it a simple strategy? I sort of think it is, although it's not simplistic. It's a strategy that works and a strategy that'll continue. One thing I would share is, I'm fairly confident that I'll get that question today, or we'll get that question today.
I think I'll also get it when we cross $10 trillion as well as when we cross $15 trillion, and I'm confident that our answer will be the exact same as it is today and was 15 years ago. So I also wanna spend just a moment, if I could, talking about the announcement that we had last week of the transition with three of our very senior executives, and these are extraordinary professionals. These are people of incredible character, integrity, of skill, insights, and we're certainly gonna miss Joe and Bernie, and Peter, although Bernie and Joe will simply be moving into different roles, different phases of their career. But I wanted to take a moment and share with all of you why that communication occurred the way it did and the timing of it.
If you roll the clock back almost five years ago, we were deep in the discussions around the Ameritrade acquisition, and I think it's fair to say at that time, Schwab probably did not have a stellar reputation for doing large-scale acquisitions and integration. Maybe it went back to the U.S. Trust transaction, but it wasn't a skill set that we were known for. But of course, the existing leadership team at that time viewed that as something historical as opposed to a limitation on the current team's capabilities. When we talked about it at length, one of the things that we all agreed on is that if we were going to move forward with this transaction, we needed stability because stability and consistency would lead to accountability.
It would mean that as you made decisions as part of this tremendous initiative, that you would also live with the consequences of those decisions. And so what occurred is the executive team made sort of an informal pact, and that informal pact was that whatever personal goals or personal objectives or phases that we might have or envision for the future or the coming years in our life, we were gonna set those aside until we had completed or largely completed, basically all but the decommissioning, this integration with Ameritrade. And so, as a result, that entire executive team that gathered in the fall of 2019 and made the final decision in conjunction with our board to go ahead with that acquisition, remained completely intact. And I think that contributed to the success of the integration, and you'll hear a lot more about it.
I know Joe will talk about it, but it was, without question, the largest, most complex, best executed integration in the history of our industry. We brought over volumes more client information than any other acquisition and integration in the history of the industry. We did so to the tune of what worked out to almost $2 trillion in client assets, 17 million accounts. We did a best of both approach, where we retained premier capabilities from Ameritrade, like iRebal, thinkorswim, as well as key executives that we felt really fit with our philosophy, our strategy, and our culture here at Schwab. And again, you're gonna have Tom Bradley up here later today, who certainly fits within that.
I think what's also important is for all of the press and the effort to find clickbait, we averaged 55 complaints per 1 million accounts that converted over to Schwab. Now, I know I'm a longtime reforming former pension actuary and pension consultant, so I should be able to do the math, but I can't do it, but I can tell you that's a lot of zeros after the decimal point in terms of complaints from that Ameritrade acquisition. But that's why you saw the announcement that you did. That's why you saw it bundled. That's why you saw all three. Joe, Bernie, Peter put aside personal objectives that they had, stayed through the integration, and got us to the place where all we have left now is largely the decommissioning effort.
They maintained their commitment, as did all the members of our senior executive team. I couldn't be more grateful to them. I'm excited about the new opportunities that they have before them, and again, my gratitude really knows no bounds to those three professionals. So that's, that's why you saw it bundled, and, and that's why you saw the announcement when you did. Let me go ahead and spend just a couple minutes on slides, here. This slide just shares a little bit of the history that I know you're familiar with, our focus on operating through client size, serving clients in a no trade-offs manner. I'll touch on that a little bit later, but I truly believe that to grow at scale, you must meet all of the criteria for clients.
You can grow rapidly pursuing one particular area, but to really grow at scale, as we strive to at Schwab, you need a no trade-offs approach. This shows a little bit of detail around Schwab. I'm sure you're fairly familiar with about $9 trillion in assets, 35 million brokerage accounts, a couple million bank accounts, and over 5 million workplace accounts that we serve, in addition to 15,000 independent advisors. So just taking a step back and looking at the history and evolution of the firm, of course, starting with discount brokerage, adding capabilities to serve independent investment advisors, moving into asset management, advisory, banking, and really, the chapter that I would say we're in today is the chapter of personalization.
Personalization, I believe, will drive a significant amount of the growth and success in our industry as we move forward. We tend to call this modern wealth management, and whether it's done by independent advisors or done by us on the retail side of Schwab, I think it'll really lay the groundwork for the future of this industry. I mentioned earlier our commitment to guiding principles that are timeless, and I won't read through these, but these are five principles that we strive to operate, whether it is serving our clients, whether it is the relationships that we have with our fellow Schwabies or employees, whether it's the communities we operate in, the vendors that we work with. These guiding principles are key to us in everything we do.
I'm a big believer in saying that there's a lot of ways to make money in the short run, but in the long run, the only way to really be successful is to be aligned with your clients, and as you serve them in their best interest, it will pay off. There's a good argument to make that over the two or three years leading up to today, we have really lived this. When we proactively went out to our clients and encouraged them to transfer what turned out to be several hundred billion dollars, even a bit more than we'd initially anticipated, out of a bank sweep-oriented type of solution into a money market fund, we were living through client's eyes. We knew the ramifications of that. We knew that we would have a revenue and an earnings hit as a result.
We anticipated that we might even have some balance sheet complications related to that. At the same time, we were going to operate through client's eyes, all, at all points in whatever the ramifications of it would turn out to be. I think when you do that, you get charts that look like this, in which you see the progression over what is effectively the last decade, from just over $2 trillion- $9 trillion. I mentioned earlier in my opening comments, almost $3 trillion of net new assets in the last decade. Truly, I think, an extraordinary number. I referenced earlier that in a no trade-offs world, you can be successful with one of these four, and we do have competitors who are operating in one of these four. We have some outstanding competitors that also strive to operate in all four.
This is our belief: value, service, transparency, and trust. The combination of those four is what leads to $2.8 trillion in net new assets in the last decade. That concept of no trade-offs, we're not, we're not going to ask clients to pay more to get premier service or to accept a lower level of service in return for maybe a slightly lower price. We want to be the best that we can offer clients in all categories, a no trade-offs approach. So just to touch on some of the highlights here of the areas that I mentioned at the outset, discount brokerage, of course, remains a very, very important part of our business. Direct investing is one of the fastest-growing, if not the fastest-growing aspect of the industry.
We offer, we believe, the premier trading experience in the entire industry by continuing to offer the thinkorswim or TOS platform, and of course, we offer that in desktop software, web, mobile. There are multiple ways to access TOS, do so at zero commission for listed stocks, ETFs, and many funds. You can see some of the efficiencies in terms of account opening, as well as the ongoing recognition of our quality of service. Our RIA business continues to be a gem of an offering for the independent investment advisors who are either the fastest or the second fastest-growing aspect of our industry, and you can see the success that we've been able to achieve here, again, on the backs of those that we serve.
The independent investment advisors are our clients here. I do want to emphasize our commitment here to no custody fees. This is a corporate-wide commitment that we will continue to deliver for the independent investment advisors that we serve our platform without charging them custody fees. I know that is somewhat unique, in our industry, and many of those we compete with, either are including custody fees in certain situations or striving to do so. We think it's important that we can serve, these investment advisors, given our scale and given our efficiency, without charging them custody fees. Asset management continues to be a rapidly growing part of our story. We're now about $1 trillion in Schwab managed, managed assets, principally in the, market cap-weighted index area, although we do have a broader offering than just that.
And of course, we offer more customized solutions for certain clients with Thomas Partners, Wasmer Schroeder, and also Windhaven. You can see the competitiveness of our market cap weighted ETFs with their expense rates relative to industry average. And of course, we continue to be a supermarket of some sort, where we offer the solutions for many other asset managers who do a wonderful job managing money for their clients. The growth side of Schwab, which Neesha will spend time on today, continues to grow rapidly. We offer the spectrum from doing it yourself all the way to we'll do it for you. Sometimes we do it for clients out of Schwab managed capabilities like Schwab Investment Advisory. In many cases, we're partnering with the quality investment advisory firms across the country through Schwab Advisor Network.
You can see records being achieved almost on a quarterly basis here with this business over and over. $13 billion into our premier solution in the last year, $38 billion, again, a record number over the course of the last year. I think we're about $600 billion in investment advisory right now at Schwab overall. We continue to offer our bank for investors while enhancing our capabilities. We've done a lot of work in the Pledged Asset Line. I would say we are under-penetrated here relative to some of the other firms that offer this capability, so it's a big growth, a growth path for us. I believe Rick may even spend some more time on that later today.
We've been able to bring our average approval rate now down for about 3/4 of the loans that we offer to under five minutes by leveraging technology and some of our machine learning capabilities, and you can see it reflected in the growth of our pledged asset lines with 200% growth in the last five or six years. Our checking account continues to be a very, very successful attractor of new clients and particularly younger clients. And of course, we've been recognized for six consecutive years for having the top-quality checking program in banking. I did mention personalization, so I want to spend a minute here on this. Again, I believe this is the future of where investing is going.
I think I was referenced several years past saying that Direct Indexing was going to be a rapidly growing area, and it is for us. We now offer four different indices that can be utilized, and you'll see more being added to that. Very fast-growing part of the firm. In addition to new and unique ways of investing, like Stock Slices, where you can buy fractional shares, Schwab Investing Themes, which is attracting a significant amount of interest, the ability to have a given theme you want to invest in, and with a click or two, buy a series of stocks that have been assembled that most correlate with that particular theme. Again, I think it's the path to the future of investing, with an alternative like Investing Themes.
Our segmented services for a private client, 1- 10 on the retail side and ultra high net worth at 10 and above. Our commitments there is to offer a premier service experience. When I look at our average speed to answer among our private wealth services, it's a single ring. We want to answer that phone after a ring, and we've been able to achieve that, that type of result. On the RIA side, we continue to expand our capabilities and personalization for them. We acquired Family Wealth Alliance because many of the RIAs are now progressing up into serving family offices, and having access to the expertise of the folks from Family Wealth Alliance helps them continue to pursue and grow in that space. So kind of roll it all together, where are we?
We are intentionally in the two fastest-growing areas of our industry, direct investing and independent investment advisors. Our positions there are either one and two in those place, in those spaces. I think that opens up tremendous growth opportunity for us in the future. Back to my opening comments about how are you going to continue to grow? We're gonna grow because we're a premier provider in the two fastest-growing areas of the industry, somewhere around 14% market share in the U.S., a lot of opportunity ahead. We'll continue to do so with these five goals in mind that you've probably seen many times over the years. Be a premier asset gatherer, offer innovative solutions, build lifetime relationships, operate in an efficient and scalable manner that can deliver for our stockholders value over time.
So I wanna go ahead and wrap up here and invite Rick up on stage to go into a little bit more detail around the firm and some of our capabilities, but I will be back up after Rick and Joe complete, and we'll do some Q&A. So thanks for your time this morning. Rick?
Thanks, Walt. Well done. Hello, everyone. Welcome to Texas. Jeff said this was a little bit like our winter business update. It's a little bit warmer. But this is a big week for us here in Texas, for the company and for me personally. For the company, we're hosting the Colonial Golf Tournament down the street, which always a big week for us, and for me personally, my daughter's graduating from high school this week, which I'm quite excited about, and we haven't lived here that long, and on Thursday, we're having a party for 85 of my good friends in Texas, probably 50 of which I'll be meeting for the first time. So I'm looking forward to that.
And, this weekend, my wife gave me a really long honey-do list, and I went out, and I power washed the deck in the back. I swept the front. I did all kinds of things, which surprised my wife, by the way. But, as I was doing it, it reminded me a little bit of where we are as a company. We've spent the last four years working really hard, getting ready for this moment. We converted lots of clients over to Schwab. We brought the best of both, everything Ameritrade had to offer and everything Schwab has to offer. We made sure to incorporate the best of Ameritrade's experiences into all that Schwab has to offer.
Now we stand ready to enter a new phase, a new era of growth, bringing together the best of all that we've put together. Certainly, the hard work over the last four years, it's hard to compare to the power washing I did this weekend, but nonetheless, I think it represents us ready to take off on our growth journey after the hard work we've put into this integration. As we do that, we'll start where we always start, which is taking a no-trade-offs approach to how we treat clients and seeing through their eyes. That's guided our company for 50 years and will guide us for the next 50 years.
You know, Walt talked about earlier about how ever since he's been CEO, he's asked whether we're $1 trillion or $2 trillion or $4 trillion, "How can you possibly keep your growth up now that you're a bigger company?" And now that we're $9 trillion, just as Walt said, the answer is just the same as it's always been. We'll follow the growth recipe that's worked quite well for us, and that's to grow 3%-5% with existing clients.... And that's RIAs that are outgrowing their business and earning new clients. That's our retail clients earning money and bringing it to Schwab. It's clients reinvesting their dividends and interest back with us, but it's built upon us seeing through client's eyes and delivering for them.
When we do that, they keep their money with us, and we grow organically 3%-5% from existing clients. It's also attracting 2%-3% from new clients. Again, that's through advisors breaking away and becoming independent. It's from our existing advisors growing their business, and it's from attracting new retail clients to our brand, to the transparency, trust, and value that we stand for. And you can see over the last 10 years, how consistently we've grown in that 5%-7% range.
Even in 2023, in a year where there was a lot of noise in the industry and, and a lot of noise from us from converting, one point nine billion dollars of, or sorry, one point nine trillion dollars of assets from Ameritrade over to Schwab, we still organically grew at 6.4% when you look at the Schwab-originated accounts. And in the first quarter of the year, we grew at around $100 billion. So our growth trajectory remains intact, even as a much bigger company, and we remain confident that will continue. So I'd like to talk a little bit about, as we enter this new phase coming out of the Ameritrade conversion, the four areas on which we're focused. And they remain the same: scale and efficiency, win-win monetization, client segmentation, and the brilliant basics.
Now, I'm gonna talk a little bit about each one of these. Scale and efficiency has been a huge differentiator for us as a company, and you can see on the page, we have a big expense advantage versus many in our industry. That has allowed us to disrupt the industry, to invest back in our clients over time. It allowed us to be the first significant brokerage to announce commission-free equity commissions going to zero. It allows us to serve our clients effectively across channels in a way that's hard to match. The Ameritrade integration has been a big part of driving our scale and efficiency. We brought over $1.9 trillion of Ameritrade assets.
That's nearly 50% more than the time the deal was announced, and we've captured 80% of the $1.8 billion-$2 billion of expense synergies that we said we would capture, with the remaining 20% coming this year on a run-rate basis. Now we get to the fun part. You know, we spent the four years doing the hard work to get to where we are, bringing the best of both. Now, we get to take those capabilities out to our collective clients and continue the growth trajectory we've been on. We see a $500 billion+ opportunity to grow with our Ameritrade clients and capture a greater share of wallet. At Ameritrade, the average client has around 30% of their assets at Ameritrade, and at Schwab, that number is over 50%.
As we take our relationship capabilities, our wealth, lending, and investing strength to this group of clients, we're confident we can close that gap in share of wallet. As we do, that's a $500 billion dollar-plus asset opportunity. As we look to the future, we're coming off a period where we've achieved tremendous scale and efficiency through this major effort with Ameritrade. As we look to the future, there's a number of levers that we'll focus on that will continue to drive our scale and efficiency, and those include things like smart processing and operations, the way we deliver technology, and artificial intelligence will also be an important element of that. There's ways that we will use artificial intelligence all across our company to better serve clients and to do so in a scalable and an efficient way.
I wanna share with you this morning, one of the, one of the ways we are using artificial intelligence today that will drive our scale and efficiency. Today, our phone reps, about 600,000 times a month, go onto our knowledge network and search around for information. When they get a complex question, that takes them around 3 minutes to go and find the right page that has the information that they need to relay to the client, because we have hundreds and hundreds of pages and all kinds of questions that we're being asked by clients. Well, now we've built the Schwab Knowledge Assistant, which is a generative AI tool, which sits on top of those knowledge pages, and by typing in a question, is able to access the right page and do so in under a minute.
So now we're able to get the client the answer they want more quickly, so they're happier. We're able to save a couple minutes, hundreds of thousands of times a month, which drives our efficiency, and we're able to have newer reps to the firm perform like much more experienced reps because they can access information incredibly quickly. So this is just one of the multitude of ways that we think we'll be able to use artificial intelligence to continue to drive our scale and efficiency advantage. I wanna now move to win-win monetization, which to me is about doing more to help our clients reach their financial dreams. One of the areas that we've invested a lot in over the past few years is our wealth business.
As Walt highlighted earlier, we're seeing record levels of growth, both in 2023, but again in the first quarter of 2024. This is truly a win-win. It's a win for clients, as you can see in the middle of the page, where you see extremely high client promoter scores, higher than our, than our typical client. At the same time, these clients are generating a high ROCA and a high MOCA. So it's a win for the client, and it's a win for us. As you'll hear from Nisha later, who leads this area. We're just scratching the surface. We have about 5% of our retail households that are using advice today, but the willingness to pay among our clients is 37%, and it's even higher in the industry.
Every 1% we can close that gap is an additional $125 million-$200 million of revenue. But more importantly, it's another client life where we're having significant impact and where, where we're delighting them. Walt talked about lending, so I won't go over this in a tremendous amount of detail, but this is a second area where we're focused on driving win-win monetization. As Walt shared earlier, and we've got a tutorial on it in the back if you have time later, our PAL process is now the industry leader in terms of the ease, the speed, and it, and it's attracting growth. For those that are using it, you can see we have high client promoter scores, and it helps accelerate our net new assets.
As Walt highlighted earlier, and you can see on the right-hand side of this page, we're just scratching the surface in terms of the number of clients that are using us for the liability side of their balance sheet. We know that the more we can bring both the asset side and the liability side of the balance sheet to clients, the more holistic picture we have of their financial life, the more we can help, the more we can do to help them, the longer they stay with us, and the more satisfied they are. I want to talk about our workplace business. We're currently focused on two things within our workplace business. Number one, we're investing to integrate the experience to a greater degree into Schwab, and to have access to all that Schwab brings, to bring that to our workplace clients.
We know today that greater than 20% of our workplace clients have a relationship at Schwab. And when they do, they have three times the assets of a typical client. So that's the first area of work, integrating those clients more into Schwab, introducing them to all we have to offer. The second part of our effort revolves around growing the top of the funnel in the workplace and winning more business. And we're investing in the strength of our capabilities there so we can compete with anyone in that channel, and we do so from a position of strength.
And you can see on the right-hand side of this page that for the seventh year in a row, we were the most awarded plan sponsor by PLAN SPONSOR magazine, and we won two times the number of awards as the second closest finisher. So we have a strong offering today. It's one we're investing in, and we'll continue to grow the top of the funnel and to integrate the experience into more in all that Schwab has to offer. And already today, it contributes in a very significant way, with 15% of retail NNA coming from our stock plan business, and we're capturing 50% of eligible rollover assets today. So we start from a real position of strength in our workplace business. I want to take a moment to talk about client segmentation.
As Walt highlighted earlier, we believe personalization is happening in our industry, and we are trying to bring everything we can to the different segments we have, both on the advisor side of our business and to the retail side of our business. In retail, I'm going to focus on a few segments here, and some of the things we're doing to personalize the experiences for them, and I'll start with the high-net-worth segment. We are often known as a Main Street firm, and we are. Over the last 50 years, we've done a lot to democratize access to investing in our country, to bring down barriers, and to be a place for everyone to invest. At the same time, we're a place for the ultra-high-net-worth to invest.
In fact, across our advisor and our retail business, 1 in 6 families in our country that have more than $20 million are a client of Charles Schwab. We have worked hard to make sure that we're world-class in meeting the needs of that segment. We've invested in our service experience. We've invested in our product capabilities. We've invested in how we deliver advice to clients that fall into this category. We answer the phone as Walt highlighted in just a ring, on average, 5 seconds, and the client promoter scores of this group are 76. This year, we will launch a retail alternatives platform for the first time, adding to the strength and the capabilities that we have for this important client segment.
Our trading business is a business in which we have a platform that we do not think can be matched. Between the different trading venues that we have and the sophistication of our thinkorswim platform, combined with the trading education and market research that we deliver, combined with the experts that we have at Schwab, you can pick up the phone and call a very knowledgeable trading rep to help answer your questions. And we have financial consultants who are deep in trading that can help you. No one can bring in our industry the combination of that relationship model for traders, the market research and education for traders, along with the best platform in the industry. It's why when you look at firms that report daily average trades, why we have two times more daily trades than the next closest competitor.
And our international business is also an area of growing importance, particularly following the Ameritrade integration. We bring the same set of capabilities and no trade-offs approach to international, just as we do to the U.S. And Lisa will be up here later to give a lot more detail on our international business. I want to close with our fourth focus area, and that's the brilliant basics. As Walt said earlier, we don't always have the flashiest strategy. Sometimes it could be considered simple. Brilliant basics is simple, yet so effective. It's about making it easy on our clients. It's about recognizing that with 35 million client accounts and $9 trillion of assets, if we nail the basics for every client every day, we're gonna have a growing and robust business, and that's what we're focused on.
You can see the client promoter scores here, 69 on average in retail. Bernie's gonna share some scores around satisfaction and client easy scores on their advisor side, which I think are around 84, both really high. We're delighting clients on both sides of our business 'cause we're delivering the basics. Part of delivering the basics is creating straightforward digital experiences that are intuitive and easy for a client to follow. One of the areas we've invested in is the digital experience on our advisor side, through our Schwab Advisor Center. Put a lot of time and energy into something again that seems simple but is powerful, and that's digital account open. It's a quicker experience for the client, it's easier for us to process, and it's led to a really high easy score for that process.
We also wanna meet clients when and where they need help, and we wanna help them stay in the channel of their choice, just as we do in retail with our Schwab Intelligent Assistant, where if a client's online and is facing a challenge or wants to know how to do something, they can stay in that channel, ask a question, and get a really quick response. And we've seen a 90% increase in the utilization of that. So brilliant basics isn't the flashiest thing to talk about, but it's incredibly important to sustaining the growth as a much bigger company well into the future. So I wanna wrap up where we started. We've put a lot of the hard work in over the last four years to ready ourselves for this moment to serve clients.
We have never had a stronger set of capabilities, either for advisors or for retail clients than we have today, coming out of the four years of hard work we've put in to pull off the most complex, broadest, and largest integration in the history of our industry. As we look forward, we're confident we can continue to grow at the organic growth rates we have. We believe there's additional upside in taking our skills and capabilities to the Ameritrade clients and putting our arms around them and helping them in their financial journey, and we believe we have upside from growing our wealth and lending business and doing more to help our clients. Thank you. I'm gonna turn it over to Joe.
Thank you, Rick. So I'll admit, I'm feeling a little bit set up here because I think what probably happened, 'cause anybody could come up and talk about what happened with the acquisition and the success we've had, and you've heard Rick and Walt already talk about it. But I'm guessing in the planning session, they sat around and said, "Who can come on after Rick and Walt?" And everybody else probably said, "Eh, put us in a little later in the session. We'll get Joe to do it." So, Jeff, thank you for the opportunity. You know, I realize as I'm standing here and I've been listening to Rick and Walt, and I understand part of this challenge we have as a firm.
I probably should have realized this years ago, given how long I've been here, but we talk to you a few times a year about growth, and it's our job when we're talking to you in those few times, to try to convey our sense of confidence, our sense of optimism about the growth of the firm. I think, you know, it's always a struggle for us, but internally, we live this. We experience this every day in a way that I think is just a bit of a challenge for those of you who aren't with us all the time, to understand how important that growth mindset is.
As I was listening to Walt earlier, I was remembering back to 2007, when I was talking to Chuck for some of the first time around whether I wanted to move into the CFO slot or not. And literally, the only question that Chuck asked me in that conversation was, "Do you wanna help me grow this firm?" It's that deeply embedded in our mindset around how do we run the place and what are we here for? We are here to serve clients, but to do that, we have to continue to drive the acquisition into the engine every year to be able to completely fulfill the mission of the firm.
The acquisition certainly puts us on a path to be able to serve more clients, but I think as we executed our way through it, we've also set ourselves up for some great growth opportunities going forward. So for the past several years, I've had the pleasure of leading the initiative around the integration, but it has been the work of literally thousands of people, some of them full-time, for the last 4.5 years to get us to this point. And I'd be remiss if I didn't say thank you, and for many of you in the audience who own the stock, I'd say you owe a debt of gratitude to these folks because they have worked incredibly hard and delivered a really phenomenal outcome here. So what did we actually do?
You can see almost $2 trillion of client assets, over 17 million client accounts, representing about 4.3 million daily average trades. All of those numbers are substantially bigger than what we talked about when we originally acquired Ameritrade. It was a significant lift just in terms of pure volume. As Walt referenced, we did bring over a tremendous amount of information that was beyond just accounts and positions. We brought over their watch lists. We brought over their preferences. We brought over their open orders. We brought over everything that we thought clients would want to have from their old firm to their new firm, as we re-platformed them. We provided really superior service throughout the course of the integration, some of it leading up to the actual conversion, some of it at the time of conversion.
You've heard Walt and Rick both talk about speed to answer on the phones. Those service levels—for every one of our transition groups, worst case, we were back to those service levels within a couple of days of doing the conversions, and in best case, matters of hours for some of those conversion groups as we got better as working our way through. So, and I think our clients were, you know, pretty pleased with the service we were able to deliver as we made our way through this. We've also made substantial progress on getting around the expense synergies and delivering on those. So we're about 80% of our way through.
The remaining 20%, we're on track to be able to pick up over the course of the rest of the year, and it should be fully in the run rate as we move to decommission a lot of the systems, platforms, and data centers that are left for the now redundant broker-dealer, having moved all of the clients off of the old Ameritrade broker. So pretty substantial efforts just to actually move the client set over, and if that's all we did, I would've said we were pretty successful. But beyond that, we took the opportunity to do some work that's, I think, gonna set the firm up going forward as well.
So, again, you've heard us talk about this best of both approach to the integration now for a number of years, where we've moved things like thinkorswim, thinkpipes, iRebal, some of the Ameritrade, you know, great capabilities around trading into the Schwab environment. We also were able to continue to build on some broader product set initiatives that weren't even part of the integration. So while we were doing all of the work on the systems, we were able to launch things like our new Pledged Asset Line system, some of the wealth management solutions that Rick was talking about. So continuing to drive forward on some of the new product initiatives, as well as just the integration pieces as we rolled our way through the integration work.
Some of the pieces we did were probably gonna be a lot less transparent to you in the moment, but I think are gonna deliver really spectacular client service activities going forward. So, while we had the systems open, and we were doing all of the scalability work, part of what we were able to do was, we embedded a lot of code around client segmentation, which you've heard Rick talk about, I'm sure you'll hear other people talk about going forward over the course of the day. In a very Schwab way, we've been able to now code clients so that we can still deliver on those tailored solutions for the clients, but do it in a way that is incredibly scalable and takes advantage of the size of the firm that we built.
So instead of having to go out and build specialized teams that are in silo, that build cost structure, we're able to leverage the breadth of what we do all the way through the service experience, but in a very Schwab-like manner. And then we added a bunch of resiliency and capacity into the Schwab platform, so going forward, the scalability of the firm is greatly enhanced, along with just the resiliency of the firm in any given day. So I think we're just really proud of where we stand, and think we've got really probably one of the best industry platforms for a brokerage at this point in the industry. Our clients have rewarded us for this.
So on the actual time of move, we'd have to admit, we take a bit of a hit on Client Promoter Score because these are not clients that chose to originally do business with Schwab. We are moving their accounts from the platform they chose to the one that they didn't actually choose. But the good news is, as they get a sense of that experience, we're seeing their Client Promoter Scores lift pretty dramatically over a course of months, which says that we preserved that opportunity to be able to continue to offer products and services to these clients and grow that relationship over time. We're also seeing a significant lift from the Schwab legacy client set, as we're bringing things like thinkorswim onto the platform.
We're seeing a pretty significant uplift in terms of their utilization and the number of trades that they're doing as they're getting the opportunity to use those more sophisticated tools. So again, an opportunity to continue to move that forward as we move through time. So I think we've done, you know, great work getting the integration done, but also really set ourselves up for the opportunity going forward, both in the back office and with the client set. So with that, I'd like to bring Walt and Rick up to the stage, and we can take a few questions. I think I saw Steven's hand come up first, so... You go in the middle.
Please take your time.
No one wants to sit next to me?
No, good morning, and thanks so much for hosting this session. So, maybe starting off with a question for Rick. You highlighted a, a lot of interesting growth opportunities around wealth solutions, advice, penetration, and PAL, the PAL product. And on the lending side, loan growth has been relatively stagnant over the last six quarters. It's probably the most accretive opportunity if we were to benchmark to the 3.5%, but just given that the growth has been relatively stagnant, not surprising given the interest rate environment, maybe just speak to how you're thinking about the growth opportunity on the lending side. You highlight the improved technology, but what do you think is a realistic expectation for how much that book could grow over time?
Yeah, I think what's important is we put the hard work in to be ready for growth when the interest rate environment is conducive to more borrowing. At the moment, I think there's two challenges. With interest rates where they are, not a lot of people are borrowing. There's not a lot of less mortgage demand and even less Pledged Asset Line demand. But what's good news for us is that when clients do want it, our experience is now the easiest in the industry. We can process a Pledged Asset Line in minutes now.
Someone, one of our colleagues was telling me a story about someone who was in a house the other day, decided they wanted to buy it, reached out to their FC, and by the time they left, the house had been approved for PAL that they used to buy the house. So that's an experience that can't be matched in our industry. So when we get a more conducive environment, you'll see that. We think we'll close that gap in terms of the amount of assets we have in lending relative to our competitors. I think the other thing, too, is-
... Because we're in an environment where there's a constrained amount of lending, the spread to securities in some of these areas is narrower than it, than it may otherwise would be for new lending arrangements. But I think as you take the long-term view, next 10 or 20 years, we're exactly where we want to be, which is our two big products that people rely upon, mortgage and pledged asset lines. We now have a leading experience in the industry, backed by our Investor Advantage Pricing, which gives our clients the lowest pricing they can get in the industry if they have assets with us. And it allows us, I think, over the long run, to leverage our balance sheet in a much more effective way.
So I can't give you exact numbers, but I do know, I think it sets us up for 10-20 years of delighting clients, doing more for our clients, and helping them in their financial life.
Thanks. Dan Fannon, Jefferies. Well, was hoping you could talk about the last events of the last, you know, year and a half. And as you think about prospectively, the revenue mix between NII, asset management, commissions, how do you think that should look over the next 5-10 years, and how is that informed by the events of the last year or so?
Yeah, I think anytime you talk about revenue mix, you first have to go back to our core strategy through client's eyes. Clients make a decision how they want to pay for our services. There may be all kinds of different ways that we would like them to pay for our services, but they have the ultimate power and the ability to decide how they're going to pay. And I think that largely, they've made clear how they want to compensate us for the services that we provide. So I guess the first thing is, we don't... We're not gonna force something. We're going to respect the way the clients want to pay us.
You know, in terms of the events of the last 18 months, I think all of you are aware that we have had a very consistent philosophy in managing our balance sheet for two decades, and that is that we targeted a corporate-wide duration somewhere around 2.5 years. We did so because it picked up a little bit of duration spread. You know that we don't take a lot of credit risk, so we're not capturing a lot of credit spread. And that was consistent with the philosophy of not trying to time markets, whether they be interest rate markets, equity markets; we don't believe in that timing aspect. And that strategy worked fairly well for two decades.
Did not work really well, as we're all well aware, when interest rates spiked up as rapidly as they did in a short period of time. So I think what you should expect as we go forward is probably not revolutionary changes, but more evolutionary changes, where we'll be evaluating a bit of that, decision around, duration. We'll be evaluating whether there are opportunities for us to capture, similar, degrees of spread, maybe without actually holding, all of the, balances on our, all of that on our balance sheet. You'll likely see us evaluating those types of alternatives and making decisions. With respect to, to, again, revenue mix, we recognize that, that reducing NII as a percentage might create certain benefits.
Then again, the environment is gonna dictate that to some extent, and as I said, we don't want to force something. We want to be respectful of the way clients choose to pay us.
Great, thank you. Michael Cyprys of Morgan Stanley. Just wanted to come back to some of your commentary on AI. You had mentioned the use case with the customer service representatives. I guess just more broadly, just curious, how many use cases you guys have identified? How many do you have in production today? Kinda how do you see that, 12 months from now? And more broadly, how meaningful could this be to the bottom line, whether it's on expense efficiency as well as on top line? Thank you.
Yeah, we have about 75 use cases right now. About half of them are in production today. You know, very tough to say what it's gonna look like one year from now, but as Rick shared, we're utilizing it now in areas of efficiency. I think we have some real questions at this point, whether it'll actually translate into the investment advisory space. We also recognize that our regulators are trying to figure out how they feel about some of the capabilities that may be there in AI. But right now, the focus is on efficiency in serving clients, and then scalability in areas like AML or fraud, things of that nature, where AI can be a strong tool. I don't know.
Either of you have items you might want to add to, Joe?
I actually think we're up to about 90 use cases now, so-
Oh, see, I'm out of date with 75.
It's a rapidly evolving field for us. I think we're gonna work our way through it, but I think we're doing enough work now among all of the various capability sets to be able to really start to build the core skill, which is probably the most important thing. Which it's a really early stage capability for us and everyone. But I think, you know, the trick here is to make sure that we build enough skill and knowledge, that when we see the opportunities, we're able to act on them quickly. And I think we're making enough investment to be able to say that pretty confidently at this point.
Thanks, Brennan Hawken, UBS. And thanks, nice to transition away from the earnings cycle and talk about things in the long run. Joe, you all just had a big transition a couple of weeks ago, thinkorswim. It seems like from the social media reaction, that this one went better than some of the prior. But could you give us a little bit more texture on what you're seeing so far, levels of engagement, levels of attrition, and how, just sort of an update?
... Sure. So it was, for all intents and purposes, a very successful transition. We saw client activity that was consistent with what we saw the weeks before the transition. So I think we're feeling pretty confident that, you know, we largely, you know, nailed the conversion. As always, there's a small number that isn't gonna be happy with something. And, you know, I think we all get letters. Some of them are quite helpful and identify things that we've put on roadmaps, and we have development opportunities to continue to deliver on new and better experiences. Some of them are as simple as, "I really just don't like the colors," right?
It's a balance to try to find the things where we can do better and continue to enhance the platforms versus some of the things where it's just people don't like change. And I think Walt said it really well. I mean, the numbers of complaints we've had for the number of clients we've moved has really been pretty minuscule. We moved a big number of clients, so there's, you know, a set out there that's gonna be vocal. In this day and age, the way media works, they're gonna find some of those people, and they're gonna write those stories. But I have to tell you, from my perspective, overseeing this, I could not have been happier with how the entire transition went and how, you know, well-received it was by the client set.
I quoted those CPS numbers coming up 30 points in the first three months on my slides, and you don't get a result like that if people aren't generally pleased with the kind of transition that you've made. And I think there's always gonna be some negative voice out there that's gonna find a way to get amplified, but by and large, you know, the attrition numbers are running significantly below anything we anticipated in the business case. The CPS numbers are rebounding, you know, consistently. I don't think we could be happier with where we stand at this point.
Brennan, I would just add to Joe's point about client promoter scores and your question about engagement. If you look at clients that have converted from Ameritrade to Schwab, they've now brought $60 billion of inflows to Schwab after they've converted. If you look at clients in the November transition group, their trading activity is up, actually up 20% or 30%. So once they get to know the platform, and they see all that it has to offer, they actually engage more, and if you look at where we are in our, our wealth business and the, and the records we're setting in terms of flows, 30% of those flow, net flows into our wealth business are coming from Ameritrade clients.
So I think when they get here, and they realize all we have to offer, they are absolutely engaging, and their client promoter scores are a reflection of that, as is the activity we're seeing from them.
Yeah, even on the lending side, I saw some numbers yesterday. The legacy Ameritrade advisors are now promoting PAL, opening accounts at a pace that's consistent with where the Schwab advisors were a year ago. Now, the Schwab advisors have made a substantial increase year-over-year, so they're not quite to parity, but the gaps are closing pretty rapidly.
You know, I think it's really important to remind ourselves and, of course, all of you, that the reason why there's such a huge growth opportunity that Rick talked about in bringing over the Ameritrade clients to Schwab is that Schwab has a lot more capabilities than Ameritrade had. So the idea that our, for example, mobile app would be as simplistic as the app at Ameritrade or maybe as simplistic as some other firm that barely offers a fraction of the capabilities that we offer is just a little bit naive, right? Of course, our app is going to be a little bit more complex because we have lending, we have investment advisory. You can buy mutual funds. I mean, there's a lot more that you can do.
Now, that's not to say that we don't hear the concerns by those who have raised them, and as Joe shared accurately, we've made dozens of enhancements to the Schwab mobile app to make it simpler to trade, to make it more like the Ameritrade app was, and we have a roadmap to add even more. But the idea that you're gonna take a super simplistic app from maybe not even Ameritrade, but maybe some other firm who's very small, and compare that to our app and say that somehow their app is better or ours is worse is a little bit absurd and incredibly naive because we have so many more capabilities.
Well, you also have to balance that. I feel like we keep piling on.
Yeah.
We had as many accounts and more than double the assets that were very happy with the platforms that they were using on the Schwab side. So if we'd have just adopted the Ameritrade platforms, we'd have had some deeply disappointed clients the other way, right? So it's a balance here of how do you bring these things together in a way that gives you really the best of both.
Hi, everyone, Devin Ryan with Citizens JMP. Thanks so much for doing this today. Gave a lot of good detail on the growth algorithm, and I think the enthusiasm around the ability to continue to grow. How should we think about the revenue per asset trajectory and the puts and takes around that with the growth coming, and then with the scale that you guys continue to build, the ability to drive incremental margins off of that versus reinvesting it back into the customer experience or into the value proposition? Like, how should we think about ultimately what's filtering to the bottom line, essentially, is the question.
You want to take that one?
Yeah, go ahead.
Oh, you...
So I think, again, it starts with expenses, as Rick talked about. You know, Q1, adjusted expenses, we were at 13 basis points. We're not satisfied with that. We know that leads the industry. We know it's somewhere around a third of wirehouse numbers to maybe a fourth of some of the regionals and IBDs. That's a huge competitive advantage. We're gonna keep using that to do two things: to drive better outcomes and more value for clients and also to be able to reward our stockholders. In terms of ROCA, ROCA is gonna ebb and flow a bit. Right as we pay off the remaining $70-ish billion of high-cost funding, you're gonna see ROCA move right. So ROCA is gonna move around a little bit.
It's been on a trajectory that has been largely down over time, but if you look at where we are today, a lot of the pricing moves have sort of been played out, right? I mean, we're already at zero commissions for the vast majority of trades. So I don't see huge pricing moves in the industry that are going to push ROCA down. It's more likely to be where we are in the interest rate cycle and our ability to continue to expand offerings to clients like lending, like margin loans, like investment advisory, to the extent it meets their needs. But on the expense side, you know, we talk about 10. We'd like to get to 10, although we don't generally set goals like that.
But if we leverage our scale and our efficiency, usage of AI, there are ways to continue to enhance the client experience while driving that number down that's currently at 13 adjusted.
Yeah, I'd maybe highlight two quick things. One is, because of all the scale and efficiency benefits we've accomplished through the Ameritrade integration and the scale of the firm, we'll invest more in our business in 2024 than we've ever invested into our wealth business, into the digital pledged asset line capability that we talked about, into the experiences Joe referenced that bring together the best of both Ameritrade and Schwab experiences. And that ability to invest in our business is really important. So as we drive scale, we hope to spend even more and more on those things that we know will generate a return. The other thing I'd mention, just building on Walt's point about the interest rate environment, that will have a big impact on ROCA.
If we live in a world now where the interest rate environment is going to be structurally higher than it has been for the last 10 or 15 years, that's an incredibly bullish scenario for our long-term ROCA.
Hi, Ben Budish from Barclays. Thanks for taking the question. Rick, in your prepared remarks, you talked about the wallet share gap between Ameritrade and Schwab, 30% Ameritrade, 50% at Schwab. Can you maybe unpack that a little bit? For Ameritrade, where are those assets sitting that could potentially move over to your platform? What are the sort of areas of low-hanging fruit that we could start to see more of in the next, say, year? And what are the longer-term pieces that, you know, may take a little bit more investment on your side? Thanks.
Yeah, absolutely. Well, Ameritrade had such a strong trading platform, and it attracted clients that wanted to trade and be active. And we love those clients, and we're gonna serve them really well here. There's also a group of clients that had some of their money at Ameritrade and then had a broader relationship somewhere else, where they went to get their wealth advice and to have an advisor help them think through their financial future, and where they went to get lending and the work on their liability side of their balance sheet. And those are... You know, all the firms you're aware of that provide those things. And so the typical Ameritrade client would have their trading assets at Ameritrade, but then all their wealth and lending assets somewhere else.
And if you went into an Ameritrade branch, the experience would be service-oriented. A lot of clients walk in there, they wanna place a trade, or they wanna drop off a check, or they, you know, it's something transactional related. Just the way our branches looked probably 15 years ago, you know, when Walt began to move the branches in our model more towards a relationship model. And in a lot of ways, so what the exciting part or the fun part, and I joked about my daughter's graduation party, but the fun part's starting because we get to take that relationship model that we've built at Schwab and all the set of things that we have and can offer, and bring that to this group of Ameritrade clients whose, they have that in their life somewhere, possibly, but they, they're at Ameritrade for trading.
The opportunity for us to come in and introduce that model, and to do so, if they already have a wealth relationship, to introduce it at a lower price likely, and incredible service and expertise around that, and introduce lending, that's the exciting part of the journey. So that's why that share of wallet gap exists. Clients have come to Ameritrade largely to trade and kept a broader relationship somewhere else, and the exciting part for us is to become that somewhere else and have it all here, have their trading and their wealth assets and their lending right here at Charles Schwab.
Hey, Rick. This is... We've had a few questions on these from the council, so I wanted to, to pose one. Perhaps something that'll also be touched on later today, so we don't have to go in-depth, but, questions from, from Bill Katz at TD Cowen, as well as Alex Blostein at, at Goldman Sachs. Just maybe a little more color on the, the retail alternatives platform, that you mentioned in your prepared remarks and, and sort of how you're thinking about that opportunity and, and what that might look like.
Yeah. With us serving one out of every six families in our country that have more than $20 million, we wanna make sure when they come to Schwab, they're getting an experience that's world-class. And there's no question it is from a service standpoint, from an advice standpoint, being able to talk about tax trusts and estates, and in many ways, from a product standpoint. One of the areas where we have an opportunity to do even more for our ultra-high-net-worth clients is on the alternative side. And so now at Schwab, we'll have a platform of alternatives powered by our iCapital, so it'll be state-of-the-art from an experience standpoint, and we'll have 5 or 6 different categories of retail alternatives.
We'll have private equity, venture capital, private credit, long-short, exchange funds, and we'll have to start, you know, one or two offerings in each of those categories. And then we'll, we'll grow it out from there. But it'll. And, and behind that, we'll have a team of experts, of, of alternative experts ready to answer clients' questions about how an alternative fits into their asset allocation and why a particular product or asset class may make sense for them. So we're excited to offer that to clients. We think it adds to the product and, and capabilities that we have for the ultra-high-net-worth clients and rounds out our offering.
Great, thank you. I think we have maybe time for one last quick question here in the room, if there's any remaining.
... Okay, gentlemen.
Thank you all.
I think we are, we're going to break now, I believe, for, about 10 minutes, Jeff? Ten-minute break. Thanks, everyone.
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Saturday morning, and it's time to go. Wonder these could be the days, but who could have known? Loading in the back of a pickup truck, riding with the boys and pushing the luck. Singing songs loud on the way to the game, wishing all the things could still be the same. Chinatown runs over the backstop. Kakuha on the ball and soda pop. Well, we used to laugh a lot, but only because we thought that everything good always would remain. Nothing gonna change, there's no need to complain. Sunday morning, and it's time to go. Been raining all night, so everybody knows. Over to the field for tack football. Big hits, big hats, yeah, give me the ball. Rain is pouring, touchdowns scoring. Keep on rolling, never boring. Come on, come on, come on, Camellia. We're talking kind of funny from helium.
Well, we used to laugh a lot, but only because we thought that everything good always would remain. Nothing gonna change, there's no need to complain. ... Monday morning and it's time to go. Wet trunks and schoolbooks and sand on my toes. Do anything you can to dodge the bus ride blues. Like driving a potato with a burnt out fuse. Well, my best friend Kenny wants to go with Julie, so meet her by the sugar mill after school. My best friend Kenny wants to go with Julie, meet her by the sugar mill after school. We used to laugh a lot, but only because we thought that everything good always would last. We used to laugh a lot, but only because we thought that everything good always would, everything good always would last. Mmm.
Oh, oh. Oh. You got a fast car. I want a ticket to anywhere. Maybe we'll make a deal. Maybe together we can get somewhere. Any place is better, starting from zero, got nothing to lose. Maybe we'll make something. Me, myself, I got nothing to prove. You got a fast car. I got a plan. On the other side of town, I built a mechanic and convenience store. Measure safe, it's a little bit of money. Won't have to drive too far, just across the border and into the city. You and I could both get jobs, finally see what it means to be living. You got a fast car. Fast enough to run far away. We gotta make a decision. Leave tonight or die this way. So I remember we were driving, driving in your car. Speed so fast, felt like I was drunk.
City lights lay out before us, and your arm felt nice wrapped around my shoulder. I had a feeling that I belonged. I had a feeling that I could be someone. Had a feeling that I could be someone. See, my old man's got a problem. He lives with a bottle, that's the way it is. Said he's probably too old for working. He's probably too young to look like it. My mama went off and left him. She wanted more from life than he could give and said, "Somebody's got to take care of him." I quit school, that's what I did. You got a fast car. We go cruising and then outside. You still ain't got a job. Now I work in a market as a checkout girl. Our lives will get better. You'll find work, and I'll get the money.
We'll move out of the shelter, buy a big house, and live in the suburb. You got a fast car. See, fast enough to fly away. You and I gotta make a decision. Leave tonight or die this way. So I remember we were driving, driving in your car. Speed so fast, felt like I was drunk. City lights lay out before us, and your arm felt nice wrapped around my shoulder. And I, I, had a feeling that I belonged. And I, I, had a feeling that I could be someone. Had a feeling that I could be someone. Be someone. Had a feeling that I could be someone.
Oh, yeah, yeah, yeah. I got a pocket, got a pocketful of sunshine. I got a love, and I know that it's all mine, oh. Whoa. Do what you want, but you're never gonna break me. Sticks and stones are never gonna shake me, no. Whoa. Take me away, a secret place, a sweet escape. Take me away, take me away, to better days. Take me away, a higher place. I got a pocket, got a pocketful of sunshine. I got a love, and I know that it's all mine, oh. I got a pocket, got a pocketful of sunshine. Got a love, and I know that it's all mine. Do what you want, but you're never gonna break me. Sticks and stones are never gonna shake me, no. Gonna shake me, never gonna shake me. I got a pocket, got a pocketful of sunshine.
I got a love, and I know that it's all mine, oh. I know, I know that it's all mine. Wish that you could, but you ain't gonna own me. Do anything you can to control me, no. You can't control me, you can't control me. Take me away to better days. To better days. Take me away. Take me away. My hiding place. There's a place that I go that nobody knows, where the rivers flow, and I call it home. And there's no more lies, and the darkness is light, and nobody cries. There's only butterflies! Take me away. Take me away. A secret place. A secret place. As sweet as candy. As sweet as candy. Take me away. Take me away. Take me away. Take me away to better days. To better days. Take me away. Take me away. My hiding place. My hiding place.
Take me away. Take me away. A secret place. A secret place. As sweet as candy. As sweet as candy. Take me away. Take me away. Take me away...
Good morning. We will be starting up again in just a couple of minutes, so if you could please take your seats, we will greatly appreciate it. Thank you.
Take me away. To better days. To better days. Take me away. Take me away. Take me away. To better days. To better days. Take me away.
Good morning. We will be starting up again in just a couple of minutes, so if you could please take your seats, we will greatly appreciate it. Thank you.
The sun is on my side and takes me for a ride. I smile up to the sky, I know I'll be all right. The sun is on my side and takes me for a ride. I smile up to the sky, I know I'll be all right.
Lately, I've been, I've been losing sleep, dreaming about the things that we could be. But baby, I've been, I've been praying hard. Said no more counting dollars, we'll be counting stars. Yeah, we'll be counting stars. I see this life like a swinging vine, swing my heart across the line. In my face is flashing signs, "Seek it out and ye shall find." Old, but I'm not that old. Young, but I'm not that bold. And I don't think the world is sold, on just doing what we're told. I feel something so right, doing the wrong thing. And I feel something so wrong, doing the right thing. I could lie, could lie, could lie. Everything that kills me makes me feel alive. Lately, I've been, I've been losing sleep, dreaming about the things that we could be. But baby, I've been, I've been praying hard.
Said no more counting dollars, we'll be counting stars. Lately, I've been, I've been losing sleep, dreaming about the things we could be.
We are getting started. Once again, Jeff Edwards.
I've been praying hard.
Right, everybody, welcome back. Hope you were able to stretch your legs, get some food, and start to check out some of the great booths. So we're gonna have, you know, some more time during the extended lunch to go and check out the different demo booths. But we're very excited to have all those folks join us today, 'cause they're really the experts. They're on the front lines that are gonna, you know, help kind of bring some of that to life. But anyway, I promise I'm not gonna stay up any longer than necessary. I once again have the honor to invite up on stage our Head of Advisor Services, Bernie Clark.
Thank you.
The clicker is right over here. Sorry.
Don't worry about it. Thanks. Head of Advisor Services. We... Thanks, thanks, for all being here. It's fabulous to be out in front of you, albeit for perhaps my last time. I was amazed again in the conversations that we have ahead of time and in the breaks and those types of things. And in talking with Dan and a few others, the one thing that came to mind as we get started, was still the curiosity about this space, the advisor space. The wonder, if you will, of what potential there is within the space, and the many, many dialogues we have all had for so, so many years about could this continue? Will this continue? Is the trend over? And we've never seen that come to fruition.
We've seen continuous growth throughout that period of time, and I'm so pleased to say that that wonderment of what the potential could be is what excites me so much about the independent space, because it's not formed. In fact, yeah, I'm gonna show you numbers today that are gonna make you feel like there's been tremendous success in this space, but, but in truth, there's so much, so much left to play here. There's so many innings left in this game, that we're not exactly sure where it's all going to play out to. But we know it's fastest growing. Walt and Rick had talked about that, and so it's so critically important for us to keep watching, to keep forming, to keep our minds open to what the potential of all of this is, 'cause it will evolve tons further.
I also wanted to take a moment, and I joked about the timestamp on that title. I really want to take a moment to thank Walt, and Rick, and Chuck, and really all of the independent advisors for allowing me to play in their game, to be a steward within the business. It's been so much fun for me to be able to do that. I've been so, so inspired by it, and many, many of my friends have come from the community of advisors as we go forward. Thank you for allowing me to play. It's been a special time for me in all of that, and with some bittersweetness that I step a little further away from it, but never far. Trust me on that, I'll never be far. Now they tell me there's a clicker.
I got a clicker here. So let's get into some of the facts, as I know you guys all like facts, as we get going forward. One fact is the fact that I have been a passionate leader of this business, but I lead it for Charles Schwab. And if you think about where we're headed, we've talked a lot about what our pledges are, to our clients and the importance of what those pledges are. The importance of consistency. I think my entire career, I have talked to advisors about the fact that you want change, you want disruption, but not too much, and not all at once. We learned a little of that in the whole TD integration, which I'll talk about. But the reality is, you need that consistency 'cause you're in businesses.
Advisors are in businesses, and they promise that consistency to their clients, and we have always promised to be uniquely positioned within this space in going forward. And the pledge, which I wanna remind you of, is that we're not. You heard Rick, you heard Walt say, you heard Rick say, you'll hear me say it again, it is a Schwab pledge. We're not gonna have custody fees. People like to write things. They like to create a little bit of turmoil in the marketplace. We have a consistency. We have that ten-year view that we like to talk about, and so it's really important that we're not gonna play with that pricing. We're not gonna disrupt the businesses of our advisors, and that's gonna serve us well, well into the future. We know how to be in this business.
We know how to make money in this business, and we have the scale and efficiency to be able to do so long into the game, and even as it evolves in, in so many, many different ways. Best-in-class technology, always going to be important. I always remember talking to some of my friends in the industry, you know, about other competitors and, and those kinds of things, and people leading with technology. Technology is a fabulous, fabulous thing, but it augments people. It augments relationship. It augments having the great workforce that we have and the depth of knowledge that we have within our organization, and we're gonna stay very committed to that, and we're gonna continue to hire the best and the brightest.
We wanna be an employer of choice for everybody who wants to come out, whether it's on the retail businesses, or retirement businesses, or institutional businesses. This is a place to have a career, trust me. I enlisted for 26 years. I never knew that was gonna be the case when I first started out, but it is a place to have your entire career. And it is a place to make sure that we are digitally enabled and making it easy for clients. I mean, again, in my business, specifically, we're helping businesses be in business, and they have to have the same efficiency. Our goals are so tightly aligned around making sure we're creating scale and efficiency within the business and serving more clients in better ways with more assets.
The proof points, $4.3 trillion in assets. You know, I have the pleasure of talking to some of the true founders of this business, the John Coghlan of the world. I had drinks with him recently. These were the people there when this was a nascent industry, when Chuck was just starting to notice all these RIAs that were out there, and they really got the ball moving on this. But when you talk about $4.3 trillion in assets, I think Walt referenced when we turned a trillion, a single trillion, actually, a couple of times back and forth, back in the day, when we, we passed that mark, that was for the entire firm. We're at $4.3 trillion now for advisor assets and growing as we go forward.
$53 billion in net new assets in the first quarter, and I highlight that number to you, not because of its size alone, but because it represented a quarter in which clients began to come back into the business of with us. We've gone through a lot last year. We've gone through, you know, the early part of the year when we got into the banking news, you know, appropriately, inappropriately, but we were there through the integration, bringing TD Ameritrade on board. But we're seeing every aspect of the advisor business, the new starts, the joins, which I'm gonna talk a fair amount about, as well as the organic growth of advisors continuing and coming back to us in volume.
$53 billion, certainly for the first quarter, shows you something, something of volume, and I will tell you, I see that trend continuing, in the months that have just come. 47% of the firm's assets, nothing to scoff at. We're a material business. That's why I say that number. I've said this to you many, many times. We are an important business within Charles Schwab. I don't think there's anybody else in the industry serving advisors who can claim the importance to their balance sheet that Charles Schwab can claim in the independent advisor space, and that makes a difference. It certainly makes a difference, and especially given our strategy. Obviously, the revenue side of things is different in our business. We're a custodian. We're not the provider here, the advisor is the provider.
As long as we continue to remember that, they're going to continue to think of us as their custodian, and we'll keep growing. Let's talk about the integration. Technically flawless, unbelievable size. Joe did a great job, not just representing it today, but a great job leading it, as we went through all of that. It was hard. It was really hard. Was it a little distracting? It was a little distracting, there's no question. Was our North Star the integration? Absolutely. Everything we did was to focus on this integration and to make sure we did everything we possibly could to create the best experience we could for all of our clients, throughout the network, and I think we did a pretty darn good job.
That said, I know within the advisor business, there were 500 experiential differences that advisors had to go through. You know, again, I love the line, you know, if we kept all the TD Ameritrade stuff, then half the population would have been unhappy, and going the other way was the same type of thing. We tried to pick the best of both worlds, and we tried to get it all done by the integration date. Some of it was left to get done after the integration date, and we continue to work on those types of things.
But the transition went very, very well, and I'm really happy to talk about the fact that our clients knew they could talk to us about it, and they came to us, sometimes in volume, to tell us the things they liked better about the platforms that we're on. And in some of those cases, I think almost 100 different changes we've made have created even more synergy between the two different platforms. And that's making a big difference 'cause they hear us listening, and that's probably the most important thing. We had an advantage conference recently with some of our best clients, and the one thing that came out of the whole thing was, you know, the beginning was the whole, "We're gonna tell you," type of thing. You know, we've all been there at times with our clients.
And as we sat there and we listened, and we talked about the responses that we had and the things we were doing, and the roadmaps, that you heard referenced, they said, "Oh, you knew? You knew these things were out there." And we did. And so, so there's still a lot of change coming, but it all does go back to that brilliant basics. When you're a custodian for the fastest-growing segment in financial services, and you have $4.3 trillion in assets and growing, you need to be really, really good at what you do. Then you get invited into a more, even more of the fun stuff, as you go along, and more of the strategy work, and, and more the depth of kinds of things that you can get into.
And that's where I start to look at the easy scores. Easy score is a little bit different as we look at it, than sometimes we talk about CPS a lot as a firm, we do as well within the advisor business, but this is a little more of a point of interaction, and we're seeing our easy score grow consistently over time. You know, during this period of time of transition, we made some really significant policy changes to make sure that we could accommodate for things that were happening at TD Ameritrade. Tax withholding elections, where advisors were allowed to do it, was one of the marquee types of things that we heard about.
I'll tell you one thing, if you're ever gonna talk to the press, and you're ever gonna say something negative, make sure you sign a contract for a residual, because they will print that thing forever. 'Cause I'm seeing a lot of rewrites on things that are long fixed, long gone, and I suspect that that's gonna continue for some time. And that's okay, 'cause we wanna get better and better at the things we're doing. Let's think about the fastest-growing side of things. I think this is really important for all of you to think about. You know, as we grow, and you see the continued growth here, and you see the wealth management space, we're still just a fragment of the potential of what the industry holds. But there's a sea change I wanna point towards.
Certainly, private equity and capital has begun to influence the space more so than ever before. And even in some of that wonderment, as we were talking about it, you know, how high can the multiples go? You know, when, when can't you get a good turn on the other side of it? And the truth is, we've been having that conversation for two decades now, and it keeps getting better and better and better. And so we think there's some runway there, but we're seeing a little bit of a change here, and I wanna highlight some of the flow that we're starting to see in the broker-dealer, independent broker-dealer space.
It's become easier to be an independent advisor, quite honestly, certainly than it was two decades ago, even a decade ago, because the ecosystem has grown up enormously within the space. So coming out is easier. Creating an economic story for yourself as an independent is easier, and we're starting to see that the growth that we're starting to see in the industry is coming far more from the independent broker-dealers directly. That used to be a little bit of a stopping ground for the small wirehouse advisor to spend some time to grow themselves up, to be able to take that leap into the next phase. Many, many more are coming directly now, and so the average size of someone becoming independent is changing.
There's another phenomenon at that same time, which I'll get into in a moment, and that's the idea that many are coming out and joining firms. That's really different than it had been. They're not trying to put their own name on the door, but they're coming out instead, and they're joining a firm, and they're getting the infrastructure, basically for free, of those firms, and that's more akin to the IBD model. So I'm seeing more pressure being put on a model that was already pretty highly pressured in the independent broker-dealer space economically, and I'm seeing more pressure coming on that space as well, as we go forward. The starts, the large firms coming out, still quite significant, as I said, and the organic growth, just still phenomenal for advisors.
As we think about the five key trends that we think about, you know, expanding upmarket has been key for advisors. You heard it before when we talked about Family Wealth Alliance. Multi-family office firms are prevalent now. Single-family office firms, more prevalent than had been. We launched a new offering, not very long ago, but have had tremendous success with, with Eddie Brown, underneath John Beatty, in, in running a family office model for our premier multi-family office and single-family offices, and we're gonna continue to grow out that offering. It's very, very competitive in the space and is growing nicely, and it's a great consolidator of assets as well, as we go forward. Differentiating, always been a challenge, within the advisor space. How do advisors differentiate? Well, they've differentiated for a long while being fee only.
They've differentiated a lot based on an open architecture of products. These are all things that hold them out different from others, but they haven't really even started to compete with each other yet. Because if you go back to that prior slide, we're still only 12% of the market as a collective firm. There's so much market to be had, that people... You're starting to see that they're, they're happy to deal in their communities and in their areas, and we're starting to see, again, that private equity introducing itself, and we're seeing more consolidation of firms, creating a little bit of economic differentiation, but maybe creating more capability differentiation.
Alts has become an incredibly important asset class to advisors, maybe because of the income strategies, predominantly, but I think 36% of advisors now use alternatives, and I think we're approaching $50 billion in assets and alternatives on our book of business, and we do them quite competitively. Rick had mentioned iCapital. CAIS is also one of our providers. We have a one source, AI OneS ource product on platform. I still remember at Impact, just aside, when someone asked the AI question, and Walt and I looked at each other, we didn't know if they wanted to talk about alternatives or if they wanted to talk about artificial intelligence. So we answered both. So lots going on there. Outsourcing is a bigger factor in the business.
I think we, too, can play more in that space. You know, we have a very, very robust consulting offering, led by Lisa Salvi, and we want to do more to help clients grow where they want to grow, how they want to grow. And probably one of the most important things we want is for clients to come to us first. Make us your first phone call. We'll help you find the right place. We'll help you, guide you. We'll do whatever we want to, even at the expense of having you do something away from us. I'd rather you be in the right space, 'cause you only want to make this move once, and you don't want to find yourself in a model that you weren't planning on being in. And the growth, and it's the potential for the growth.
I sometimes wonder out loud, and I'll do it with all of you, but if you're an entrepreneur, you know, at least the way I think, the sky is the limit. The trees grow to the sky, in my mind, right? Why would you ever limit yourself, putting yourself in an offer that has eight account types? You're basically saying, "Well, I'm not going to be that successful. I'm gonna take this leap, but I'm not gonna be that successful, so let me just limit myself now. Let me be penny-wise and dollar foolish." We've got a platform that will take you, as proven, into the tens of billions of dollars.
John and I often joke about the fact the day of a trillion-dollar RIA exists, you know, maybe not, maybe not tomorrow, but it's coming, as we see the consolidation continue, and that's important. So, so let me talk about the blurring of the lines as well. Everybody, I say this, I say this as a homer, everybody wants to be in this space. It's exciting, it's dynamic, it's an alternative to what was, and as they try and come in, the economics are the economics of the space, and everybody wants to try and share in all of that. I still believe the way to share in the economics of this space is, is the same as our through client eye strategies.
Do as much as you can for the client, and they will keep inviting you into the relationship in a deeper way, and the economics will take care of themselves over time, and it's proven to be true with advisors. We've seen the interest rate correction, if you will. We've seen the precipitous increase in interest rates. We've seen a change in behaviors within advisors. We've seen a leveling off of cash in our sweep programs and then cash equivalents, and that will continue to change over time as we see different markets present themselves. Let's go to this joining versus starting, 'cause this, I think, is a really interesting thing for us to think about. As you think about the statistics here, the join deals are now twice as many as the start deals, and we're starting to see more firms.
I could rattle off a list of them, and, you know, you have the Dynasty is out there thinking, you know, always how to bring, bring firms out. Mariner is out there, Mercer. It's a long list, Hightower. You're seeing a lot of movement within the firms in trying to understand how to bring people into independence, and that's where the competition, again, I think, goes to. I can bring you out more easily, I can amass more advisors within my model, and I could take care of that noisy stuff that no one really wants to be part of, you know, the compliance, the tech stack, all of those kinds of things, and make you a person who can simply work with your clients upfront. We're gonna. We suspect that joins are gonna continue.
We are strong advocates, and I know John's gonna talk a fair amount about this in the Q&A. We are strong, strong advocates for supported independence. You know, come out on your terms, how you wanna do it, let us help you. Let us guide you, let us create the modeling. You talked about thinkorswim, a couple of moments ago, thinkpipes, iRebal. These were great attributes we brought over from TD Ameritrade that have added greatly. We've got almost 4,000 clients now that weren't in thinkpipes before, that are in thinkpipes and working with that. Let us help to support you in how you're getting to independence, and let us work with the other providers in the industry. It's an ecosystem, right?
Again, I'm a very competitive person, but the truth is, there's a lot of space in this industry to continue to grow it competitively with colleagues in the industry and capabilities in the industry. Not everything has to be homegrown and born here. If you think about, you know, again, the sources of advisor deals, 70% coming from IBDs now. That's a really important statistic, and I think that's gonna be sort of the passing of the torch on that side. The complications of the business, we used to be a little bit simple. Firm would come out, you know, hang their shingle, we'd help them get to independence. It was pretty basic. We were the custodian. Then they started inviting us in, we started building more custodial consulting services for them.
We started creating more product capability for them, and we started getting invited in deeper and deeper and deeper. And then the ecosystem just blossomed around all of this, the TAMs, as we call them, the Envestnets, the Orions, a whole host of firms that have grown up to help advisors be in the independent space, along with the custodian. And our strategy has always been to work very, very tightly aligned with them and make sure our technologies were seamless between us. So if advisors want to use something, they can use something, and that creates... Well, it takes all the friction out of the process of why Schwab, and in turn, brings the assets more directly to us.
As you start to see more capital come into this space, I think you'll continue to see more technology. The thing that's not a commodity here is people and knowledge. You know, I might have been remiss even in not covering it before, but one of the biggest challenges we had from the integration was the fact that we brought over thousands of people from Ameritrade who hadn't worked on Schwab systems either. We brought the clients over, and they hadn't worked on the Schwab systems, but now they had the people. You know, we give them 40,000 hours of training. It's not the same. Every call that comes in is different.
Every need from a client becomes more and more urgent, and as those people come up the experiential curve, we have the strongest, largest workforce in this space to serve advisors. So, we're quite pleased with where we got in there. We're quite pleased with the ecosystem, the way it's growing up. We continue to want to play aggressively with our partners in the industry and continue to grow the space. Scale, efficiency, it is, it is the mantra of this business. It is the need of this business, as it is with our clients, quite honestly.
You've been here, and as I look out and I see so many familiar faces, advisors been adding so many capabilities to what they bring to their clients, never charging more, never charging less, but eroding their margins, if you will, right? And so they have to be able to scale, they have to be able to be efficient, and they have to be flawless in their execution with their clients, and so do we. And this is where we just align, I think, so well, in a synergistic way as we go forward. You know, helping independents, we have a saying within our group, you know, every now and then, you have to freshen up your mantras and those kinds of things, but it's never changed within Advisor Services: grow, compete, and succeed.
Those are the three words we use when we talk about advisors. When they're having success, we're having success, and we're so pleased to be where we are, so grateful for the growth of the industry, and as I said at the start, so grateful to be a part of it for such a large part of my career. But with that, I have the enviable task of introducing somebody with my title. So I want to bring up John Beatty, Head of Advisor Services. So if you have a problem, he's the guy to call. And Tom Bradley, our Chief Client Officer. John and I have worked together for over two decades. He's worked with advisors most all of his career. Tom, well known for his 30+ years at TD Ameritrade, running retail.
Everybody has a little bit of bad in their past. And then, obviously, Advisor Services, and just a very, very powerful team. And so they're going to join me for some Q&A now.
Thanks, Bernie.
Thanks, Brennan Hawken in UBS. Congratulations, Bernie.
Thanks.
It's been quite a run. Curious, you touched a little bit on PE and their entrants, and obviously, it's had a big impact. So, you know, we all know that they've been aggressive, or we hear about it, but, you know, these aren't permanent investors in almost anything. So what I'm really interested is, what are you seeing as these financial investors begin to exit? What is the impact of that? How has that cascaded, and what impact should we expect on the marketplace through those transitions?
We've seen to date, and John, you may want to jump on this as well, but we've seen to date that the private equity and the capital that's come to the space has been additive. So it's been very accretive to the industry as it's grown. And we've seen that there's some strategies that show changes. You know, I would highlight, you know, a firm getting built like United Capital, being acquired by Goldman Sachs, and then being spun back out into the independent space. So it's very stable, in effect, and it's stabilizing to a large degree. Firms need capital to grow. Small firms need capital to grow, right? I mean, in Walt's documentary, it's a fabulous line he makes. He couldn't find people to lend him money, back when he was starting.
Boy, don't we all wish we were one of those folks, right? It's important that we find ways to help make sure that that capital gets put to use well.
Yeah, I agree, Bernie. It's certainly unlocking that entrepreneurial spirit and the generational evolution of these businesses from one owner group to the next owner group. I was talking with a large enterprise leader the other day, and the reality is, you know, PE money typically is short term, 5, 6 years, but, you know, one PE firm to the next PE firm, and he was talking about how he could string 3 or 4 of those together and make it a 20-year event. And so, but you do highlight, you know, what we're paying attention to, which is: What is the end game here?
The other thing that I would just mention for all of you is, there are a lot of fiercely independent advisors out there who want to be private and maintain that position. It's interesting to see the minority players coming into the marketplace and how they are providing that capital without having to take a majority position in the firm, and we think that's healthy as well. So, we do believe that this is an engine of growth for the industry and supporting firms in their run in terms of acquiring new clients and growing.
Great. Thank you. Michael Cyprys of Morgan Stanley. Just a question on how you're thinking about expanding the overall service offering for RIAs. There's others in the industry providing a whole range of different ancillary services, including capital. Just curious how you're thinking about that, a potential for additional or new revenue streams here, and new services?
... Got it. Thanks, thanks for the question. And as Bernie highlighted in his talk there, certainly foundationally, the brilliant basics and the idea that that's a game of continuous improvement, rolling out new digital tools, making the business more efficient. Whenever I sit with advisors, that's typically where we start the conversation, in the foundational aspects of how we serve them. We are a logistics company, moving millions of transactions, trades, opening new accounts, money movement transactions on an annual basis, so we're leaning into the digital tools. I would say we're probably in the fourth or fifth inning in terms of the completion of that digital experience.
And not only the 1.0 version of that, if you think about a move money transaction for a firm to be able to come into us on a digital tool and move one transaction at a time, that's where we got started. But now we have firms that want to move 100 transactions in a day, so we need to evolve our digital tools to be able to do things in bulk. And so at the foundational level, that's the focus. From there, Bernie mentioned supported independence as a new opportunity for us. And as we see many enterprise institutions in the business are providing supported services to advisory firms. That's coming through transactions, the M&A activity.
Certainly, advisors are looking to monetize the business they built, but if you ask them, "Well, why did you pick that firm versus the other firm?" They'll quickly tell you, "It's the services that firm could provide me, which was the differentiator." Certainly, multiples are important. So as we think about how we can help advisors scale so they can deliver more personalized experiences, beyond just our digital tools, things like managed investing, wealth management capabilities. Nisha and I were talking about that on Friday. Is there a place for us to play there, not only as a product provider, but also as a digital solution provider there? I've seen Paul sitting right there. The bank is another place for us to build, deliver wealth solutions to advisors.
Supported independence is a place that we're leaning into as a future for us.
Well said, John.
Yeah.
Let me just add one additional thing to that around thinkpipes and the trading. So thinkpipes is kind of an institutional version of thinkorswim that came over with the Ameritrade deal. A lot of interest in that, a lot of advisors that leverage that platform trade in options, essentially, different types of option strategies. Also, kind of tied to that, we have what's called a strategy desk, because traditionally, advisors, they're professionals, but they've done a lot of asset allocation. You're seeing more into alternatives, and this is kind of that, one of those alternative strategies. How do I leverage options to, maybe in some cases, protect portfolios, but even more than that, how do I increase returns? How do I generate more income?
So the strategy desk is available to the advisors to teach them different ways to reach their goals and objectives. We have, as an example, a weekly webinars. We have hundreds of advisors that join those weekly webinars to learn all different types of strategies around options. And so a lot of interest, just like as Bernie mentioned on iRebal, and you did mention thinkpipes, too, but we're adding, oh, geez, we have probably about 3,800 advisors that are leveraging thinkpipes today, and we're adding quite a few on a monthly basis, too.
People tend to think of the size of advisors as being the differentiator between a TD and a Charles Schwab originally, and the truth is, we had as many or more smaller advisors than TD Ameritrade had on platform already before we did the deal. But there were stylistic differences, right?
Mm-hmm.
We're starting to see the advantages of some of that diversification of those stylistic differences.
Thanks. Dan Fannon, Jefferies. So sounds like the environment for growth is still very strong. Can you maybe talk about the last, you know, 12 months and the integration and then the regional banking crisis? Is there some pent-up demand where you might see a little bit of acceleration and growth as there's more decisions being made, given you guys were maybe focused more internally than externally, and/or advisors were hesitant to maybe move to your platform in that environment?
I would say, as it relates to the conversion and in the middle of last year, we did see a little bit of a pause amongst the breakaway advisor, the advisor in transitioning, wanting to do the transition after we did our transition, their transition. And so we had a very strong first quarter in our business development space, where we help advisors go independent. The numbers were very strong there, and it looks to be good for the rest of the year. So that's a place where there is some of that pent-up demand. I think organic growth is constant and really wasn't impacted greatly by the conversion.
When we talk about helping advisors who are clients of ours transfer assets from another custodian, again, something that they were avoiding in that September window last year, and we had a very strong quarter there as well. So that really helped the advisor services results in Q1 of this year.
As just fair disclosure here, so as John takes over Bernie's job, I'm taking over John's sales job, so I'm sure my goal is going to go up. You can guarantee that.
Already, already happened. And didn't you—didn't... When you say pent-up demand, did you not—did I not cover the $53 billion in the first quarter?
You know, I think when Bernie showed that slide before, the of the RIA space and the independent broker-dealer and the wire house space, I mean, everything else is potential to come into the RIA space, right? Nothing... It's kind of the- that's where everything ends up if it's going to move. Nothing... Rarely do you see anything leave the RIA space and go into one of those other places. Everything is kind of coming into it, so it's all kind of a green field for us to tap into.
... Steven Chubak, Wolfe Research. Tom, actually, that last comment is a nice transition to what I wanted to press on, which is: we know that there are strong secular tailwinds in terms of the migration to the independent channel. The key question that is difficult for us to suss out from the outside is: where was the gap in capabilities and services ten years ago between the RIA channel and the wires? Where is that today, and what's gonna drive further narrowing of that gap to potentially continue that trend and potentially even accelerate it?
Yeah. Do you want me to take that or...?
I'll let you go first.
Yeah, so I think what you're seeing is you and we talked about this 10 years ago, you know, be careful because the wirehouses are eventually gonna figure this out. What I think you've seen happen is that the wirehouses now, their reps are probably duly registered, they're RIAs, and still, you know, have holding their licenses. But in the end, I think that's actually gonna help us. So while they've expanded their advisory capabilities, you still have individuals that they wanna break away. They wanna break away from, you know, mother wirehouse, so to speak, and they wanna go off on their own, and they wanna build equity with their own shop, so to speak.
And so I think actually, although you've seen them expand their capabilities, I think in the end, that's just gonna continue to grow the pot and continue of potential breakaways that come over to complete independence with us.
Yeah, I worry less about the delta of what an advisor has sitting in a wirehouse environment versus what they would have in the independent channel working with us and that other fintech, you know, capabilities. I think that the thing that has been most impactful and helpful in the last five years is the fact that we do now have more advisory firms and partners who can be a completion strategy to us as a custodian, so that the advisor leaving or the team of advisors leaving can join somebody versus having to start their own firm, and that has just widened the opportunities. You know, it is something that you have to be thoughtful about as you were changing channels. You know, are you an entrepreneur? Do you want to be an entrepreneur?
If you're starting your own firm, that's a choice to make, right? But the fact that you can join a firm, become an employee or a contractor, leveraging somebody else's capabilities that's there and ready for you and your team to plug into, has enhanced the opportunity for the number of advisors that sit away to come to the independent space, so that's been very beneficial.
Kind of answers that itch of turnkey-
Right.
-right?
Right.
If someone really wants to do that.
Right. That's why we watch that join versus start ratio on an annual basis.
Thanks so much. Devin Ryan, Citizens JMP. A little bit of a follow-up, I guess, to Steven's question, just on advisors in motion, and, you know, I think every year there's maybe 6%-7% of advisors that actually move around. And so how are you guys thinking about that, just thematically over the next few years, kind of the drivers to push them into movement versus reasons they might stay where they are, even if long-term they're going RIA? So I'd love to just get a little bit of a thought there. And then, similarly, obviously, the independent firms are, you're trying to create an outlet so they can retain that RIA asset, and maybe that's the next step of them coming to a Schwab.
Like, how does that play in to movement if the independent firms are really, you know, realizing that they have to have an outlet so they can try to retain those assets?
Yeah, I think that, just to put it in context, on an annual basis, roughly 85% of our net new assets, that number that Bernie shared with you, is delivered to the firm by the 15,000 advisory firms that we work with. So, so that is the bulk of our opportunity every year, and it's nice to have an army of advisors out there. Where do they win? They typically win in the traditional channels when they find new clients. So, we want to understand the mix of where the flows come from. If we can expand that extra 15%-10% on an annual basis by 10% or 20%, that's additive to us as we go forward and grow the firm.
Again, when we're operating in the marketplace, we have our marketing efforts, our business development efforts that are prospecting and sharing the good word about the advisor channel, the independent channel. But now we have our client partners doing the same thing. Bernie mentioned Dynasty, Mercer, Mariner; they have their marketing efforts. So there is this sort of stereo effect going on, calling advisors to our space. Sometimes they'll go from a traditional wire to an IBD and get a taste of independence, and then eventually come to pure independence. And there's this new thing called hybrid advisors that sit between the IBD channel and the pure independent model, and we want to be a player in both of those spaces with our platform.
So, we see it as additive to our mix of existing advisors that deliver so well for us on an annual basis.
Incredibly powerful combination, right?
Right.
So it's not just the movement of the advisors, it's also the end clients and the existing advisors bringing those end clients on. So when we bring on a brand-new advisor, we're not just bringing on their existing clients and assets, but we're bringing on essentially another salesperson for the organization that's out there pounding the pavement, trying to grow their business.
... and sending their new flows to us as well.
As we size the opportunity, you know, we're about a $9 trillion industry, the RIA industry. We see about $32-$33 trillion of managed assets in the United States. That's the opportunity that we go after every day, and we support our existing clients, the RIAs, in doing that. And then, if there's an advisor in a traditional channel that wants to join us, you know, we'll put all the resources in the world against that. And, you know, going back to supported independence, that's not only a play for our existing clientele, but we see teams that are wanting to start their own firm, want to pay for services.
Like, I don't wanna create my own HR, I don't wanna do my own finance, I don't wanna do my own compliance. Can I find a partner that could scale that, so I can focus on delivering personalized experiences to my clients and finding my next new client? So that's the virtuous cycle that we think about in our relationship and this growth model.
Okay, I think we have time for one more question. We'll take one off the console here. This one's from Jeffrey Natha at Rockefeller Asset Management. Bernie, or for the full team, just double-clicking into maybe that growth opportunity. Off to a great start with the $53 billion here in the first quarter, you know, where do you see that growth coming from over time? You know, breakaway versus, you know, share of wallet versus conversion.
So I'll break it down for you. So I mentioned 85%, roughly coming from our existing clientele. Of that 85%, I would say, you know, 80% of that is what you would call traditional organic growth. An advisor finding a new client and converting them to their business and our business at the same time. The remaining percentage of that is what I refer to as share of wallet, where an existing advisory firm has custody at a competitor, and they choose to move those assets to us 'cause we've earned the opportunity, either with new services, new capabilities, or just great service. And so that rounds out the existing client flows.
Organic growth, share of wallet, and then we talk about the conversion opportunities of new advisors coming into our space and our business development efforts, and that rounds out that $53 billion, mathematically.
I think we've come to time, so I wanted to thank everybody again for the questions, the interest. So keep watching, we're very, very optimistic, I know, as a group.
We're bullish on advice, right?
With that, thank you, guys. Thank you, John. Thank you, Tom.
Thank you.
I have the privilege of introducing the next speaker, which I warned him that this was a gift from Walt, that I get to introduce him. And then he reminded me that he gets the last word, so I'm gonna be very, very cautious here. But Jonathan Craig, our Head of Investor Services and Marketing, a great friend, a great colleague, and somebody we like to play together a lot.
Oh, we'll play. I definitely have the last word, and I will say I had the pleasure of driving over this morning with Bernie and Peter and Joe, and it dawned on me that these transitions are very real. So I do wanna just pass along my congratulations to all three of you on the transition. I think we've reflected. I think it's been decades working together and not just adding hopefully a lot of value to Schwab, but also great friendships and great colleagues. So I know no one's going anywhere, but I have to say that. Bernie, that was a nice thing to say. I'll say something different later.
So what I'd like to do is use the next 20 minutes to give you a quick update on the retail business, the core strength of the business, and then talk about the priorities for the rest of 2024 and beyond. I'm happy to say this is the first year in a while, first Investor Day in, I guess, 3 or 4 years, where I won't have to talk about a coming integration weekend, which is exciting. Obviously, as you know, Joe covered, but, we've, we've completed the retail integration, at least as it relates to client conversion. You've seen some of the stats.
I'll share a few more stats specific to retail, but really what I want to do is talk about where we go from here, moving forward as no longer Schwab Blue and Schwab Green, but truly one Schwab. I think that is going to be an incredible, incredible unlock of value for the firm and for our clients. Just to get started, let me level set on some numbers for the retail business. As a result of our Through Client's Eyes strategy, very strong organic growth year after year, and of course, the acquisition of Ameritrade. We're now sitting in retail at $4.1 trillion in assets, 25 million-plus brokerage accounts, over $600 billion in managed investing, and 4.6 million daily average trades.
You know, despite, despite that incredible growth, what's, what's also remarkable is we've stuck to a very focused business model. Every single employee in retail comes to work every day with one objective, one simple objective, which is: How do we help individual investors and traders achieve great financial outcomes, outcomes that they, they richly deserve? And of course, we do that by bringing a broad set of capabilities to, to the table, from, wealth management, advice, banking, self-directed ta- trading, active trading, and much more. And then we complement that with individual capabilities for individual client segments. Yes, I wanna look back a little bit on, on 2023, and, you know, I would describe 2023 as, as, as a challenging year, but also a year in that environment where we delivered some really strong results across key areas.
I'm happy to say, in each of those areas, those results have only accelerated, and even materially, in 2024. I describe 2023 as a challenging year for a couple reasons. Certainly the regional banking phenomenon and some of the negative press, most of it I would characterize as misleading, that we had to deal with, was part of it. But, it was also a year where investor confidence and the VIX continued their downward trend. Yet in that environment, in retail, over $100 billion in net new assets, MI flows up 20% year-over-year, $27.7 billion. Schwab CPS score near industry highs at 66, just shy of 1 million new to firm retail households and 4 million daily average trades.
On the far right, you can see how those numbers compare in Q1 2024. Already strong growth across each of those dimensions. So $34.9 billion in net new assets in retail in Q1, twelve point four billion in MI flows. You're going to hear a lot about this. You already did from Rick and others. You'll hear more from Nisha, but very strong interest in, in advice among our retail clients and strong adoption there. CPS up to 69, and 275,000 households, and that's up as well to 4.6. So overall, I think strong momentum coming towards the end of the year in 2023 and accelerating into 2024. We also made meaningful enhancements to our retail offer in the last 15 months or so.
I won't go through them all, but let me hit on a couple. Significant enhancements to Schwab Wealth Advisory, our premier wealth management solution for clients, leading to record advice flows in that program. We made meaningful enhancements to Schwab Personalized Indexing. You can see a demo over here, a really strong capability for our affluent clients who are looking for customized indexing and most importantly, tax alpha. We launched Thematic Investing. We brought thinkorswim over to Schwab Blue. We also most recently brought over Futures, Forex, and Portfolio Margin to Schwab Blue. Made meaningful web enhancements, meaningful mobile enhancements, including streaming and SnapTi cket and other enhancements. Walt, I think, mentioned this in the high net worth and ultra high net worth space. Last year, we launched Schwab Private Client Services and Schwab Private Wealth Services.
This was about delivering differentiated experiences for our 1 million-plus and 10 million-plus. Then the last thing I'll highlight, significant enhancements in making it easier for our clients to enroll in managed investing and to enroll in things like pledged asset lines. Our value proposition also continues to be recognized as industry-leading. Everyone has a trophy shelf, I guess. We have a bigger one, but I chose all these for a couple of reasons. First, I think Investor's Business Daily, number one online broker. We take great pride in that. U.S. News & World Report just came out and rated Schwab the number one overall investing platform. But underneath that, they also said we are number one for stock trading, number one for options trading, and number one for forex trading.
J.D. Power on the far right ranked TD Ameritrade and Schwab, number 1 and 2, respectively, in the self-directed trading space. When you think about that, think about the power of the two firms coming together when you bring 1 and 2 together. And then I included the customer service, which I think, Walt, you had as well on your chart. I included that one because in our industry, we talk a lot often about product, price, platform, and those are all important. But, you know, make no mistake, I think increasingly it's service that makes the difference, and it's often Schwab service that makes a difference. And, you know, replicating the Schwab service model is not an easy thing to do. It takes meaningful investment, sustained investment.
It takes a service ethos, top to bottom, that starts with Chuck and goes all the way down. It takes great service people, and it takes it through a client's eye strategy. And I think the sum total of those are, I don't think you're going to find anywhere else, and why Forbes named us number one in service. And when you get underneath all of our accolades or awards, service almost always pops to the top. So before I move on to where we go from here, I did want to make a couple of final comments about the integration. This will be a little bit repetitive, but it's worth highlighting, and I'll pull out some new numbers as well. From a retail standpoint, we did it over five transition weekends.
Unlike in Advisor Services, we had to spread it out. Those five transition weekends started in February 2023, but in those weekends, we successfully moved 13 million accounts and over $1 trillion in assets. I think, you know, I would hope an objective observer would have to describe it as an incredibly successful integration on so many dimensions, whether it's the technical or operational acumen that it was done with, the service that we delivered, or even the complaints per million. I want to spend a second on complaints here because I'm quoting the number as well, 55 complaints per million. Now, that number is real. That number is audited.
That is, as a broker-dealer, when clients complain, when they register a complaint, we have to send it to our client advocacy team and audit it and resolve it. So, I just want to reiterate, that's not a loose definition of complaints. It's a very specific definition and accurate. I will tell you, as the head of retail, I spent a lot of time, even though it's 55, you can imagine I can look at every single one, and I do look at every one, and often I get every one, actually. And what the complaints tend to be, almost always or most of the time, they're about change. Change is hard, and people don't like change. And that's understandable.
And they tend to be when it's about change, it tends to not be about thinkorswim because there was not a change there. It tends to be about the mobile app because the mobile app is what many TDA clients use who don't use thinkorswim, and they're going from one experience, TDA Mobile, to Schwab Mobile. The example I use for you know what it's like to go through change, I say this all the time with my teams: Imagine if you woke up one morning and you drive, let's say, a BMW, you're late for work, and you run down the garage, and there's a Mercedes in the garage. You jump in the garage and you know try to drive away. It's raining out. You can't find the windshield wipers. You don't know where the turn signal is.
You know, all the way to work, you're going to be complaining about this car and say, "Who designed this car?" It doesn't mean that the car is not well-designed. It just means it's different. And I think that's a lot of what we're dealing with with some of the very, very small complaints, but some of the complaints that we've been getting. I'll also say- You know, as Walt said, what Schwab does is far more significant from a capability standpoint than what Ameritrade did. So as you'd expect, our app, our web experiences are more comprehensive. We're also a lot larger, so in the retail space, we have about 3x Schwab retail clients relative to the $1 trillion that we moved over.
So, you know, some TDA clients would say to me: Why don't you just use the TDA app? Well, for a lot of reasons, we wouldn't, but one of the most obvious ones would be we'd have three times as many complaints on the blue side. And then the last thing I'll say is that, if you look at the mobile app store ratings, for Android and the Play Store, or from the Play Store and the Apple Store, prior to conversions, our app and mobile experiences were rated quite high at either at par or better than Ameritrade. So, you know, I digress a little bit on that one because, we're getting a very, very small number of complaints.
They tend to be about change, and yet at the same time, we are trying to take the best of what Ameritrade has and the best of what Schwab has, and we'll continue to make enhancements as we go. Let me a few more seconds on this page. Joe, I think you talked about attrition and CPS. Attrition's been coming in well below our forecast for every transition group, and that continues with this most recent transition group, so that is great to see. CPS is also on the rise immediately after every conversion group, almost hockey stick type growth, starting at sort of neutral, where you'd expect. When you convert a client, they didn't ask to be converted, but then dramatic improvement in the first couple of quarters. CPS is great. CPS is just what clients say.
What's probably more interesting is what they do, and I, I can also tell you that the behaviors of these clients are very, very promising. So far, on the asset side, $60 billion of converted assets already. Converted clients have already brought in inflows of $60 billion, so a very meaningful number. Related to that, for clients who converted, who were assigned to a financial consultant, we had a 99% retention rate. Trading levels, we looked at the trading levels of clients who converted pre and post. This was the November TDA group, where we had 2 million thinkorswim users. Trading post-conversion increased 22% relative to pre. No doubt, some of that was the market performance, but that is indicative of these clients willing to trade at Schwab and willing to trade on our platforms.
Then the most compelling stats at the bottom of the page, tremendous engagement with managed investing. The green client adoption of our managed investing capabilities has been fantastic. $17 billion of inflows already. Just one stat to put that in perspective. In 2023, 25% of our inflows to managed investing came from green converted clients, and those clients, proportionally, those clients that are already converted, only represented 22% of our total retail asset base. So think about that. Disproportionate engagement with Schwab advice in year one relative to Blue Clients. I'm really, really bullish on this. So let me so hopefully, you have a sense of the overall strength of the retail business, and the strength of the franchise.
As we think about it, where we go from here and how we build upon that strength, I wanted to share some client and industry trends that are informing that strategy. I will say these aren't new, but I think they're generally instructive to consider. The first one is that I say convergence is here. And what I mean by that is competitors broadly are starting to look more and more similar from things like price, product, in some cases, platform. You know, that's not to say that there aren't differences. There are absolutely differences, and for many clients, those differences are fundamental. And in many cases, we may pride ourselves on those differences. But it is to say that increasingly, people are making decisions more based on service and experience, and that's the world we live in.
Second trend, you hear this a lot. There's a bull market for advice, without question, and that should not be a surprise when you consider the last couple of years, 2022, every asset class down, many down double digits. 2023, fastest rate rise in history. 2024 appears to be a strong bull market. You know, navigating the last couple of years, the last three years, has been difficult for retail investors, and, and as, as much as we have some amazing self-direct investors, we're also seeing clients leaning into advice more and more at all asset levels. The third trend that we think a lot about is this demand for ease. You know, very simply, clients expect easy and intuitive experiences.
They expect you, as a firm, to respect their time, and they're not gonna compare their experiences with Schwab to other financial services firms. They're gonna compare their experiences to all firms they interact with. That's the world we live in, and that's the world we have to live up to, which is why we talk a lot about the brilliant basics. And then finally, Walt touched on this, but you know, the desire for personalization and customization is fundamental. People want... It's everywhere. People want, you know, curation, personalization in the service they receive, the content they get, the experiences they have, the products and solutions they buy. And so if you're sitting in my shoes or our shoes, that's a high priority. And I'll tell you, it's easy to say.
It's hard to do at scale, but I'm quite proud of the progress that Schwab is making, 'cause we are doing it at scale. So with those trends in mind and the integration behind us, touch on four key areas of focus going forward for retail. First, we've got to continue to drive growth, household and asset growth, leveraging our multi-channel acquisition model. Second, continue to deliver differentiated experiences for our clients, in particular, high net worth, ultra high net worth, and trader. Third, deepen client relationships, primarily with a focus on wealth and banking, where there's such opportunity. And then finally, again, continue to build intuitive and easy experiences for our clients. On the growth side, the most important thing we can do to drive growth, without question, is the brilliant basics.
What I mean by that is great operational experiences, great service experiences, tight relationship management, the brilliant basics. But beyond that, we will continue to leverage what has been a very effective multi-level acquisition model that brings together breakthrough and insight-driven marketing, deep personal client relationships, a growing, increasingly important workplace business, and of course, referral, which is such a core part of this business. Each one of these works independently, but also together to sort of symbiotically create the asset gathering, gathering machine that Schwab is and is known for and will continue to be known for. I think Stacy is going to spend more time touching on these, so I will, I'll move on. The second priority is we have to continue to, and will, emphasize the importance of client segmentation, and in particular, again, high net worth and trader.
For high net worth, we define high net worth at Schwab Retail as 1 million-plus at Schwab. We define ultra high net worth as 10 million-plus at Schwab. Both of these segments collectively represent about 70% of our assets. Maybe more importantly, they represent the areas where we've seen the strongest growth, five-year CAGR, growth over the last five years. In 2023, we launched private client services and private wealth services. Again, that was about delivering differentiated service, relationships, ops, product, price, platform, experience for each of those segments. 2024 and beyond is about building on those, adding more to what we deliver for those clients. Things like continued investment in operational enhancements and experiences, family benefits, launch of new products like alternative investments, which you'll hear more about, enhanced banking, which we talked yesterday a lot about.
So a lot of continued investment in delivering for those incredibly important clients. And then the trader segment is become even more important to Schwab. It has been for 50 years, but with the acquisition of Ameritrade, it's become even more important. Trading represents over a quarter of retail revenue right now. Traders, which is up significantly from 2019 before Ameritrade, traders represent even more than that. So a very significant client segment. James is going to come up and follow me, so he'll do a deeper dive on Trader. I would just say our focus there really is about investing in the Schwab Trading Powered by Ameritrade ecosystem of product, platform, education, and service.
Third opportunity, you'll hear a lot more about this, too, is just how do we continue to deepen client relationships, in particular with areas like wealth and banking? Our clients want to do more with us. We have capital to do more with our clients. These are both significant opportunities with both legacy blue clients, but absolutely also with the newly converted green clients. We talked about there's a bull market for advice. People want advice. That's absolutely true. We also know that when our clients enroll in advice, they generally get better financial outcomes, they generally have lower attrition, they generally consolidate more, and they generally refer more. So it is the definition of win-win monetization.
And so given that, probably not surprisingly, a lot of our focus for my team is to really make our clients more and more aware of the capabilities that we, that we offer. Things like personalized indexing, lots of interest in tax alpha. Obviously, Wasmer Schroeder, lots of interest in this market, in fixed income. Beyond Wasmer Schroeder, we have a lot of other fixed income capabilities, thematic investing, you name it, plus a lot of focus on Schwab Wealth Advisory. Again, our premier wealth management offer. We will launch a discretionary version later this year that will, that I know will be very well received.
And then we're also going to launch a retail alternative investment platform for our, for our retail clients that I know Nisha will talk more about, but this is another area that is of, of high interest to our clients, and, and I think will be very well received. On the banking side, we've talked a little bit already, but strong penetration opportunity there as well. A lot of our focus for the rest of the year in retail, 2024 into 2025, will be on two things. Number 1, building out more premier banking solutions for our private wealth clients. They're used to a more bespoke, tailored experience, and we've made great progress there, but we'll continue to do that. And then leveraging PAL, the Pledged Asset Line for our client base is a highly sought-after credit facility.
We've seen great success in the investments we've made with the new technology that takes enrollment from days and weeks to hours and minutes. It's gone a long way with the field, and gone a long way with clients. Also matching that with our investor advantage pricing, which is about relationship pricing, is going to be a continued focus for us as we deepen the relationships with clients beyond just investing, beyond wealth, to get to banking. The last priority, maybe, maybe the most important, is being relentless about delivering easy and intuitive experiences for our clients and our financial services professionals who deal with clients every day. On the client side, I won't go through it all. I would just say you can count on meaningful web and mobile enhancements in the areas of research, move money, trading, performance reporting.
On the client side, you can expect meaningful investments in things like our sales and service desktop investments, and continuing to make it easy for financial consultants to enroll people in advice from MI discovery to enrollment, all the way through to disclosure delivery. Then, as was referenced earlier, there's lots of opportunity in the artificial intelligence area to leverage artificial intelligence to make our financial services professionals even more efficient in interacting with clients. We'll be... We've made some good progress there, and it will have more meaningful progress with the launch of what we're calling Knowledge Assistant this summer.
So, yeah, I hope so far you've got a sense of the, the tremendous strength of where the retail franchise is today and, and how optimistic I am about it, not just where we are today, but the next decade of growth. You know, I believe we sit in a very, very enviable position. We sit here with differentiated leadership positions in self-directed trading, at investing, active trading, and those seeking advice. We've got premium services for our high net worth and ultra high net worth, all backed by a no trade-offs value proposition, and of course, wrapped in a satisfaction guarantee. And despite that incredible, incredibly enviable position, we still have tremendous opportunity in front of us. $9 trillion in assets for the firm, $4 trillion for retail.
We still operate in a business, in our, the retail side, with a single-digit market share in an industry that's growing double digits. So tremendous opportunity to grow externally. And then internally, there's a question about share of wallet before. A lot of opportunity to grow our share of wallet, but also drive deeper penetration where it makes sense for the client in areas like advice, like banking, and utilization of our advanced trading tools. In all those cases, our penetration rates are either in the low teens or low single digits. So, I'll close there with I've been at Schwab 24 years, been in this role for a while. I don't think I've ever been as optimistic now that we're past this integration, an integration that went incredibly well.
But I don't think I've been, ever been as optimistic about the organic growth opportunity in front of us as we move forward as, as one Schwab. So with that, I'm gonna bring up James to talk trader.
You come down or come up?
I'll make the
Thank you.
Transition.
Appreciate it. Thanks so much. I'm honored to be here, my first Investor Day with Schwab, after 20-plus years at TD Ameritrade. It's truly an honor to get a chance to represent the trader business. So when we think about trader, I mean, the team has done an amazing job, I think, of giving background on the integration, and obviously bringing over sort of that trader value proposition of Schwab Trading Powered by Ameritrade, was a mission-critical component of what we did as part of the integration. And so I think it's important to start out sort of with what is the continuum of trader?
And so the value proposition that we talk about is amazing for the most entry-level person who's interested in the, in the world of trading, all the way up through to the most sophisticated traders that we have, who are trading across multi-asset classes, trading complex, sophisticated strategies, leveraging portfolio margin. But across the platforms, across the products, across the services, across the tools, we've got a value proposition that meets all of their needs. Obviously, we've seen huge growth in trading at Schwab, right? The Ameritrade acquisition added millions of traders into the mix. We also had the meme stock frenzy, obviously, which pumped in a lot of new interest within trading, and I think very important to note, a lot of that business has stayed with us and grown along that continuum over the course of the last few years.
A lot of the traders we brought in are much more experienced, are much more skilled than they were when they got here, and that's a lot of what we try to do, and I think we do really effectively across the full value proposition that we offer. And then there's been a growth in derivatives trading, as many of you know for sure. And once you start to trade derivatives products, we classify you as a trader and have a lot of things to meet your specific, unique needs as a derivatives trader. And why that's all important, as Jonathan talked about, traders drive a disproportionate amount of new assets to the firm.
Their ROCA is higher, and we're seeing that great adoption of other products, which is one of the things I am so excited about as a guy who gets a chance to lead the trading services business. We think about the value proposition here intentionally multi-legged, right? All firms have some form of a trading platform. We like to believe, and industry will tell us, we believe it's the best trading platform, bar none. But it's not just about the platform, it's about the education and content we put around that. Again, content that starts with most novice of strategies, of very basics like covered calls through cash-secured puts, all the way up to multi-legged, sophisticated option strategies.
Where you are on the continuum, we have education for you, and hopefully education to help you move up along that continuum if that's something that you want. If ultimately you're very content at, you know, covered call strategies and don't wanna go any further, well, that's wonderful, and that's fine with us. A lot of times people come for the platform. I say that the platform is sort of at the epicenter of the offering, but quite frankly, they stay, and they fall in love with the service. Any firm can say they have a platform, any firm can say they have a form of service. We believe the combination of those two, with education on top of it, is an absolute differentiator for us.
And I'd be remiss if I didn't talk about sort of risk management permeating through all of that. One of the things we really try to do with our traders is teach them how to be more like professional traders in terms of how they think about specific positions and how they think about their entry points and their exit points, and how they manage their portfolio. So whether that be risk management tools within the platform, courses on risk management, specialists in the risk management area, when you call in and have a specific question, you know, heading into expiration and wanna talk about something like pin risk, we have people to do that at the highest levels, and I think that's a really important differentiator to the value proposition that we provide. Let's dive in a little bit.
We'll talk about the platforms, right? I think Walt had talked about it. Whatever form factor you wanna use, multiple monitor setup. I've seen up to 10 monitor setups that people have, monitoring the markets to, you know, your iPhone out of your pocket, your Android device, or sort of a more simplistic web version. I don't wanna say simple, but more simplistic than the actual desktop. So 3 platforms across the board... all the bells and whistles, anyone could want. I think one of the things to stress on here, an unbelievable excitement by the team about, it's, like, palpable in the room of finishing the integration, how important it was. But some of the things we did to add scale, some of the things we did to ensure performance would not take any sort of a, of a hit post the integration.
When we look at the growth trajectory we wanna be on, the ability to grow with the infrastructure we have was critically important. But the teams get excited about the innovation piece, right? Everybody is really excited about getting back into the world where we're not working through the integration, and we're getting focused on innovation to grow the business. We've got a long list of enhancements clients have been asking us for. Some of the teams have already started that now, even though we finished the integration last week, but overachievers, which is fantastic. And so a lot of great work is happening there in the innovation space. To the box on the right, I think it's important to call out the interest of the Schwab community and new clients relative to, you know, it's thinkorswim, but it is the broader value proposition.
So basically, 4 out of 10 new clients are saying, "Hey, we have some level of interest in the platform, in this trader value proposition," which is a fantastic number, quite frankly. And the 200,000 number of households who have downloaded and started to explore thinkorswim, really since October, was when we ultimately sort of formalized the launch, is a number we're also really proud of. And so, you can already see the effects of the STPV. Sorry, I shouldn't say that. Schwab Trading Powered by Ameritrade value proposition permeating across the Schwab client base. When we talk about education and coaching, there's a lot to it. So a quick plug to my team and my friends back here. Please check out the booth during your lunch.
You can get a quick look at the platform, you can see some of the education, and you can see a little bit of the Schwab network in action. All important components of the value proposition, right? And so, again, all firms have platforms. Most have at least some form of service. This is a place where we absolutely differentiate. 25+ hours of live content a week. All of that gets archived, so clients can access on demand, computer-based training modules, courses, live events. We just wrapped up a live event outside of Chicago last week. We had standing room only, 350, 375 people there doing some intense work around the platforms, around different trading and investing strategies. It was a phenomenal event.
We'd only opened that up to the, to the Schwab client base, for a couple of compliance reasons with the broker-dealer. So now we're gonna be able to grow that, probably double, and maybe even triple the size of those combined events, which we are incredibly excited about. paperMoney, we call it Guest Pass now, is another unique product that's very important in the education space as clients come in and they wanna test, especially their first sort of derivatives trading strategy. Being able to do that in a riskless way, in a paperMoney account is, is an important component of it. We launched that early this year.
Back in January, we've had 10,000 plus clients sign up or prospects sign up as a way to sort of get into the funnel for broader trading exposure, which we are super proud of as well. And then the network gives our clients an opportunity to see, you know, real-time news we program throughout the market day. Again, we'll take a look at that when you get a chance during the break. Let's talk a little bit about service. I said this before, clients come for the platform, they often stay for the service. And the other thing we have found is when clients leave, they do occasionally, not often, but they very often come back for the service, right? And that gets into, you know, what we talk about as traders talking to traders.
The experience level of our folks, mirrors that continuum I talked about. So, you know, a level one client who's just getting interested in derivatives will talk to somebody, who's very experienced in that space, but as they work up that continuum, you can get to folks who have 20-plus years' experience trading derivatives in, you know, in the pits in Chicago. We pride ourselves on the best service in the business. Jonathan also alluded to a little bit of the symbiosis here that exists as well. We had a phenomenal trade desk at TD Ameritrade, and all the way up to the top, what we've called Trader Private Client Services.
The ecosystem now, though, that exists with financial consultants, with some of the wealth managers that Nisha will talk a little bit about, and a lot of the experts that we have, we've seen an unbelievable amount of interest and uptake from our most sophisticated, ultra-high net worth traders, who, as Jonathan pointed out, didn't have that available to them at Ameritrade. And so we had about 1.1 million, what we would call dual clients. So they had relationships with Schwab and Ameritrade. And I think, as Rick pointed out earlier, a lot of that was they like to do their trading at Ameritrade, and they like to do their broader wealth management at Schwab, and that's fantastic.
That said, that leaves us, you know, 13, 14, depending upon how you break up the advisor business, million clients who had relationships at Ameritrade but didn't have a relationship with Schwab, and if they had a second relationship, had it somewhere else. And so what an amazing opportunity, and I think it just speaks to the numbers Jonathan talked about relative to the uptake in advice as one example of the power we have going forward of all the Schwab products and services to the trader clients from Ameritrade. And then lastly on this slide, the Trader Solutions team, another unique component of the value proposition, and a team that's been incredibly busy over the course of the last few months through the integration. This team will do one-on-one platform demos.
In some cases, for clients that need it, they will do in-person visits, whether that be in a branch for a small group of people, or whether it be one-on-one consultations to help those folks who want that 10-monitor setup get set up to ultimately, you know, create their trader cockpit. That team has done an amazing job, and I think is, is a key component of some of the clients who are working through that change Jonathan talked about, "Hey, something has changed for me. What does that look like, and how can I best acclimate myself to that change?"... Looking ahead, we see great opportunities to grow those relationships. I talked a bit about this. I think I was a little bit ahead, sort of, on this slide here.
I do think that the bank is another place where TD Ameritrade didn't have a bank. And we're already seeing great uptake, not only on some of the lending products that Jonathan talked about, but just sort of some of the core basic components of a bank offering, which I think are great. Again, the platforms are here now on the Schwab side, and so the trick now from my perspective is, you know, how do we sort of take what used to be a bit of a more monolithic trading business and sort of expand the lanes on the highway? So to me, I sort of see three lanes on this highway. I see the new clients who are coming in and wanna be, or want to experience some elements of trading and ultimately may wanna move up that trader continuum.
But, but I think the beauty of the way that this was set up is, for those clients, it's not an either/or. There's not a trade-off decision here, and I think one of the really critical components of my role sitting within the retail business is there's no sort of conflict over clients. I think our best clients are gonna use a plethora of our products and services. Ideally, they're gonna be trading in, in an account for them, seeking alpha within the markets. They may have an advisor relationship as well in, in Bernie and John's business. They may be taking advantage of wealth management products in, in Nisha's world, and, and that gets back to that share a wallet element that I think is gonna be such, such a great opportunity.
Coming from Ameritrade, having led the thinkorswim integration back in 2008 and 2011, and then, I was also able to lead the Scottrade integration back in 2016. We saw the same formula. Whether you bring clients to a new trading platform, like we did at Scottrade, we brought them over, or you bring the trading platform to a new group of clients, we see increased engagement. We see increased interest in a broader set of products because, again, traders are typically gonna have more of their money here and are gonna be interested in the broader wealth management spectrum that we ultimately provide. Everything I've seen from the transition groups we've executed before, and this most recent one that we just executed now, indicated it's gonna be more of the same.
It's not just about the platform, though, now, it's about the entire broader value proposition and trader ecosystem that we're bringing to the Schwab client base. The beauty here, again, is with also moving over the 17 million Ameritrade clients, we're giving them access to the, to the full world of Schwab. And so you've got new clients coming down one lane of the highway. You've got the Ameritrade clients coming down the center lane with access to everything that Schwab has to offer, and then you've got the Schwab clients coming down the final lane to this value proposition of Schwab Trading Powered by Ameritrade. That's quite frankly, a much more robust value proposition than Schwab had previously.
I could not be more excited about the seat I sit in, in terms of the opportunities for trading to grow and expand across Schwab, but also for their trader segment to continue to grow at Schwab with access to everything that Schwab has. That was all I had. I know I can talk fast. Really appreciate the time today. I look forward to taking questions after I turn it over to Lisa Hunt for the international update.
I just wanna point out that, James, you got claps. Jonathan, I don't think you did. So, good morning, everyone, and please clap for me. I value that greatly at the end. Good morning, and I am gonna one-up James and Jonathan's excitement, I think, to tell you how excited I am to talk about our international services business. Thought we've spent most of the morning talking about the US, that we could spend maybe 10 minutes talking about the rest of the world. And more importantly, the opportunities that Schwab has to continue to grow our global exposure and really to diversify the growth story for Schwab overall, especially in retail. I've been at Schwab, for those of you that I haven't met, for almost 33 years, and I've been leading this business for a while.
But I have never been more excited and enjoyed working on something that is such a great growth story as I have having the privilege of leading the international business. So for some of you, it may be a surprise that Schwab is and has been involved in our international business. We work with clients in over 200 countries globally, but we really focus on about 60. 60 countries where we believe we have a great opportunity to deliver great value and take terrific market share. And we do most of that work through our U.S. broker-dealer on a cross-border basis. But we do have three foreign affiliates in the other major global financial centers in the U.K., in our London office, and then in Hong Kong and Singapore.
We really believe in those markets, that local presence, that ability to serve those individuals, both through our normal phone service, chat, and web and digital-based services, but in person, really gives us a very powerful competitive advantage over many of our competitors that are in those markets or not in those markets at all. We've been in those markets for a while, I think. I tell a story that Chuck actually opened the Hong Kong broker-dealer back in 1984. It was a little bit of a different business model, but we had an office in Asia before we opened our first retail branch in Manhattan. I think that speaks to his commitment to really democratizing investing, not just here in the United States, but worldwide. I'll tell you why it works so well.
Our no trade-offs approach really is a value proposition everywhere. You don't have to be lucky enough to be born and live in the United States to value things like transparency, great service, and trust. It's a basic human desire, and when you're talking about money and financial services, it matters, and ours translates quite nicely. In fact, our clients that live outside of the United States really mirror quite closely our client profile in our, in our domestic retail business. It's a little different because, as most of us know, in your own portfolios, I would imagine maybe you have 5, 10, 15% of your money invested outside the United States, so we're never going to get 100% of a client's investable dollars today.
But as you would probably imagine, most investors, if they're going to start investing, really look to the United States. They wanna come to that market that has the most liquid, the most mature, the most transparent capital market system in the world, and frankly, they wanna take advantage of the growth story of the great American entrepreneurial spirit with some of the securities that we know are uniquely traded here in the United States. So what's a little different for us is 53% of our clients have their investments outside of their home country. So that's a big percentage higher than what we would see here domestically, where it's a much smaller percentage.
So we definitely get the benefit of being in the United States and being the leaders of investing in the United States when our clients or prospects, for that matter, are thinking about a platform or a company to engage with. The good news is, of that 53% of investable assets that they're taking outside their home country, 80% of our clients consider Schwab their primary or sole broker for investing in the United States. So we have deep loyalty and a lot of great engagement with them. 70% of them consider themselves self-directed, an area that we've heard all morning about how we lead and do so well in, and that's important for us.
These people are driven, they're excited about investing, and they wanna come to Schwab, but it gives us a little bit of room for some help and advice and guidance, and I'll talk about where we're expanding our capabilities here in a minute. 86% of our clients consider themselves to be highly or somewhat highly experienced investors, so they have experience, they're familiar with growing their wealth and how to go about doing that. We definitely see a bit higher uptick in initial funding in these accounts, about 25% higher from what we see with domestic retail when clients open an account and come to Schwab.
Then 25% of our clients are active traders, and this study was done last year, so it doesn't include yet the majority of the TD Ameritrade clients that converted over. We know from just our data and our numbers within international, the majority of those were very active traders. So we are excited to see not only those, those clients convert, which we've completed our successful conversion, but also introducing Schwab Trading Powered by Ameritrade to the majority of our existing clients who haven't had that capability. So let's talk a little bit about scale. To be clear, we are not establishing a bunch of bespoke models in 60 different countries.
We are taking the very best that Schwab has to offer and transferring and exporting that into other jurisdictions that are very interested in engaging with us. We are tapping into our proactive client outreach. We are taking our products and solutions that we have built for our domestic clients, and to the extent we can, exporting them overseas. And we're not just exporting our products. One of the things that I think really differentiates Schwab's international offering from other competitors is we're also exporting our service. And as you've heard today, that matters, and I will tell you, it really matters outside the U.S. The fact that we pick up our phones in a handful of rings, that we have individuals that will spend time with you, to educate you, to help you, is very unique and quite disruptive outside of the United States.
What we would consider table stakes for most firms today is still quite unique and disruptive outside. So that delivering best-in-class service, relationship management, and education in multiple languages goes a long way. Now, why do we care about this international business? Why do we think that there's a great opportunity? Well, there's $300+ trillion reasons why we are interested in that business. And while there's $67 trillion in investable assets in the United States, 70% of all global wealth is actually outside of the US.
You've got this massively growing, emerging middle class with rising expectations and a convergence of external environmental forces that are turning the rest of the world into what we saw, quite frankly, here in the 1970s and 1980s, as we moved from defined benefit plans to defined contribution plans, putting more responsibility in the hands of individuals to invest, and we know how that exploded this business model. The U.S. market is, is where people wanna come. As I said earlier, it's mature, it's liquid, it's a trusted market. So if you're gonna invest from another country, you're gonna start here, and you want Meta, Apple, NVIDIA. You wanna see that growth, and you're going to come to the U.S. to do that. The other thing that's been really, helpful, I think, in just fueling a lot of this business,...
is the fact that social media and information is so readily available now that people are learning how to invest from their computers. They are, understanding where to go from, key opinion leaders, and we have a lot of sort of marketing, halo, if you will, from just social media. If you, if you travel at all and go to Asia and other markets like that, you will understand how this really can fuel the growth, and turn things around. We've also seen a pretty big policy shift in most countries outside the U.S., whether it's been austerity measures that have been put in place over the years with challenging budgets, the demographic shift of less workers supporting a massive base of retirees, and you're seeing governments start to pull back on some of the social safety nets that were in place before.
And what does that do? Puts a lot of responsibility on the individual for the type of retirement they want to have, the type of education they might want to deliver for their children, the type of healthcare they want to have later on in life. And so that need to invest, and some of the regulatory policies, creating things like the IRA accounts that we have here in the United States, that all help individuals want to invest and grow their wealth. Maybe I'm biased, but if they're gonna do that and do it in the U.S., they're gonna come to the leader, investing in the U.S., and that's Charles Schwab. The nice thing, too, about our strategy is that our through client's eyes approach resonates and is something that we leverage in international as well.
Our strategy not only aligns with what our clients need, but it aligns very nicely with the corporate strategic priorities as well. And so not unusual, you're seeing the exact same elements of success that we employ here domestically. All we're doing is tapping into that and leveraging it. Scale and efficiency, and I'll just go through a couple of these, rather than spend time on each one of them. I'm happy to talk more about any of them. We do a great job with our education, with our content on our digital advice devices, and we really have transported that into our international business, and we've translated it. So we serve clients today in Mandarin, Cantonese, and Spanish, and we're working to really grow the languages that we can also provide to our clients.
We not only provide live service in those languages, but we also provide content and information so that while they're investing in the U.S., they're doing it in a way that is in their native language, and they can understand and help. We're investing heavily in our digital-first experience. For most people, you can imagine they're outside the U.S., they don't have access to a local branch. They're also a little bit more digitally savvy than maybe the American population is. Mobile first and web have been major elements of our ability to connect with these clients, and again, we do that in multiple languages. We take a very scalable approach. As I said earlier, we're not setting up a bunch of different business models in different locations.
We have leveraged technology to make it very scalable and easy for our service professionals to serve clients in a variety of different jurisdictions and being very compliant and clear on what is allowed, permissible, and okay to do in each of those jurisdictions. It's really helped us to take a very reactive business, and going forward, to be very proactive in how we reach out and how we engage with clients. We're very excited about adding to our platform. We have been primarily and only a U.S. dollar stock and option trading platform. But over the next few years, starting with this year, we will be introducing, if you will, our existing clients and capturing new clients by talking to them about our powerful trading tool that James just spoke about, Schwab Trading Powered by Ameritrade.
We'll be expanding, and Stacy will be up later. We're gonna be tapping into the marketing campaigns that we use domestically to really shout our message about zero commission, zero minimum, things that are, again, very unique outside the U.S., to share that news. And we will be launching several of our managed investing products, starting with managed accounts and our Schwab Advisor Network before the end of the year in partnership with Nisha's team. We also provide a very differentiated experience for our traders, our high net worth, and ultra-high net worth clients, and we are just beginning to tap into that relationship model. We are adding to...
We have a very small handful of financial consultants, and we'll be adding to that over time to ensure that our high net worth, our high net worth traders and ultra-high net worth clients have that level of personalized experience that we know they expect. We also have local websites that are very clear for some of our clients. And then the brilliant basics, I think, is really what differentiates us outside the United States. We have service professionals. We answer our phones. There are a lot of our competitors that are in other markets where there's no phone number. You have to send an email. You have to wait for someone to respond to you, and that ability to engage with us is important.
If you think about it, if you were gonna send money over to a foreign country, you'd really want to make sure you could reach out to somebody, get a question answered, and get help immediately and not have to rely on a phone coming, a phone call coming back in. So to talk, just to wrap up, 'cause I know we wanna jump into Q&A here. We have a very robust roadmap of things that we wanna drive forward. We'll just speak. I spoke about the managed investing. We're actually gonna be in 53 different jurisdictions, where we can actually reach out to clients and talk to them about our capabilities. And just as it is in the United States, that help, that guidance, no matter how active or driven or sophisticated you are as an investor, they matter.
Things like managed accounts, things like somatic, are gonna be game changers for us and very unique outside of the United States. We haven't really been offering margin in most of these jurisdictions. With the advent of thinkorswim coming over, and a lot of our other capabilities, we are adding margins, so that is gonna allow us to trade more options, futures, and forex. And then we're just gonna continue to expand our client experience, continue with not only our digital education, but create more of the live education sessions. It's very easy for us to do that, even around the entire world. We are, like I said earlier, expanding our translation capabilities.
We will be leveraging the Schwab Intelligent Assistant as well in multiple languages, so clients can engage with us very scalably, very quickly, and we will deepen those relationship models. As you saw in one of the previous slides, we continue to grow. We have $92 billion in client assets of around $600 billion across 670,000 accounts. We are about 2 times the amount of ROCA than our retail business, and we see tremendous scale and opportunity there. We are looking forward to capturing our fair share of the global market. Really, our time-tested model that has worked so well for decades here in the United States, we are ready to serve investors, both big and small, around the world.
As I say to my team, if we can just get 1% of market share of that $303 trillion over the next couple of years, we're gonna be doing okay. So we're excited. Jonathan, James?
Lisa, the lack of applause was they were in awe.
I know.
They were in awe of the—
Don't let down-
The comprehensiveness.
I feel so bad.
The comprehensiveness.
You what?
By the way, it's James' birthday today, so hard questions go to James.
I didn't know that.
Happy birthday.
Very exciting. Very exciting.
Happy birthday, James.
No cake either. No clapping and no cake. This is not great.
Okay, Brennan Hawken, UBS. Thanks for the presentation. You guys made a couple references to banking throughout the various presentations. So I'm curious if there's a goal to drive more day-to-day banking into the retail business, and, you know, what's the plan in which to do that? You talked about expanding the premium banking offering, so, you know, could you add a little bit of meat to that bone? Is the goal—obviously, lending is a big strategic priority, but is another side benefit to get more of the day-to-day banking deposits, which might be a bit more sticky? Thanks.
Sure. I mean, I think from the genesis of the bank, 2008, 2009, the goal is always to build the world's best bank for investors. So we start with the investor mindset and then say: How can we ensure that if you're an investor, first or primarily, what adjacent banking capabilities do we need to bring to the table to support that? And those are both on the deposit and on the lending side. Certainly, on the deposit side, with high-yield checking, with savings, obviously with money funds, which are not the bank, but we've got a lot of great cash management solutions. Adoption of that high-yield investor checking or investor checking continues to be a strong growth driver to the firm.
It's actually been—we've seen really good early adoption for green clients as well. TDA-converted clients, even though there was a relationship with TD Bank, I think the Schwab Bank relationship is much stronger, so very, very strong in terms of that referral opportunity. So much stronger adoption there, I think, will come. In terms of our more affluent clients, lending is a big priority. Again, the Pledged Asset Line, but also mortgage, HELOC, things of that nature. And the premier banking that we talked about was really about building out not as much more capability, but also just a more bespoke experience, and more relationship pricing, things like that, to match the needs of what these clients have and what they expect.
I think over time, we've got a roadmap for other potential capabilities in both the deposit and lending space, but we are definitely interested in serving retail investors and their banking needs, as robustly as we can. A little different. It's a domestic view. Internationally, it's different.
Thank you. Thanks for pointing that out.
Thank you. This is a question for Lisa on international. I think you framed the opportunity well. I guess I have a question about the ability to trade overseas. I take the point that it's a big world, and the US is the biggest, deepest, most trusted, maybe most desirable market in the world. But I'm curious how important it might be now or over time to allow everybody in the world to trade, not only in the US, but to trade-
... anywhere they want, and maybe even for Americans to increasingly want to do that?
Yeah. So we, we do offer in the U.S. to our domestic clients, the ability to trade in, multi-markets, in multi-currency. We've had that offer, for, a few years now. We don't really market it broadly, and there's, there's reasons for that, but we will. So that's an important component of our offering, especially as we've brought over so many traders from, the TD Ameritrade acquisition. We don't offer that to our international clients today. It's definitely on our roadmap. We agree, it's, the reason why we only have 53% of their investable assets and not 100%, because, there's a big world out there, and there's other markets as well.
For now, we believe that our best and most immediate opportunity is really expanding the products that we offer today, in particular in the advice space. So that's, that's our focus for the next, I'd say, 18 months. But that multicurrency, multi-market, effort is on our roadmap, and we believe an important, further differentiator for us. Mm-hmm.
Thanks. Ben Budish from Barclays. John, I was wondering if you could talk a little bit about the behavior or treatment of cash on the retail side. I think, for us, as we think about Schwab and sort of the overall cash levels, we sort of understand that generally on the advisory side, you tend to get more full allocations to, you know, to invested assets. So what are you seeing on the retail side, and how do you think about, you know, the addition of these banking products that you've been talking about as being additive? Or is this sort of near-term expectation that investors will sort of follow the trends that they've been seeing in the past, the sort of slowing of cash sorting?
So if you could talk about that a little bit. Appreciate it. Thank you.
Yeah, I mean, I know, and Peter's probably going to talk to this a little bit later. I don't know if I have a lot to add about cash trends, specific to retail, other than to say, you know, a lot of it, of course, is market dependent, rate dependent, active trader engagement dependent. Without question, though, we do deepen relationships with green clients, and they do more banking with us, including things like checking. That is a transactional meaningful transactional cash opportunity. But I don't want to... I don't think I would project here now what I think the retail cash penetration rates would be.
You know, from where I sit and from where we sit, our focus, which shouldn't be a surprise with a through-client's-eyes strategy, is to make sure we're there for our clients, providing the broadest set of capabilities we can, making sure that we keep them inside the Schwab franchise. And a big part of that is making sure that their investment cash is getting great returns, and that's why you see things like money funds, treasuries, CDs, things of that nature, having strong volume last year. You'd expect that in a rapid rate rise environment. So, you know, going forward, my focus is less on specific cash levels and more on net new assets, client satisfaction, and growth, and then at the same time, broadening the capabilities we offer.
And again, on the green side, especially as we deepen banking penetration, there's certainly transactional cash opportunity there. Also, as we bring in NNA and continue to bring in new households, which is a priority, a lot of that can come in in cash, and then get deployed over time, depending on the markets.
Yeah, I might just add from a trader client perspective, obviously, depending upon your strategies, depending upon the products that you trade, depending upon how actively you trade, your cash needs may be different. And as Walt sort of highlighted out, we have opportunities or options for any client trading whatever kind of strategy they want. So if they need to keep more free cash because they're trading futures, versus they want to go into Schwab money funds to earn some yield and then free up cash for trading opportunities, all of those are available, and I think that is one of the additional benefits for the more active green traders coming over relative to access to some of the Schwab funds.
Michael Cyprys of Morgan Stanley. Just curious how you're thinking about the implications of longevity as people are living longer. How do you see that impacting customer demand trends, and how do you think about the opportunity to partner, say, more closely with insurance for guaranteed income streams and otherwise?
Yeah, I mean, certainly longevity, but also wealth transfer are sort of a related topic. I guess, the inverse, I mean, there's certainly. And so as we think about, and Nisha may talk a little bit about this, as we think about the, the broader set of wealth management capabilities that we bring to the table, particularly under Schwab Wealth Advisory, that's a really primary focus area. A lot of our conversations with clients are both, you know, how can you, what does the positive side of longevity mean for your portfolio, and how do we support that, and family planning around it? And then also all the trust and estate that goes along with that.
So it is definitely, and we have a lot of insurance product that we can bring to the table as necessary for those conversations. Again, the inverse of that is the wealth transfer, which comes up a lot, which is sort of, you know, how do we prepare as an industry for the massive wealth transfer that's coming? And, you know, I always say to my team, a couple of things. Number one, you know, we've got to build a deep relationship with the whole family. Easier said than done, but that's critical, that's a priority. Number two, we've got to expand the relationships that we have, and ensure those relationships are tight.
But number 3, well, 3 and 4/3 is we've got to build capabilities to make it easy for people to transfer their wealth within the franchise and have it not leave. Things like family benefits and things like that go a long way. But maybe the most important thing is we also need to continue to win the younger generation. You know, when you look at this wealth transfer, a lot of it may initially go from a spouse, one spouse to another, but often the decision-makers are the children, and those children tend to be Gen X or maybe millennial or, or younger boomer.
So, you know, I do feel like relative to our competitors, we are very well positioned for this wealth transfer, both because of the depth of our relationships and the high CPS that our clients have with the firm, but also we are really good at acquiring. You'll hear this from Stacy; we are really good at acquiring, you know, less than 40-year-olds, 40 to 50. You know, that's where the decision makers are gonna be in many of these cases.
Hey, Steven Chubak, Wolfe Research. I actually wasn't sure who this question was best for, but someone's gonna have to field it, and Jonathan, you mentioned retail alts, so I think it'll need to be you. It's on this dynamic around the all-in fees to the customer, and certainly, there's a lot of demand for alternative products. You know, the one thing that we've been hearing is Schwab will need to get a platform fee. iCapital is also gonna have to charge a fee as facilitator, in addition to the management fees to the alt manager. And I was hoping to get some perspective, just given you've always been a leader in terms of pricing, how you're ensuring you're managing that to a zone of reasonableness, and are there any incentives are offered to the advisors to market these products as well?
Yes, let me answer briefly. Then Nisha's coming up later, and she could probably provide a deeper response or correct anything. But I would just say, without getting into the individual specifics on pricing, number one, really, really excited from where I sit to be able to offer our clients directly retail alternatives. Right now, as a retail client, we custody reactively and through our Schwab Advisor Network, a really important partnership. Clients can access alts, but they can't directly within retail. That will change later this year. It's gonna be a robust set of private equity, private credit, hedge funds, exchange funds, and you'll hear more from Nisha.
It'll be, you know, institutional-quality due diligence, as you expect around those funds, a great, digital experience supporting it, and will be priced in a way that is consistent with Schwab, which is, very, you know, strong value to the marketplace. So let me leave it at that, and then I think Nisha can answer more specifically.
Thanks so much. Devin Ryan, Citizens JMP. Question just around the evolution of the self-directed trader and really, you know, what that means for Schwab. And so the last few years, you had pandemic, this, this huge amount of first-time investors coming to the market, had the acquisition come together. You guys are leading with education as well, and so trying to think about, like, what this all means in a more, quote-unquote, normal market backdrop for the ability to grow DATs, and engagement with new products like derivatives, and how that all comes together. So effectively, where the market goes, over the next, you know, five years from a self-directed perspective, because of all the things you guys are doing, but also the market backdrop. How many more derivatives are there being traded?
How much do people evolve their engagement, if you will?
Yeah, let me have James take it, but just I wanna really quickly say, I mean, the Schwab philosophy, we don't, we're not out there trying to create traders or getting traders to do things that they might not have otherwise done. We want to be the world's best place for self-directed investors. We believe we are, and for very active traders from, you know, early stage to the most sophisticated, and provide them with great education and support. But, you know, like maybe some other firms, we don't, we don't come to work every day and say: How do we get people to trade something new or trade more? That is not necessarily a true client-side strategy. It's how do we support them as they, as they get smarter and engage more with trading. James, you probably...
Yeah, I would add, I mean, well said, but I would add a couple of things. I think one, the backdrop of the markets, obviously, we are at, I don't wanna say historic, but near historic lows and sort of volatility. I think the VIX closed around 12 yesterday, which I think is about a 4.5-year low. And so in these times, clients who are trading more actively and are seeking to look for volatility or seeking alpha are obviously, you know, turning more towards derivatives, right? So we continue to see a growth in derivatives. It's not a crazy growth. I'd say it's a healthy growth in those products.
So for us, you could think of on the retail side, somewhere between sort of 25% and 30% of the DATS in the derivatives category. We obviously want to do a lot to make sure if clients wanna make that move from equities to the derivative side, that, as you pointed out, we're educating them, we're providing them all the tools and services that they need. We spend a lot of time trying to understand, especially if they have a relationship with a financial consultant, what their investment objectives are, what their risk tolerance is, and then based on that and their strategies, you know, how derivatives may play a part in that. And then there's obviously that pool of traders who use derivatives for more speculative type of trading, right?
And our goal there are not to encourage that or discourage that, but to provide them anything and everything they need to be able to do that in the most successful and most responsible way possible. I think the one thing I would point to, what I sort of hit on briefly before, was just the clients that we saw sort of come in the door for your, you know, GMEs and your, and your AMCs. They have grown with us, and they have absolutely evolved with us, and obviously, we saw the return of Roaring Kitty last week and a little bit of the rekindling of that.
Certainly not as hot, certainly not as long as it sort of fizzled out a little bit, but in talking to some people about that sort of what we saw, I think we've absolutely seen that sort of growth in our client base in terms of the maturation of their trading. I think we would like to continue to see that, but one caveat to your question, Devin, is just sort of what are the markets gonna do? If all of a sudden we start to see huge spikes in volatility, we may see some different things. Lastly, I would just say in times like this, where we've been in a pretty good market, right?
So a good market run with lower volatility, we have seen more of a flight into equities, so that will change the trade mix a little bit. Derivative volume stays consistent, sort of just consistently going up, so the mix isn't affected because derivatives trading is going down. It's just because equities trading is going up, and that, again, is just sort of a factor of the markets. So we'll cross our fingers on the markets and sort of continue to keep doing what we're doing.
And maybe I'll just sort of echo a little bit of what Jonathan and James also said, and provide just a couple of additional thoughts, too. You know, again, we're not in the business to create traders, and sort of nudge people along to place transactions. We're really here to change people's lives, and for some, that does mean, you know, fairly active trading and taking advantage of that. And I think what really differentiates us from many of our competitors, and I see this in particular overseas, is the amount of education and support that we have to help our clients, as James just said, grow with us.
They may get started because a buddy says, "Hey, do this," but then they realize it's a pretty complicated market out there, and there's a lot of information, there's a lot of details. There's a lot of things that you need to help you, and we provide all of that, and we provide it live, over the phone, with a human being. I mean, there are a lot of competitors that are primarily digital. You can't get ahold of a human being if you wanted to. And I think that, over time, is really what is gonna set Schwab apart as we continue to see the growth in trading.
I think maybe we have time for one more question here from the console. This could be maybe a Jonathan or James question, and it's a little specific, too. How does the new-to-firm acquisition sort of trends and characteristics from an active trader perspective compare to maybe a broader traditional retail client? And this is a question from Brian Bedell at Deutsche Bank.
Yeah, I can start, and then Stacy's coming up, too, so she can add to it later. But, I mean, first, when you look at our new-to-firm profile, a couple stats I'll share. One is, 58% are under 40, so we often sometimes get the question of, are we continuing to acquire younger clients? The answer is, we absolutely will. We absolutely are, and we'll continue to do so. Shouldn't be a surprise when you think about the breadth and depth of our value proposition for folks who are just getting started, whether it's no account fees, no account minimums, zero commissions, thematic investing, Schwab Intelligent Portfolios, all the incredible education. I think we are a great firm for folks who are just getting started, and that's a good portion of new-to-firm.
The other side, though, is we acquire a lot of very wealthy, very wealthy new-to-firm households. And, you know, $10 million-dollar clients, $100 million-dollar clients, many hundreds of millions-dollar clients. I see them every week through our, primarily through our branch network. These clients tend to. Some are self-directed, but many increasingly are coming direct to advice. So they're coming direct to Schwab to enroll in Schwab Wealth Advisory or one of our and partners. So that's also been a change, I'd say, over the last 5 or 10 years, a lot of strong, direct advice, ultra-high net worth. So I think we're, we're acquiring across the spectrum. I'll let James talk about the traders as well.
Yeah, and I would just add that, you know, 40% of new-to-firm being interested, right? And we can sort of define interested in different ways, but interested in the trading value proposition, I think is a very healthy number. Obviously, at TD Ameritrade, we had a strong sort of trader population, more strongly attractive to the new traders. I think, and Stacy will talk about it, the marketing team has done a great job of rebranding and capitalizing on the Ameritrade brand within Schwab Trading Powered by Ameritrade. So I feel really good about that new pipeline.
And I think the other thing is, that's interesting from my perspective, is how many non-traders, so we wouldn't put them in the trader segment, but are interested in watching Schwab Network or leveraging the platform or taking an education class. And I think especially as we look at the high-net-worth and ultra-high-net-worth world, some of Nisha's team and my team have been talking about sort of the overlap there, right? When you have a high-net-worth client, they're gonna have a lot of specific needs, and one of those needs may be advice, and it may be more managed solutions, but most of them are also interested in some level of alpha-seeking, sort of on their own with where we are.
I think as we talk somewhat about the generational wealth transfer, that sort of client in that sort of mid-forties area is probably interested across the spectrum. So I don't think it's just trader to the question, but I think it's trading in general, which to me feels really, really healthy right now.
Great. I think, I think we're sure to get an applause as I think lunch is next. But, I know we're around at lunch-
Clap for lunch.
- questions.
Clap for lunch and me.
Thank you.
Okay, everyone, well, I wanted to make sure I got on stage, so I was close to the celebrities. I don't... You know, it's, it's good to, to be close. But yeah, it is lunchtime, time to get some refreshments. As noted throughout the, the various remarks today, you know, we do have a sort of what we feel is a really special opportunity for all of y'all, as you, as you have a chance to, to take a, take a breath, to go visit some of the, the, the demo booths and, and the experts that are, you know, deeply involved in the product, talking with clients, the strategy, the approach. We have, we have the Schwab network, we have the TOS trading platform, we have the Power platform, and then we have kind of the suite of personalized investing, both thematic and, Schwab, personalized indexing.
So we'd strongly encourage everybody to take some time out. If you don't have a chance to get to everybody during the lunch break, they will be sticking around for a little bit afterwards, so I think it'd be a great experience. For those of you on the web that couldn't be here live, we have added a little module in the top-right corner of the screen. I'm biased to the folks here in the room, it's probably not quite as engaging, but there are a set of resources that go over these same demo booths that we think will be really helpful. So thank you all very much. We'll be back in roughly about an hour after lunch.
From the Dairy Queen to the head of the parade. In a blink, your life could change. This could all be yours someday. This could-
...be yours someday. Oh, oh, oh, oh, oh, someday. Oh, oh, oh, oh, oh, someday. Oh, oh, oh, oh, oh, someday. Oh, oh, oh, oh, oh, oh. You come as Elvis Presley every Halloween, and dream of sing-alongs the whole wide world will sing. Into the great unknown, a ratio, desire and ambition fuel this heart! So take a breath and step into the light. Everything will be all right. This could all be yours someday. This could all be yours someday. This could all be yours someday. This could all be yours, all yours someday. Oh, oh, oh, oh, oh, someday. Oh, oh, oh, oh, oh, someday. Oh, oh, oh, oh, oh, someday. Oh, oh, oh, oh, oh, oh. This could all be yours someday. This could all be yours someday. This could all be yours someday. This could all be yours, all yours someday. Someday. Someday. Someday.
Turn your magic on," to me she'd say, "Everything you want's a dream away. We are legends every day." That's what she told me. "Turn your magic on," to me she'd say, "Everything you want's a dream away. Under this pressure, under this weight, we are diamonds." I feel my heart beating. I feel my heart underneath my skin. I feel my heart beating. Oh, you make me feel like I'm alive again. Alive again! Oh, you make me feel like I'm alive again. Said, "I can't go on, not in this way. I'm a dream that died by light of day. Gonna hold up high the sky and say, 'Only I own me.'" I feel my heart beating. I feel my heart underneath my skin. Oh, I can feel my heart beating, 'cause you make me feel like I'm alive again. Alive again!
Oh, you make me feel like I'm alive again. "Turn your magic on," to me she'd say, "Everything you want's a dream away. Under this pressure, under this weight, we are diamonds taking shape. We are diamonds taking shape.
... But if we've only got this life, you get me through. Oh, if we've only got this life, and this adventure, oh, then I wanna share it with you, with you, with you. Sing it! Sing it. Ooh, ooh, ooh, ooh, ooh, ooh, ooh, ooh, ooh, ooh, ooh, ooh, ooh, ooh, ooh, ooh, ooh, ooh, ooh, ooh, ooh, ooh, ooh, ooh, ooh. Oh, oh. Oh, no. Cinderella's gone to New York City. Wants to shave her head and disappear. 18 years of never feeling pretty. Says she's finally thinking clear. Ain't too proud to swim or drown now, baby. Ain't too proud to sink or see it through. She said, "Everybody wants to be with me. I got all I need,"-
All I need.
I feel invincible with my headphones on. Everybody pulls for magazines.
Oh.
It's all just noise to me.
Noise to me.
I feel invincible with my headphones on." Oh, oh.
My headphones, headphones.
Oh, oh.
My headphones on.
If anybody comes around to find me,
Oh, oh.
If anybody asks for me," she said, "tell them all I'm in the deep end singing.
Oh, oh.
With this music in my head. Ain't too proud to swim or drown now, baby.
Ain't too proud.
Ain't too proud to sink or see it through," she said. "Everybody wants to be with me. I got all I need"-
All I need.
I feel invincible with my headphones on. Everybody pulls for magazines.
Oh.
It's all just noise to me.
Noise to me.
I feel invincible with my headphones on." Oh, oh.
My headphones-
With my headphones on.
On.
I feel invincible with my headphones on. People talking in their sleep. Can't see the forest for the trees. It's all scratch ticket lottery.
Oh, oh.
Oh, oh, oh. Brave new world, same old crowd. Good things whisper, bad things shout. I don't hear 'em now.
Oh.
She said, "Everybody wants to be with me.
Be with me.
I got all I need.
All I need.
I feel invincible with my headphones on. Everybody pulls for magazines.
Oh.
It's all just noise to me.
Noise to me.
I feel invincible with my headphones on." Oh, oh.
My headphones-
With my headphones on.
On.
I feel invincible with my headphones on.
Oh, oh, my headphones.
With my headphones on.
On.
I feel invincible with my headphones on. Know that I've been waiting for so long. You're all that I see. I can't stop this feeling, no, no. It's taking over me. Feel the mercury rising. I feel your bass line bumping. Hear it in your rhythm. You got my heartbeat pumping. Oh, I can't stop it. No, I can't control it. Can you feel it overloading? Oh, overloading, yeah. You can't stop it. No, you can't control it. Can you feel it overloading? Oh, overloading, yeah.
... Know that I've been waiting for so long. You're all that I see. I can't stop the feeling, no, no. It's taking over me. Feel the mercury rising. I feel your bassline pumping. Hear it in your rhythm. You got my heartbeat pumping. Oh, I can't stop it! No, I can't control it. Can you feel it overloading? Oh, overloading. Yeah. You can't stop it. No, you can't control it. Can you feel it overloading? Oh, overloading. Yeah!
Run away with me. Lost souls in reverie. Running wild and running free. Two kids, you and me. And I say, hey, hey, living like we're renegades. Hey, hey, hey. Living like we're renegades. Renegades. Renegades. Long live the pioneers. Rebels and mutineers. Go forth and have no fear. Come close and lend an ear. And I say, hey, hey, living like we're renegades. Hey, hey, hey. Living like we're renegades. Renegades. Renegades. All hail the underdogs. All hail the new kids. All hail the outlaws, Spielbergs, and Kubricks. It's our time to make a move. It's our time to make amends. It's our time to break the rules. And let's begin. And I say, hey, hey, living like we're renegades. Hey, hey, hey. Living like we're renegades. Renegades. Renegades.
So this is what you meant, when you said that you were spent? And now it's time to build from the bottom of the pit right to the top. Don't hold back. Packing my bags and giving the academy a rain check. I don't ever wanna let you down. I don't ever wanna leave this town. 'Cause after all, this city never sleeps at night. It's time to begin, isn't it? You understand, that I'm never changing who I am? So this is where you fell, and I am left to sell, the path to heaven runs through miles of clouded hell. Right to the top, don't look back. Turning the rags and giving the commodities a rain check. I don't ever wanna let you down. I don't ever wanna leave this town. 'Cause after all, this city never sleeps at night. It's time to begin, isn't it?
I get a little bit bigger, but then I'll admit, I'm just the same as I was. Now, don't you understand, that I'm never changing who I am? It's time to begin, isn't it? I get a little bit bigger, but then I'll admit, I'm just the same as I was. Now, don't you understand, that I'm never changing who I am? This road never looked so lonely. This house doesn't burn down slowly, to ashes, to ashes. It's time to begin, isn't it? I get a little bit bigger, but then I'll admit, I'm just the same as I was. Now, don't you understand, that I'm never changing who I am? It's time to begin, isn't it? I get a little bit bigger, but then I'll admit, I'm just the same as I was. Now, don't you understand, that I'm never changing who I am?
It might seem crazy what I'm about to say. Sunshine, she's here, you can take a break. I'm a hot air balloon that could go to space with the air, like I don't care, baby, by the way. Huh! Because I'm happy. Clap along if you feel like a room without a roof. Because I'm happy. Clap along if you feel like happiness is the truth. Because I'm happy. Clap along if you know what happiness is to you. Because I'm happy. Clap along if you feel like that's what you wanna do. Here come bad news, talking this and that. Yeah. Well, give me all you got, and don't hold it back. Yeah. Well, I should probably warn you, I'll be just fine. Yeah. No offense to you, don't waste your time. Here's why: Because I'm happy. Clap along if you feel like a room without a roof.
Because I'm happy. Clap along if you feel like happiness is the truth. Because I'm happy. Clap along if you know what happiness is to you. Because I'm happy. Clap along if you feel like that's what you wanna do. Hey, come on! bring me down, can't nothing, bring me down. My level's too high. It bring me down, can't nothing bring me down, I said. Let me tell you now, bring me down, can't nothing, bring me down. My level's too high. It bring me down, can't nothing bring me down, I said. Because I'm happy. Clap along if you feel like a room without a roof. Because I'm happy. Clap along if you feel like happiness is the truth. Because I'm happy. Clap along if you know what happiness is to you. Because I'm happy.
Clap along if you feel like that's what you wanna do. Because I'm happy. Clap along if you feel like a room without a roof. Because I'm happy. Clap along if you feel like happiness is the truth. Because I'm happy. Clap along if you know what happiness is to you. Because I'm happy. Clap along if you feel like that's what you wanna do. Hey, come on! Bring me down, can't nothing bring me down. My level's too high. It bring me down, can't nothing bring me down, I said. Because I'm happy. Clap along if you feel like a room without a roof. Because I'm happy. Hey, hey! Clap along if you feel like that's what you wanna do. Because I'm happy. Clap along if you feel like a room without a roof. Because I'm happy.
Clap along if you feel like happiness is the truth. Because I'm happy. Clap along if you know what happiness is to you, hey. Because I'm happy. Clap along if you feel like that's what you wanna do. Come on! I caught you watching me under the light. Can I be in line? They say it's easy to leave you behind. I don't wanna try. Cut, curve and take that test. All courage through your chest. Don't wanna wait for you. Don't wanna have to lose. All that I've compromised to feel another high. I've got to keep it down tonight. And oh, I was a king under your control. And oh, I wanna feel like you've let me go, so let me go. Don't you remember how I used to like being on the line? I dreamed you dreamed of me calling out my name.
Is it worth the price? Cut, curve, and take that test. All courage through your chest. Don't wanna wait for you. Don't wanna have to lose. All that I've compromised to feel another high. I've got to keep it down tonight. Oh, I was a king under your control. Oh, I wanna feel like you've let me go.
I had to break myself to carry on. No love, no admission, take this from me tonight. Oh, let's fight. Oh, let's fight. Oh, let's fight. Oh, oh. And oh, I was a king under your control. And oh, I wanna feel like you've let me go, so let me go. Let go, let go, let go of everything. Let go, let go, let go of everything. Let go, let go, let go of everything. Let go, let go, let go of everything.
I step off the train. I'm walking down your street again. I passed your door, but you don't live there anymore. It's years since you've been there. And now you've disappeared somewhere, like outer space. You've found some better place. And I miss you, like the deserts miss the rain. And I miss you, oh, like the deserts miss the rain. Could you be dead? You always were two steps ahead of everyone. You walked behind where you would run. I look up at your house, and I can almost hear you shout down to me, where I always used to be. And I miss you, like the deserts miss the rain. And I miss you, like the deserts miss the rain. Back on the train, I ask why did I come again? Can I confess? I've been hanging on to your old address.
... Oh, but I can't move on. And I miss you, oh, like the deserts miss the rain. And I miss you, yeah, like the deserts miss the rain. And I miss you. I step off the train, I'm walking down your street again, past your door. I guess you don't live there anymore. It's years since you've been there, and now you've disappeared somewhere, like outer space. You've found some better place, and I miss you. Yeah. And I miss you. You found some better place, and I miss you. Like the deserts miss the rain, and I miss you, yeah, like the deserts miss the rain. And I miss you, and I miss you, like the deserts miss the rain. And I miss you, yeah, like the deserts miss the rain. Deserts miss the rain. Like the deserts miss the rain. Like the deserts miss the rain.
Like the deserts miss the rain. And I miss you, yeah, like the deserts miss the... Oh, I miss you.
Lord God Almighty, let me tell the news. My head got wet in midnight dew. Great God, I been down on my bending knees, talking to the man from Galilee. My God spoke, and it sounded so sweet. I thought I heard the shuffle of angels' feet. He put one hand upon my head. Great God Almighty, let me tell you what He said. Go tell that lonesome liar. Go tell that midnight rider. Tell the gambling, rambling backslider. Tell him God Almighty gonna cut him down. You might run on for a long time. Run on, ducking and dodging. Run on, children, for a long time. Let me tell you, God Almighty gonna cut you down. You might throw your rock, hide your hand.
Yeah!
Work in the dark with your fellow man.
Yeah!
Sure as God made the rich and poor, you gonna reap just what you sow. You might run on for a long time.
Run on!
Run on, ducking and dodging. Run on, children, for a long time. Let me tell you, God Almighty gonna cut you down. You might run on for a long time. Run on, ducking and dodging. Run on, children, for a long time. Let me tell you, God Almighty gonna cut you down. You might... Run, run, did you run, baby? Run. Run, run, did you run, baby? Run. Run, run, did you run, baby? Run. Run, did you run, baby? Some people go to church just to signify, trying to make a date with the neighbor's wife. Brother, let me tell you just as sure as you're born, you better leave that woman alone. Go tell that lonesome liar.
Go tell that midnight rider. Tell the gambling, rambling backslider. Tell him God Almighty gonna cut him down. You might run on for a long time. Run on, ducking and dodging. Run on, children, for a long time. Let me tell you, God Almighty gonna cut you down. You might run on for a long time. Run on, ducking and dodging. Run on, children, for a long time. Let me tell you, God Almighty gonna cut you down. You might run on for a long time. Run on, ducking and dodging. Run on, children, for a long time. Let me tell you, God Almighty gonna cut you down. You might run on for a long time. Run on, ducking and dodging. Run on, children, for a long time. Let me tell you, God Almighty gonna cut you down. You might run on for a long time.
Run on, ducking and dodging. Run on, children, for a long time. Let me tell you, God Almighty gonna cut you down. You might run on for a long time. Run on, ducking and dodging. Run on, children, for a long time. Let me tell you, God Almighty gonna cut you down. You might run on for a long time. Run on, ducking and dodging. Run on, children, for a long time. Let me tell you, God Almighty gonna cut...
Saturday morning and it's time to go. One of these could be the days, but who could have known? Loading in the back of a pickup truck, riding with the boys and pushing the luck. Singing songs loud on the way to the game, wishing all the things could still be the same. China stone runs over the backstop. Kekua on the ball, a soda pop. Well, we used to laugh a lot, but only because we thought that everything good always would remain. Nothing gonna change, there's no need to complain. Sunday morning and it's time to go. Been raining all night, so everybody knows. Over to the field for taco football. Big hits, big hats, yeah, give me the ball! The rain is pouring, touchdowns scoring, keep on rolling, never boring. Come on, come on, come on, Camellia. We're talking kind of funny familia.
Well, we used to laugh a lot, but only because we thought that everything good always would remain. Nothing gonna change, there's no need to complain. Monday morning and it's time to go. Wet trunks and schoolbooks and sand on my toes. Do anything you can to dodge the bus ride blues. Like driving a potato with a burnt out fuse. Well, my best friend Kenny wants to go with you, so meet up by the sugar mill after school. My best friend Kenny wants to go with you. Meet up by the sugar mill after school. We used to laugh a lot, but only because we thought that everything good always would remain. We used to laugh a lot, but only because we thought that everything good always would, everything good always would remain.
Oh, oh. Oh, you got a fast car. I want a ticket to anywhere. Maybe we'll make a deal. Maybe together we can get somewhere. Any place is better. Starting from zero, got nothing to lose. Maybe we'll make something. Me, myself, I got nothing to prove. You got a fast car. I got a plan to get us out of here. I been working at the convenience store. Managed to save just a little bit of money. Won't have to drive too far, just across the border and into the city. You and I could both get jobs and finally see what it means to be living. You got a fast car. Fast enough to run far away. We gotta make a decision. Leave tonight or die this way. So I remember we were driving, driving your car. Speed so fast, I felt like I was drunk.
City lights lay out before us, and your arm felt nice wrapped around my shoulder. And I, I had a feeling that I belonged, and I, I had a feeling that I could be someone. Had a feeling that I could be someone. See, my old man's got a problem. He lives with a bottle of whiskey by his head, and said his body's too old for working. His body's too young to look like his. My mom went off and left him. She wanted more from life than he could give and said, "Somebody's got to take care of him," so I quit school and that's what I did. You got a fast car. We go cruising and having ourselves fun. We still ain't got a job, not working the market as a checkout girl. I don't need to get better. You'll find work and I'll get promoted.
We'll move out of the shelter, buy a big house, and live in the suburbs. You got a fast car. Say, fast enough so we can fly away. You and I gotta make a decision. Leave tonight or die this way. So I remember we were driving, driving your car. Speed so fast-
...And I feel that I belong. I, I, and I feel that I could be someone. And I feel that I could be someone. Be someone! And I feel that I could be someone. Oh, yeah, yeah, yeah. I got a pocket, got a pocketful of sunshine. I got a love and I know that it's all mine, oh, oh. Do what you want but you're never gonna break me. Sticks and stones are never gonna shake me, no, oh. Take me away, a secret place, a sweet escape. Take me away, take me away, to a better day. Take me away, my heart in place. I got a pocket, got a pocketful of sunshine. I got a love and I know that it's all mine, oh. Do what you want but you're never gonna break me. Sticks and stones are never gonna shake me, no.
I got a pocket, got a pocketful of sunshine. I got a love and I know that it's all mine, oh. Wish that you could but you ain't gonna own me. Do anything you can to control me, no. No. Take me away, a secret place, a sweet escape. Take me away, take me away, to a better day. Take me away, my heart in place. There's a place that I go that nobody knows, where the rivers flow and I call it home. And there's no more lies, and the darkness is light, and nobody cries. There's only butterflies! Take me away, a secret place, a sweet escape. Take me away, take me away, to a better day. Take me away, my heart in place. Take me away, a secret place, a sweet escape.
Take me away, take me away, to a better day. Take me away, my heart in place. Take me away, a secret place. Take me away, take me away, to a better day. Take me away, my heart in place. Yeah. Mm. The sun is on my side and takes me for a ride. I smile up to the sky, I know I'll be all right. The sun is on my side and takes me for a ride. I smile up to the sky, I know I'll be all right.
Lately, I've been, I've been losing sleep, dreaming about the things that we could be. But baby, I've been, I've been praying hard. Said, "No more counting dollars, we'll be counting stars." Yeah, we'll be counting stars. I see this life like a swinging vine, swing my heart across the line. In my face is flashing signs, "Seek it out and ye shall find." Old, but I'm not that old. Young, but I'm not that bold. And I don't think the world is sold on just doing what we're told. I feel something so right doing the wrong thing. And I feel something so wrong doing the right thing. I could lie, could lie, could lie. Everything that kills me makes me feel alive. Lately, I've been, I've been losing sleep, dreaming about the things that we could be. But baby, I've been, I've been praying hard.
Said, "No more counting dollars, we'll be counting stars." Lately, I've been, I've been losing sleep, dreaming about the things that we could be. But baby, I've been, I've been praying hard. Said, "No more counting dollars, we'll be, we'll be counting stars." Hey. I feel the love and I feel it burn down this river, every turn. Hope is a four-letter word. Make that-... I feel something so wrong when doing the right thing means I couldn't lie, couldn't lie, couldn't lie. Everything that drowns me makes me wanna fly. Lately, I've been, I've been losing sleep, dreaming about the things that we could be. But baby, I've been, I've been playing hard, said no more counting dollars, we'll be counting stars. Lately, I've been, I've been losing sleep, dreaming about the things that we could be.
But baby, I've been, I've been playing hard, said no more counting dollars, we'll be counting stars. Oh, take that money, watch it burn, sink in the river the lessons I learned. Take that money, watch it burn, sink in the river the lessons I learned. Take that money, watch it burn, sink in the river the lessons I learned. Take that money, watch it burn, sink in the river the lessons I learned. Everything that kills me makes me feel alive. Lately, I've been, I've been losing sleep, dreaming about the things that we could be. But baby, I've been, I've been playing hard, said no more counting dollars, we'll be counting stars. Lately, I've been, I've been losing sleep, dreaming about the things that we could be.
But baby, I've been, I've been playing hard, said no more counting dollars, we'll be counting stars. Take that money, watch it burn, sink in the river the lessons I learned. Take that money, watch it burn, sink in the river the lessons I learned. Take that money, watch it burn, sink in the river the lessons I learned. Take that money, watch it burn, sink in the river the lessons I learned.
I'll be by your side. I'll be by your side. When the skies gone gray, and it starts to rain, I'll be by your side. I'll be by your side. I'll be by your side. When you feel alone, got nowhere to go, I'll be by your side. Ooh, we belong together. Ooh, ain't nobody better. I'll be by your side. I'll be by your side. When nothing's making sense, and you need a friend, I'll be by your side. Ooh, we belong together. Ooh, ain't nobody better. No matter where the road may lead, you can always count on me. Ooh, la, la, la, la, la. Ooh, la, la, la, la, la, la. Ooh, la, la, la, la, la. Ooh, la, la, la, la, la, la. Ooh, la, la, la, la, la. Ooh, ooh. I'll be by your side. I'll be by your side.
When your heart's been crushed, you got no one to trust, I'll be by your side. I'll be by your side. I'll be by your side. When the skies gone gray, and it starts to rain, I'll be by your side.
When I wake up in the morning, love, and the sunlight hurts my eyes. And something without warning, love, bears heavy on my mind. Then I look at you, and the world's all right with me. Just one look at you, and I know it's gonna be a lovely day. Da, da, day, da, da, day, da, da, day, da, da, day.
...When the day that lies ahead of me seemed impossible to face. When someone else instead of me always seems to know the way. Then I look at you, and the world's all right with me. Just one look at you, and I know it's gonna be a lovely day. Lovely, lovely, lovely day. Lovely, lovely, lovely, lovely day. A lovely, lovely, lovely, lovely day. Lovely, lovely, lovely, lovely day. When the day that lies ahead of me seemed impossible to face. And when someone else instead of me always seems to know the way. Then I look at you, and the world's all right with me. Ahh, just one look at you, and I know it's gonna be a lovely day. Lovely, lovely, lovely day. Lovely, lovely, lovely, lovely day. A lovely, lovely, lovely, lovely day. Lovely, lovely, lovely, lovely day. Lovely, lovely, lovely, lovely day.
Lovely, lovely, lovely, lovely day. A lovely, lovely, lovely, lovely day. Lovely, lovely, lovely, lovely day.
We are back, and once again, Jeff Edwards.
All right, everyone. Hope you're able to take advantage of the longer break and stayed inside. As it does look a little bit darker, and we're hearing some some rough weather. So hopefully, most folks that are here either had different travel plans or are able to, you know, alter them to make sure they get home safe. But, you know, that aside, very excited to bring up on stage next, our Chief Marketing Officer, Stacy Hammond. She's gonna bring a lot of post-lunch energy and talk about client acquisition. Stacy.
Hey, everyone. I'm Stacy Hammond. Like Jeff said, I'm our Chief Marketing Officer, and I am very used to marketing being probably the most engaging and entertaining part of any presentation. However, I'm not usually competing with a pretty spectacular show going on outside, so let's hope we can keep the focus in here. A lot of the themes that have already been teed up today, and I need my clicker. Oh, there it is. Sorry. A lot of the themes that have already been teed up today are the themes that you're gonna hear as we talk a little bit about marketing's role in driving growth. We have four priorities in marketing.
The first is to drive organic growth, and when I think about organic growth, I think about that as growth from new clients, so attracting either new advisors to the platform, new advisors who will custody their 401k with us or new retail clients into retail. We engage in deepened relationships with existing clients, so we increase share of wallet. We present them with solutions that may meet, meet their needs at any moment in time, and we do that in an efficient way. It's quite easy to drive growth if you have unlimited resources, but one of the hallmarks, I think, of Schwab's marketing is that we are an incredibly efficient growth machine, and we'll talk a little bit about how we achieve that in a minute here.
And of course, throughout all of that, we are strengthening the deep trust that investors have in our brand. We market across a wide range of channels, some of which you probably experience as consumers in your everyday lives, and we think about these as paid, owned, and earned. So paid is like advertising. If you've been watching the NBA playoffs, you may have seen Carl and the investing themes ad. So paid is traditional advertising that you would consume in paid media environments or the Charles Schwab Challenge, which, as was referenced earlier, kicks off this week. Owned media is things that we own and control. This would be like schwab.com, which sees something like 800,000 visits every single day, or emails that we send to clients. I heard a great stat the other day.
In 2023, we sent 600 million emails to clients across all of our enterprises, so clearly lots of communication going on. And finally, earned media. This is the media that people contribute to us. I might think of those as industry accolades or the articles that we see in PR, and we do this for all of our enterprises. Some of the examples that you'll see as we talk through this will look very familiar from a retail perspective, like investing themes. We, of course, also support our workplace business in acquiring new employers to Schwab and supporting their participants on their financial wellness journey. And of course, we support advisor services and championing, as Bernie was explaining earlier, for the individual, sorry, for the registered investment advisor and the individual investors that they serve.
Jonathan teed up earlier the four levers that we use when we think about retail growth. So I thought I might talk a little bit about how each of those levers is complementary and some of the unique outcomes that they drive. I do think of these levers as a portfolio like you would if you had a diversified investment portfolio because they all perform differently in different market environments, and they all serve a different purpose, bringing a different type of, growth to Schwab. So the first, which is the one we're gonna spend the most time talking about today, is marketing. We use an econometric model to understand how efficiently we are spending and allocating our marketing dollars, and consistently, we see that our media spend is driving about 40% of our new client outcomes.
Of course, we work really closely with our partners in sales, across the branch network, across call teams, to work with the more affluent investors. The role that the branches play and the phone teams play in acquisition really has to do with the quality of the client that we're interacting with. So when somebody interacts with a branch before becoming a Schwab client, we see that they bring us seven times more NNA than if they're just opening online. So clearly, they're playing a very important role. Clearly, a huge part of our acquisition strategy is engaging participants in our workplace business beyond the reason why their employer chose us.
So their employer chose us to administer their 401 or their stock plan, but they have financial needs that are well beyond that 401 and their stock plan, which the rest of Schwab can help meet those needs. And finally, you've heard this referenced multiple times today. At the foundation of the way that we grow is by delivering an exceptional client experience every single day. Referrals are one of our key components of growth, so when somebody has an excellent experience at Schwab, they tell their friend when they're on their golf course. They tell their kid to open a Stock Slices account. But when we deliver the brilliant basics every single day, it helps fuel our organic growth. As promised, we're gonna talk a little bit about marketing.
You have heard from all the enterprise leaders today that our value proposition is stronger than ever. When I think about the power of the best of both worlds of Ameritrade and Schwab and what that brings to the individual investor, it gives me tremendous optimism for our growth potential in the future. When I think about what Ameritrade brings to Schwab clients, you heard earlier that we're already talking to blue clients about trading on TOS. We're seeing tremendous engagement.
But of course, we have an opportunity to really deepen the share of wallet that we have with the clients who transition from Ameritrade by exposing them to the advice offers, by exposing them to bank, and quite frankly, first, by meeting their basic needs so that we earn their trust, so that when they need a solution, they think of us, and we can expose those to them. As I mentioned earlier, one of the hallmarks, I think, of Schwab marketing is our efficiency. So similar to the rest of the organization, we delivered really significant marketing synergies, but we've been able to increase our efficiency and our spend over time. We saw an 11% growth in our efficiency when we think about dollar spent to dollar in.
So this is a number that we like to see continue to grow, especially as we're realizing the tail end of our synergies here. And finally, I heard this question asked earlier, with this incredible value proposition and with our incredible efficiency, we're really pleased with the type of investor who is attracted to Schwab. I heard a question earlier about active traders and coming to Schwab. Since we launched Schwab Trading Powered by Ameritrade, we've seen a 100% increase in the number of new clients to Schwab who are demonstrating either active trading behaviors or engaging with products that are traditionally active trader products like Forex or futures or options. As Jonathan referenced earlier, about 60% of our new clients are less than 40. We definitely saw more younger clients attracted to the Ameritrade platform.
So as we continue to market Schwab Trading Powered by Ameritrade, I have a lot of confidence that that will help us continue to grow the number of younger clients that we have that fuel the future pipeline of growth at Schwab. And then last but not least, we saw about a 15% increase in the percent of clients coming to Schwab who are affluent. When you think about our value proposition, our unique ability is to meet the needs of so many different types of investors. There are as many ways to invest at Schwab as there are investors, as demonstrated by the fact that we can equally acquire affluent clients, younger clients, and clients who trade.
Of course, a huge part of marketing is also getting our solutions in front of existing clients to deepen our relationship with them and earn their trust over time, as evidenced by a couple of statistics here on the screen. So you'll see about a 30% increase in visits to Schwab.com. This is, of course, the channel where the most clients engage with us the most frequently. We brought over the best of Ameritrade education to Schwab through our insights and education. We've seen a 100% increase in prospect and client interaction with our education. We think of education as a pipeline to future growth because if we are meeting your need in the moment with what you need to know right now, you are more likely to consider us when you're trying to grow and manage your wealth.
And finally, we've seen a 60% increase in client engagement with advice solutions. I think I've heard today, multiple times now, that it is a bull market for advice, and we are seeing that in client behaviors by getting the right solutions in front of them at the right time. So let's talk a little bit about how we achieve those outcomes in marketing. And we're gonna talk about a relentless focus on measurement so we can continue to drive efficiency, deep, creative insight driven by client insights, and finally, continuous innovation. So a couple of examples here, the list is very long, of the ways in which we measure the outcomes that we are driving so that we can drive greater efficiency in the future, but I'll hit on a couple of them.
So many of you may be aware or not that cookies are being redacted from all of our digital behaviors, so you're no longer being followed around the internet when you buy something on a site. We no longer know who you are personally due to privacy rules. This dramatically impacts a digital marketer's ability to understand which of their placements and which of their messages are the most efficient. So we are building a multi-touch attribution model that will enable us to anonymize the digital behaviors of prospects and clients so that we continue to gain that visibility, and we can optimize our spend across digital channels and live channels. So this is an incredibly powerful model that will allow us to see the benefits of both our digital media spend and our live channels....
We use a marketing mix optimization model, which is a model that allows us to assign partial touch attribution, which is important in the world of marketing because last touch attribution overweights the emphasis on the efficiency of the last thing you interacted with, which, quite frankly, is usually something in the digital channel. So we use a marketing mix optimization model to do two things for us. So the first is to help us understand how to allocate our media spend across channels, whether that's digital, TV, podcasts, programmatic media, search, all of it. And it helps us forecast outcomes. So if we were to spend a little less or spend a little more, or spend it differently, how would that impact our outcomes? We can orient the model towards affluent clients.
We can orient it towards new trader clients, but we're constantly looking at how we optimize that spend to drive the profile of client that we're seeking to acquire. And finally, of course, we use data-driven targeting. This is sort of the original machine learning that happens in marketing, which is it is our job to get the right message in front of the right client, in the right channel, at the right time. That's harder than it sounds. That's four dimensions that need to work really well at any given moment, and propensity models are one of the ways in which we do that.
So we are constantly using the data that we have about our clients to identify what solution might be right for that client in any given moment, and then using digital channels, whether it's smart banners on Schwab.com or email, to reach out to that client. We see things through clients' eyes, which gives us unique insight into our clients and allows us to deliver industry-leading creativity. You've heard already today and hopefully got to experience in the back of the room here, the launch of Schwab Trading Powered by Ameritrade, which truly brings the value of the combined entities to bear on the market.
We are so excited about this, not only for the traders who are clearly attracted to the platforms, the products, the coaching, the education, but also because it signals to the average investor that if we can meet their needs, we can meet your needs as well. So we have found Schwab Trading Powered by Ameritrade, not only to be a great acquisition vehicle for traders, but also for a broader market. Schwab Investing Themes is something that we've had a lot of fun with in marketing. You may have heard us say before, depending on what the market's looking like, we're in a low engagement category. Not everybody gets as excited as the people in this room do about investing, about their finances. And Schwab Investing Themes allows you to invest in the things that you are passionate about.
So we get to go to places where investors are already engaged. A great example of this would be like on an EV charging station, we can talk about the renewable theme. In gyms, we can talk about the fitness theme. With the delivery robots that bring you food, we can talk about dining out, but it's been a really surprising way to break through and find investors where they are and engage them in their money, rather than making them come to us. And then finally, another example is our really robust stable of podcasts, which is a new media that we use to reach a broader range of investors with much deeper content. If you think about a Schwab Investing Themes ad or a Schwab Trading Powered by Ameritrade ad, you're talking about a 30-second commercial.
You know, the average On Investing episode is about 30 minutes. We've had over 1 million downloads of our podcast so far this year, and 84% of the people who start them, finish them. I don't think I finish 84% of the podcasts that I start listening to. So we know that they're really resonating with clients, and back to why we use education. This is a way to be there when investors need us, so that when they are making a decision about where to entrust their wealth, they do choose Schwab. And finally, as a marketing organization, we, we have to continue to innovate. We have to be where consumers are. You've heard the Charles Schwab Challenge mentioned, mentioned multiple times today. Lots of financial services companies sponsor golf tournaments. This should not be a surprise to anybody.
The way in which we create the experience around the Charles Schwab Challenge demonstrates our commitments to seeing things through clients' eyes. We have thought about it from the player's experience. We have thought about it from the attendee's experience. We have thought about it from the people who watch it on TV's experience, trying to, at every single touch point, understand that it is our job to ensure that we are meeting your needs no matter where we are, whether it's on a golf course or on schwab.com or in the mobile app. I hope you've already had a chance to see the 1975 Stingray. That is the car prize this year. Who would have ever thought that a prize for a golf tournament might be a restored car?
Well, here we are, and the reason why it's a Stingray is, of course, the Corvette Stingray was one of the first mass-market sports cars in the United States, so it democratized access to a real fast, fun car in the same way that Schwab democratized investing also in 1975. We talked a little bit about how we continue to innovate with insights and education. One of the things that I find the most engaging is we've created courses that are a series of different opportunities for education around topics that you might be interested in, with a wide range appealing to affluent investors who are thinking about transitioning to retirement, like retirement income, or people who are looking to, like, learn a little bit about derivatives.
So our education comes in all kinds of formats and modalities, again, to demonstrate that we're meeting you where you are. You heard Bernie talk about how we celebrate our independent advisors every year at Impact. This is an opportunity for us to showcase how we stand beside the independent investor in terms of helping them build their business, helping them recruit talent, and being advocates for them in the industry, while also building the category by celebrating what an RIA can do for an individual investor. And finally, and this is one I get a lot of questions about, is, you know, where is Schwab on TikTok? And I say it just like that because I think it's one of the places where you might not expect to see us.
We actually ran a campaign this year with 15 influencers who happened to already be Schwab clients, and they created content about their experience at Schwab, but in their unique style. So one example was Lacey, who did a Get Ready With Me video, and if you don't know what a Get Ready With Me video is, ask me after the presentation. But as she got ready, she described her experience with Schwab and how easy we made it for her to learn about investing and how easy it was to get started, and then how fun it was for her to watch and learn about all the equities in her portfolio. So this is not about trying to make investing feel like something that is quick and transactional.
It is about going to where investors are, meeting them in that space where it's a place where they're already engaged, and then deeply engaging with us around their content. That was like the punchline for the influencer. Yes. So just really quickly in summary, and then time for a couple of questions here. So the key to our success in driving the outcomes that we do through marketing is this continuous focus on innovation, creativity driven by client insight, and a relentless focus on measurement. We will continue to optimize our acquisition levers as we see trends in the industry. And finally, we will continue with rigorous measurement because we need to do everything I just said absolutely efficiently.
Maybe the underline that I would put on all of this reflects what I think everybody said today, which is there has really never been a more exciting time to be a marketer at Schwab because of this incredible value proposition that we can bring. The fact that there are as many ways to invest at Schwab as there are investors is truly a no trade-offs value proposition, and I know the entire team is excited about marking that every single day. So with that, I would love to take some questions. Yes, sir.
Great. Thank you. Michael Cyprys at Morgan Stanley.
Hi.
I was hoping you'd talk about customer acquisition costs-
Mm-hmm.
How you see that trending, where you see the biggest bang for the buck in an ROI?
So the biggest bang for the buck is almost always in what we call programmatic digital, which means that we can buy anonymized and yet highly targeted profiles of prospects, and we can target ads at them. So we tend to buy... This won't surprise anybody, given the outcomes that I was describing, we tend to target affluent clients. We tend to target traders who are, or clients who are traders, and we also do a lot of competitive conquesting. So if we know that you're in the market for somewhere to invest, then we want to be there. So programmatic is definitely where the biggest bang for the buck is. I will say cost per acquisition varies, is heavily dependent not only on how much we're spending, but also on economic factors.
Like, when there's a lot of market volatility, a lot of people are shopping, and a lot of people are engaged in the market, which drives down, drives down everybody's CPA. It's also determined by competitive spend. So we actually find when competitors spend, it helps boost the category overall because you have more eyeballs on the topic of investing. So CPA does vary, but we're in the business of driving it down. Any other questions? I'm waiting for a strike of thunder out there to, like, bring us outside. All right. I was hoping to introduce Nisha, who with a lightning bolt of energy, but come on up, Nisha.
Thank you. Hello, everybody. I feel like we got the sleepy spot. I hope you're not sleepy, because there's a show going on outside, but also hopefully, you're as excited as we are. I'm sure you've heard from all of us and felt a little bit of that energy that we're all feeling about kind of being in this new chapter and focusing on the growth of the firm and serving our clients. I've had the pleasure of meeting many of you over the years, and I'm sure when I was serving in my previous role as chief digital officer, I talked about how excited I was, and that was, you know, all the momentum that we had around digital.
When I was in retail, I talked about how excited I was about retail, and I spent over a decade working with our RIAs on the advisor services side, and I was very excited about that. But I can honestly say that I am most excited about wealth and advice, and what we can do for clients. I think the reason why I have so much passion around this, is because I think it's at the heart of what Schwab is. At the heart of what Schwab is, is we try to get clients to better outcomes. It used to be the way to get clients to better outcomes was to provide them access, to basically make it accessible for them to get to the markets or to... for them to get to products.
But more and more often these days, it's not enough to just provide them access. What they really need is more support. They need someone to talk to. They need some help, they need some guidance, and sometimes they need holistic wealth management. And, I think we are perfectly positioned to be able to offer that because of what we've done over the years and the credibility that we've built. So, so today I'm going to talk a little bit about what is Wealth and Advice Solutions, because everyone defines this differently. So I want to level set for all of you. And then I want to talk, a little bit about the momentum that we're seeing. You heard a little bit of this today, but the momentum that we're seeing from investors and advisors around how they leverage the capabilities that we offer.
Then finally, I'm going to spend some time talking about our strategy. How are we going to capitalize on this opportunity, and what are we focused on in terms of priorities? Let's start with the level set. Wealth and Advice Solutions. There's really three main parts of this organization and this area that I'm going to be talking about today. The first is Advice Solutions. Think about this as managed investing, we've often called it. These are solutions where an investor is coming to us looking for more than just a fund or, you know, or equities. They're actually looking for a solution. And Schwab Wealth Advisory, that you've heard about, is an example of this, but even Schwab Intelligent Portfolios or our proprietary separately managed accounts would fall into this category.
The second column here, I call these our hidden gems of Schwab. These are our wealth management specialists. These are the folks who have deep expertise in very specific areas that are relevant to wealth management. Sometimes that's about the portfolio, but often it's outside the portfolio. So CPAs, JDs, CFPs, you know, all the various expertise that you need to be able to support wealth management needs, whether it's a tax planning conversation or an income planning conversation or equity comp conversation. We have these experts and these specialists that serve our clients every day. And then finally, last but not least, our third-party products.
These are the vast group of asset managers that we work with every day that help us stock the shelves, and make sure that we have, you know, really compelling products and solutions that serve, again, both our retail clients as well as our RIA clients. When you total all this up, it's a significant part of our business. Over $4 trillion of our AUM and, over $4 billion of our revenue over the last 12 months. What you heard a little bit about is the momentum that we have in this area. You know, I'll talk a little bit about the trends that we're seeing and why we think that this momentum is gonna continue, but it's great to be able to talk about what we've seen just over the last 12 months.
Some of this you heard is fueled by Ameritrade and those clients that are becoming aware of all we can offer to Schwab. But it really is fueled more fundamentally by the broad trend we see, that bull market for advice that you've been hearing about all day. So the left side of this slide is really what we've seen in the first quarter, and these are our holistic wealth management solutions. So holistic meaning beyond the portfolio, includes financial planning, often income planning, you know, whatever a client needs with regards to support for holistic wealth management. And both of our offers here had record first quarters after a very strong 2023. Together, this constitutes almost $450 billion of that $600 billion in managed investing assets that you heard about.
But what I'm most excited about is what's at the bottom of those columns. Look at those CPS scores. Those are some of the best CPS scores in the entire company, and these are clients who are paying for advice, and wanting more and more, that deepening of relationship with Schwab. It's a really compelling story when we see the type of growth and enthusiasm we're seeing from clients with regards to those holistic wealth management solutions. But it's also really exciting when we think about what our scale and our business model allows us to do, because there are folks out there who want to step into advice or who have very specific needs about or ideas about what advice means to them. And because of our scale and our capabilities, we're able to provide these types of services in unbundled ways as well.
Examples of those, sometimes that looks like an investment solution. Wasmer Schroeder, Schwab Personalized Indexing, which is our direct indexing solution, they also had record first quarters, and both of those were also those are solutions where an investor is looking for, or an advisor is looking for a specialized investment management solution. Maybe not holistic wealth management, but a specialized solution. The tax trust and estate team, this is a team of those wealth management specialists that I pointed out on the prior slide. They've seen an over 100% increase in engagement year-over-year. As clients are understanding what Schwab can do in these areas, we're continuing to see more and more demand. Again, that 97% easy score.
When a client engages with one of these professionals, and I've done it myself many times, you kind of often walk away inspired, awed. "Oh, wow, you solved a question for me. You validated something. You helped me see something in a broader way." It's a really compelling interaction and a great way for us, for example, to not only fuel the path towards advice, but also capture more of that share of wallet and that NNA that you heard throughout the day. Stacy already touched on Schwab Investing Themes, but I think of that as almost a pre-advice experience. So when we think about investors and that huge population of self-directed investors that we have out there, how do we help them understand what Schwab can do?
And sometimes the way they step into that is through something like Schwab Investing Themes or a lot of the digital financial planning that we offer. And then finally, Schwab Intelligent Portfolios, our robo-advice, our automated investing offer, which is now over $80 billion in AUM, and again, with a very strong CPS score. We continue to attract investors of all shapes and sizes to that offer. So as you can see, a really strong first quarter after a really strong 2023. But we know that this momentum is here to last, and the reason is because we see these macro trends that are fueling the growth, and I'm gonna spend a few minutes on those. You heard a lot about that growth in the demand for advice, that bull market for advice.
But I think it's important to understand that's not just coming from a certain demographic of investors. It's not just coming from, you know, older clients who are now deciding they're at a life stage that they want advice. Actually, some of the most interesting stats are around, Gen Z and millennial investors who are saying that their lives are complicated enough that they're ready for financial advice. The other thing you heard a little bit about, I think, from Rick this morning, was around willingness to pay. And one of the things that when we, we were often, considering is willingness to pay within the Schwab client base. As you can see here, if you look across the industry, 64% of affluent investors are willing to pay for advice. If you take that within the Schwab house, it comes down to 37%.
But 37% when we're only serving 5% of those households. One of the questions I often got was: Well, what about the Ameritrade client base? They're not gonna be... They're traders. They're not gonna be nearly as engaged, and James touched on this earlier. Well, actually, they're quite engaged. That willingness to pay is 31% with the Ameritrade audience, so very similar to the Schwab audience, and that's why we're so excited about this opportunity with those clients as well. Another trend on this slide is around the demand for holistic advice. You saw that stat around the tax trust and estate team. We still see that kind of momentum with all of those specialty teams, and more and more clients are looking for that holistic wealth management.
The one-stop-shop experience that we can offer at Schwab is differentiating, especially when we can do it at the value and with the service that we can provide here. Alternatives has already been a popular topic, so I won't spend much time there except to say, we see this demand across the entire company. So our advisor services, RIAs, are leveraging alts more and more often. We're working to improve those capabilities for them. And then on the retail side, you heard about our launch that's coming up this year around retail alternative investments, which will bring alternative investments to qualified investors, over $5 million investors, self-directed, and then we'll also be introducing that into Schwab Wealth Advisory.
So really kind of making sure that we're taking advantage of this trend that we see in the marketplace and really serving the needs that our clients have for diversifying their investment, especially given all the wealth creation in the private markets. And then I want to spend just a second on this last trend. Bernie talked quite a bit about outsourcing. I think it was one of his trends as well. But the RIA community is really looking increasingly to that ecosystem that you saw on his slides as to how are they going to scale and grow their platform. And for us, our job is to continue to work with all those, the ecosystem of providers, but also continue to look at how can we support within Schwab, within our custody platform.
Outsourcing portfolio management wasn't really a popular thing if you talked to those RIAs five, 10 years ago. It's really changing in that industry with regards to looking to Schwab to provide more, and that's a trend that we can help support those RIAs for sure. So when you wrap that momentum and all those trends together, I hope you get a sense of why we're so excited about the size of this opportunity. On the left side of the slide here is our asset management fee revenue. You can see that it's grown significantly over the last five years.
What I call out for you is if you look at the breakdown between the fee-based advice, so think about that managed investing bucket that I highlighted on the first slide, relative to the rest of that AMAF revenue. You can see that not only is it growing faster, but it delivers a much higher ROCA for the firm. And again, a much higher ROCA, but highly competitive. We're not going to be charging fees that don't feel like Schwab. These are really competitive products, really compelling, and still really attractive from a win-win monetization perspective. The middle column here, I'm highlighting some of that Ameritrade momentum, and my colleagues really stole my thunder today.
But anyway, but some of that Ameritrade momentum, we're seeing really strong engagement from those Ameritrade financial consultants as well as the investors. And just to give you a little bit of behind the scenes, you know, a financial consultant who came from Ameritrade, they had none of this capability, and so they're coming into Schwab, and we spend quite a bit of time helping them understand what are all the capabilities that we have at Schwab. I was actually in a branch just this week in Los Angeles, and one of the Ameritrade FCs said, "Yeah, I learned about Schwab Wealth Advisory, and then I sat down again and learned about it the third time.
Third time, oh, my God, I got it." And now every client, I'm so excited about being able to bring this offer to our clients. So it sometimes takes those financial consultants a minute, but you can tell by those great flows, 30% of our SWA flows in the first quarter were from those Ameritrade clients. So you can see that momentum is starting to build. And we're just getting started. So this chart shows you've heard, you know, retail investable assets. We just kind of pulled out the advice portion of those retail investable assets. And if you think about that $600 billion in managed investing relative to the size of the marketplace, we not only have a lot of opportunity within the Schwab and Ameritrade client base, but we have a lot of opportunity outside of it as well.
So what are we going to do about it? Let's, let's talk about how we're going to capitalize on this opportunity. So there's four key pillars here that I'll highlight, and I won't walk through all this just in the interest of making sure we have some time for questions. But there are four key pillars here. First of all, we need to continue to make our offers better, in terms of making sure we're filling competitive gaps. So alternative investments was one of the ones that we're talking about here, and I'll spend a minute on that. But as, as well as just continuing to enhance and bring, our human expertise and digital capabilities together in even more powerful ways.
So Schwab Wealth Advisory, this is one of our key areas of investment, this year and has been and will be again next year. What we're doing with Schwab Wealth Advisory is we're introducing a discretionary option, so clients will be able to choose whether they want non-discretionary or discretionary based on their needs. And we have a lot of clients, by the way, who currently use Schwab Wealth Advisory and say to us: "You know, I'm ready. Like, you can take this now. Like, I don't need a non-discretionary option." So it's a really great. It's going to be a great solution for them, as well as new clients who really are ready to have a more kind of hands-off type experience. We're also going to be introducing alternative investments in Schwab Wealth Advisory.
So Schwab Wealth Advisory will have that, the same kind of capability, that, that any, you know, competitive wealth management offering would have. And then finally, bringing more digital capabilities into the experience. This is an area, I think, as a whole industry, when you think about wealth management, there, there's opportunities to bring more digital capabilities into that experience to make it really even more compelling for an investor, and that's something we're really focused on with Schwab Wealth Advisory. Retail alternative investments. So we're introducing retail alternative investments later this year in phases. Again, qualified investors, over $5 million plus. It will be a curated shelf across the major categories: private equity, private credit, credit, hedge fund, and so on. And Jonathan, I think, talked about this.
There will be a dedicated, specialized team of alts, experts who will be supporting the financial consultant and the client to, first of all, qualify the investor, but also talk to them about the specific products that are on the shelf. As you can imagine, given the distribution opportunity that our alts manager partners out there see, we have a lot of demand from managers who wanna participate in this offer. So we are really working hard to make sure we have a curated shelf that we're really kind of working through the process as we launch this to make sure that we're managing risks for our clients, and that they're really educated around alternatives and what you know, what, what this experience is gonna be.
Because it is different from investing in a mutual fund or in equity as they may be more used to. So that is rolling out later this year. And then, of course, continuing to look at capabilities around tax, trust, and estate. This is a really exciting area, I think, where some of the technologies around GenAI and some of the things that we can do will be really exciting to be able to kind of create scale in areas that maybe haven't traditionally been as scalable when you think about these outside of the portfolio kind of services of wealth management. Second column is streamlining the path to advice. So we have to have great offers, and then we have to make it easy for clients to get to advice.
Some of this is, like, really tactical, right? Making the enrollment easier, making sure that, you know, clients can kind of transition, you know, one-click kind of experiences that we, that we really need to focus on, and we've made lots and lots of progress there. But also tax-aware transitions. So we stood up a team last year called the Transition Support Team, and that team is really focused on making sure that clients can get access to kind of the, the type of experience to help them understand what the tax implications will be of a transition to an offer. It's been very popular with Schwab Personalized Indexing. Supercharging our professionals, that is all about our talent.
If you haven't, you know, heard this enough today, our people are really our secret sauce, and it couldn't be more true when it comes to advice. Our expertise is critical. Technology plays a huge role, but our expertise is critical. But we can provide them a lot more capability in terms of modernizing the platforms that they're leveraging, and again, leveraging some of the really modern technology to kind of help them scale, and be able to serve our clients even better. And then finally, being able to support the, that growth and scale of the RIA community that we continue to serve. You know, lots of different ways that we do this through the, like, institutional no-transaction fee platform that we launched that last year. We're actually gonna be expanding it.
The Model Market Center, which is really an opportunity for advisors to actually be able to leverage models right on our platform, and we're using the Ameritrade technology to enable that. And then again, alternative investments. Our RIAs are also asking for more and more when it comes to alternative investments, so working on operational improvements, making, again, enrollment easier and making reporting easier, really trying to improve that experience overall. So lots going on, but I hope that you get a sense of the magnitude of the investment and the impact that we can have and why we see such a big opportunity. At the end of the day, we truly believe that we are in the best position to win in this marketplace.
And if you think about when an investor, that population of investors, whether they work at Schwab or not, when they're thinking about who do they take advice from, what's the first thing they're going to think about? They're gonna think about: Do I trust this provider? Is this the provider that has integrity? Is this a provider that's going to be able to support my needs as I grow through time? Is this a provider that will give me great value? Actually, one of the reasons why investors don't get professional advice, actually, the number two reason, is because they're not sure it's worth it. So we know we're in a great position. We have this really differentiated value proposition, and we can grow with advisors through investors throughout the advice journey. So, I'm gonna pause there and open it up for questions.
Thank you. Just a quick question on the offering advice and wealth management. You walked through it, the different pieces seem really interesting and compelling, but it does seem somewhat complex or at least varied. I guess I'm wondering what challenges, if any, that might present, from a client perspective, making them aware-
Sure
... of all these different options without maybe overwhelming or confusing them?
Yeah, well, I mean, that's, you know, the... I think we were talking about that with the mobile app. One of our challenges, we offer so much, right? We have so many different experiences, so many different capabilities. How do we curate that and bring that into the eyes of the investor in the right way? First of all, I would say our financial consultants play a big role in that. And that is when I mention, like, for example, our Ameritrade financial consultants and helping them understand what these offers are and how to position these offers, what is the value for the client? So our financial consultants play a really big role in that. But beyond that, I think there's a lot of things.
Stacy talked about marketing and some of the things we're doing in marketing around being able to target better and trying to make sure we're getting the right messages to the client. Actually, in the Ameritrade onboarding, so when our Ameritrade clients onboarded into Schwab, they had an onboarding experience, and that's another opportunity for us to position the types of investments that we... or investment solutions or advice solutions that we think will be most compelling. So it's a multi-prong approach that we're taking to make sure that we get the right solution in front of the right client. But I think that is something that we're gonna continue to work on because it is we, we have a lot.
I think one of our biggest opportunities is our clients don't know all the things that we can do for them, and that's why when we bring attention to something, we start seeing that momentum. Yeah. Hi.
Thank you. Michael Cyprys of Morgan Stanley. I wanted to come back to the outsourcing trend that's come up a number of times today. I think you, I think you mentioned 18% of RIAs outsource all or a portion of their portfolio. Is that to you guys or to others? Where do you see that rising to as you look out over the next five years? What are some of the steps you're taking to sort of increase that, and what are the economics to Schwab?
... Yeah, it's a great, great point. That is, that is an industry-wide stat, so that's not 18% outsourcing to us. That's about 18% who are now outsourcing either a portion or all of their investment management or portfolio management. I think overall, I mean, it used to be, again, that the RIAs thought of that as their secret sauce, that they had to develop those portfolios, and they might use separate account managers, but they were certainly not using kind of models and some of these more holistic solutions. That's what we're seeing changing. I mean, the Model Market Center, after we kind of brought it over from Ameritrade, put it on the Schwab platform, we've seen incredible engagement from our RIAs, our Schwab advisors in with that, with that platform.
So we see a lot of engagement. The fact of the matter is, there are other solutions out in the marketplace that I think, it kind of similar to, I think, analogy Stacy was using. The more solutions that are out there, the more advisors are actually thinking about, "Oh, well, maybe I could outsource this." And that trend towards model management and being able to use models, I think is continuing to grow because there are a lot of other providers in that ecosystem, the TAMPs, for example, that are actually providing some of this as well. So we see a big opportunity to participate in there, and we do it in a Schwab way. We also have, obviously, very strong relationships with asset managers who very much want to be a part of that ecosystem.
And then, and similar to the relationships that we have, for example, with the institutional no transaction fee platform, we have certain asset managers that we partner even more closely with, that we have the opportunity to take a similar approach with Model Market Center. So there are attractive economics that come along with that kind of relationship that we have with those asset managers.
Nisha? Nisha here. Let's do one.
Right here.
Right here.
There we go. Okay, there you go. I heard your voice, I couldn't see you.
That's okay. No, sorry, right here. Let's do what we'll do time, I think, for to squeeze in one final question.
Okay.
Patrick Moley at Piper Sandler. Could you characterize, you know, the opportunity among the Ameritrade clients that are recently come over and converted between maybe those that are having exposure to wealth and advice for the first time, versus those that maybe have pre-existing-
Mm.
advice, relationships?
Yeah, I mean, we're seeing, you know, we're seeing momentum in both areas. So we are seeing, you know, investors who actually didn't have assets held away or wealth management relationship held away. They just were a trader. And, you know, often when a client decides to leverage an advice solution, it's because of a life event. They had a child, they got married, they, you know, something happened in their family, and they decided to leverage it, some sort of advice solution or just get more help. And so we certainly are seeing that, and you see that in some of those, Schwab Wealth Advisory, metrics for sure.
But we are also seeing the consolidation effect, where you have an investor who's, you know, really liked Ameritrade, they're now happy with Schwab, they're getting comfortable with the platform, and now their Ameritrade financial consultant or their Schwab financial consultant has engaged them and talked to them about, "Oh, you could now, you know, leverage, let's say, Wasmer Schroeder, think about what's going on with fixed income in the markets, and this might be a time for you to take advantage of that." So we are seeing both of those dynamics play out, and I think we're gonna continue to.
So I am out of time, and I'm excited now 'cause I get to introduce, let's say, I'll say my neighbor, 'cause not only do Peter and I live close together, but we sit next to each other, and close friend, and I'm gonna miss him a lot, but Peter Crawford, our Chief Financial Officer.
Thank you, Nisha.
Let's take that. Thank you. All right, we are in the home stretch here. So thank you all for sitting here for the last several hours and out on the web. Before I get started, I do wanna just briefly touch on the announcement we made last week and offer my perspective, which is working at Schwab the last nearly 23 years and serving as CFO for the last 7 years, has just been a tremendous tremendous privilege. I mean, it's, there's been no more rewarding or satisfying experience in my career than working along thousands of just incredibly dedicated, talented individuals to really advance our mission and to serve more clients and serve them better.
While I'm excited about my, my next chapter, I really wanna make sure that we did this transition at a time when it was good for Schwab, and that we made the transition to somebody who would be good for Schwab. Walt talked about why this is a great time to make this transition. I think my colleagues did a great job over the last several hours talking about the momentum we have and our confidence and our and our optimism. But I also want to say, having gotten to know Mike over the last several months, he is absolutely the right person to take up the mantle and lead the finance function, not only with his talent and his experience, but also with his alignment with our with our culture and our values.
I think you're all gonna really get to enjoy getting to know him. But I'm not leaving yet, so you'll have at least another opportunity to hear from me in the months ahead. So let's get into it. So over the last several hours, you've heard from my colleagues about how and where we're winning in the market, about the enhancements we've made to our value proposition, our offer for clients and our business, about the substantial opportunities we have to better serve our clients and grow, and also about our strategy and our game plan for executing on those opportunities. So my time, I want to talk about our financial formula or sort of financial strategy, if you will, that really supports our overall corporate strategy.
It's grounded, of course, as everything at Schwab is, in our relentless focus on clients. There's four broad pillars or principles that should look familiar to all of you who followed the company for a long time. Our ability to gather assets, our ability to convert that asset growth into revenue growth, the discipline with which we manage expenses, and then our opportunity through our business model to return capital to stockholders through the cycle over time. Now, over time, the tactics have changed, but the principles really haven't changed.
If you look over the last couple of decades, through a lot of change and some challenges, periods of time, headwinds, tailwinds, the decline of equity commissions to zero, this financial formula has not only helped us win in the market, but it's produced very solid financial performance as well. 12% growth in total client assets, 9% annual increase in revenue, and 11% annualized stockholder return. Now, it starts, of course, with our focus on clients and our ability to gather assets. When you combine the power of our through client size strategy with our no trade-offs positioning that Walt talked about, our leading position in the two fastest-growing segments in wealth management, that has helped us emerge from a relatively crowded group of competitors 10 years ago, to the clear leader today among publicly traded companies in wealth management.
Now, we have a proven track record of being able to convert that asset growth into revenue growth through our business model that combines banking, brokerage, and asset management. Now, we of course report our revenue based on the three primary components, net interest revenue, asset management, admin fees, and trading. But I think another interesting way to think about it is based on the driver of that revenue. So there's always been a large component of our revenue, which has been a function of our clients' cash. Either the cash they have on our balance sheet or the cash that may be off our balance sheet in money funds. And that, of course, is heavily influenced by the level of interest rates.
There's another, a second component, which is really a function of client engagement in the markets. That's things like trading, margin utilization, and securities lending activity. And despite equity commissions going to zero, you can see this actually, this component of our revenue has become even more important following the acquisition of Ameritrade. Then there's a third component of our revenue, which is more fee, recurring fee-based revenue, which is influenced by equity market valuations, as well as our clients' preference for various solutions. Now, today, you look at this and you say, this, this, this sort of three-legged stool is certainly very strong and resilient. And, you know, Walt got asked this question earlier. I would say, you know, we never optimize, we never seek to optimize around a, an ideal revenue mix. We optimize around the client. That's our focus.
I get asked this question a lot. We optimize around the client, but at the same time, what I'd say is, if we think about the growth opportunities we have, there's certainly opportunities to grow net interest revenue and cash-based revenue as we add more clients and trading revenue, as James talked about. But on a relative basis, very, very bullish on the opportunity to add more of this recurring fee-based revenue for all the reasons that Nisha talked about. And that will create an even more resilient, even more diversified all-weather business model. Now, our cost structure is a very important competitive advantage. In an industry where pricing matters, the firm that has low cost structure is structurally advantaged, and we have a commitment to continuously press that advantage.
And the way you do that is by growing, allowing us to spread our fixed costs over an ever-increasing client base, by operating with a lot of discipline in how we manage expenses on an ongoing basis, and by making investments in driving greater efficiency throughout our business. It's not about, you know, constraining expenses to the greatest extent possible. Rather, it's about finding a balance between managing expenses in the near term and making appropriate investments that will drive long-term profitable growth and always allow us to continuously improve the client experience. Now, what that means in practical terms, is that when we have tailwinds behind us, we tend to lean more into some of those longer-term investments.
And when we're facing more headwinds, we tend to pull back, but never in a way that jeopardizes the leading client experience our clients have come to expect from us. You can see over time, in different periods of time, we've had more or less revenue growth, more or less expense growth. But through those periods of time, we've been able to drive down our expense on client assets and increase our margins. So capital return is a very important part of our financial formula. At the same time, our number one priority from a capital standpoint is to support the growth of our business. So we have, as you, I think you all know, we have paused our stock buyback as we seek to build our capital levels, inclusive of AOCI, back to our operating objective.
Now, that operating objective going forward is going to increase on a consolidated basis by about 25 basis points. So similar to kind of what we had maybe 5, 6 years ago. And that's a level that we're confident is sufficient to both support a decrease in interest rates, as we saw in 2008 and 2020. That leads to a surge of client cash onto the balance sheet, that the capital is needed to support, as well as a dramatic increase in interest rates, as we saw, of course, in more recently in 2022 and 2023, and the impact that has on AOCI. Now, we've intentionally designed our balance sheet strategy to support our overall finance strategy, to support our overall business strategy.
We take very little credit risk, and that's a function of focusing our lending on our existing brokerage clients and ensuring that virtually all of our loans are backed either by our clients' homes or securities that we custody. We align our duration of our assets with the duration of our liabilities, and we focus our investing activity on securities that have very, very little credit risk. Most, vast majority of them are backed by the government, that have a lot of liquidity and present relatively little convexity risk. Now, going forward, as we seek to manage our capital levels, inclusive of AOCI, we're going to need to be mindful of the size and duration of our available-for-sale portfolio.
What that means in practical terms is we'll size that AFS portfolio based off the level of our client's investment cash, the rate-sensitive cash that's sitting on our balance sheet. So in a low-rate environment, when more of that investment cash comes onto our balance sheet, the AFS portfolio will be somewhat larger. In a higher-rate environment, as that investment cash gets deployed off our balance sheet into other solutions, the AFS portfolio will be somewhat shorter. And as we manage our AOCI, the potential AOCI variability that could come from higher rates, we're going to throttle the, if you will, the duration of that AFS portfolio based on the size of that portfolio. So again, when the AFS portfolio is larger, we'll shorten up that duration.
We use those inflows to shorten up the duration, and as the AFS portfolio gets smaller, we have the opportunity to have that portfolio extend a bit. So going forward, it's really about optimization. It's about optimizing, of course, optimizing around the client, but optimizing our duration in light of revenue stability, OCI variability, as well as minimizing the usage of supplemental borrowing when interest rates increase. And it's also about optimizing where our clients' cash is between the banks, the broker-dealer, the IDA agreement with TD Bank. But again, focus on our clients, focusing on our clients' behavior, including, of course, their utilization of margin. Now, we said previously that Schwab benefits from a high-for-longer interest rate scenario.
But even if interest rates declines significantly from current levels, as the most recent dot plots would indicate and as the market expects, we continue to see a path to our net interest margin approaching 3% by the end of 2025. And that's not, that's not like a cap, right? As we reinvest, as the portfolio matures and we get paydowns from the portfolio, much of which was invested when interest rates were 300+ basis points below where they are today, that creates a long-term NIM tailwind that we are excited to capitalize on. So I want to talk about 2024. We'll talk more about 2024, as we always do in our July business update, but I do want to offer a few thoughts in the meantime.
2024 has started off much better than we had expected at the beginning of the year, much better than we assumed in our financial plan at the beginning of the year, with higher transactional cash deposits, strong equity market performance, strong growth in margin lending as well, and strong trading. Given that, we would now expect our exit velocity, if you will, at the end of the year to be on the upper end of the range that we previously communicated. But there are a couple of dynamics that I want to call your attention to that have an influence over our near-term, I would even say our very near-term, financial performance, but really don't have any meaningful impact in terms of longer-term financial story.
The first is, while we are definitely taking steps and controlling the expenses that are within our control, there are some one-time unexpected expense items, things like the FDIC surcharge, the surcharge that we accrued in Q1, or our bonus funding, which is a function of our performance relative to the financial plan that the board approves at the end of the year, but that resets back to 100% in the following year. There's also some pass-through expenses, like this thing called the SEC 31 fee. It's a pass-through expense, but because of accounting rules, it shows up in both revenue and expense, has no impact on our bottom line performance.
And so given these, these items, we would now expect our expenses to be to finish the year somewhat above the flattish level that we communicated back in January, assuming, again, assuming these, these these trends continue. But again, those items are not things we would expect to influence our, our bottom line performance in 2025 and beyond. And the second dynamic is with the interest rate-sensitive client cash realignment activity dwindling and our tax season basically behind us, we would expect the path of transactional cash to be heavily influenced by the level and mix of asset gathering, as well as our clients' preference or allocation engagement in the equity markets. Now, in May, transactional cash is down about 2%.
Most of that happened in the first part of the month as we had sort of residual impact from tax season. And given that decline in transactional cash in May, combined with the decline in transactional cash that we saw at the beginning of the year, we'd expect relatively modest NIM expansion from Q1 to Q2. When you put all those dynamics together, I think it's unlikely that our Q2 adjusted EPS will be higher than where we finished Q1. But I want to emphasize that we, you know, as we look at Q4... We continue to see our exit rate, our adjusted EPS exiting Q4 going into 2025 on the upper end of the range that we talked about.
So this we described back in January, we described this as a transitional year. I think it's safe to say the transition is happening faster than we, than we had expected, even just a couple of months ago. And as the, as the headwinds that we've been facing, you know, continue to abate and the, and the fog that has been obscuring our, our financial performance clears, we see the potential for sequential revenue, earnings growth through 2025, and of course, over the years ahead. And that, that paves the way for the, you know, our long-term financial formula to reassert itself. I won't go through all the bullets on here in the interest of time.
I think my colleagues have talked about a lot of this, but when you put all this together, what you see is a company with the ability and the demonstrated track record of strong organic growth, best-in-class profitability, and substantial capital return through this cycle. A combination that, you know, we think is very unique and very, very powerful. So with that, I've got some time for some Q&A, but before we do Q&A, or as we do Q&A, I do want to introduce you to Mike Verdeschi.
Mike is our new deputy CFO and will become CFO, and you know, as I said, as I've gotten to know him, I think you will come to see in him you know someone who is as committed as all of us who interact with you are towards communicating with clarity and with candor. So Mike, please join me up on stage here.
Thank you, Peter.
Please join me in welcoming Mike.
Thank you.
I'm gonna do something I don't usually get to do in these forums, and I'm actually gonna ask the first question. I'm gonna break our rules, and I'm gonna ask a two-part question.
Two parts.
Mike, Mike here. Mike, maybe you can tell us, just tell us briefly about your background, and then I think what, you know, the investment community may want to know also is, what's the plan for you to to interact with the, and get to know some of the investment community?
Great. Peter, first of all, thank you very much for inviting me up here to share a few words today. I would say, you know, many may know me already, but I had spent 3-plus decades at Citi in a variety of roles, and very early on in my career, I was in the banking business. I then moved on to the markets business, and that included an assignment overseas in Japan, where I was the head of markets and country treasurer for Citibank, Japan. At that point in my career, I had spent all of my time on the institutional side of the firm, and in coming back to New York, I joined the consumer bank in order to just expand my experiences there at the firm.
From that assignment, I did a few other things, including centralizing a lot of the treasury activities across the firm at the time. I moved on to become the chief investment officer, and then in 2017, I was appointed the treasurer for Citigroup, where I got to see, oversee the firm's balance sheet. So in many ways, from a career perspective, I got to experience the full breadth of, of Citi. And of course, with the industry continuing to evolve, I wanted to explore that next great opportunity, and I'm absolutely thrilled to have joined Schwab. Thank you for the opportunity. I thank the management team for this great opportunity. There's so much to be excited about.
When I hear even today from the management team, this is a firm that is really well-positioned in this wealth space, a terrific management team, and what I'm most excited about is that comprehensive commitment to clients. That is something to be very excited about, and I am very happy to be a part of that. So, Peter, to your next question around the analyst community, look, I've always enjoyed the dialogue with the analysts. That's something I've done in the past. I look forward to doing it again. In addition to engaging in those business reviews, it's really important to get out on the road. So I'm looking forward to getting out on the road, meeting with many of you, and I look forward to doing that in partnership with you, Peter.
Great.
Looking forward to that.
Awesome. Thanks. Thanks, Mike. All right, so now we have some time for some questions from the audience. And given the fact this is Mike's third day on-
Third day
... third day on the job, I think I'll probably end up taking the questions, rather than Mike, but please, fire away.
Thank you. Kyle Voigt from KBW. So when speaking about revenue mix earlier, Walt mentioned potentially being able to capture some of the spread income economics without necessarily doing so on balance sheet. Obviously, you have the BDA agreement, which I think is moving towards a $60 billion floor, and I think there's some flexibility to keep up to $90 billion off balance sheet there. I guess, does that contract allow you to onboard more third-party sweep relationships? And how should we think about the optimal on-balance sheet versus off-balance sheet deposit mix in the long run?
Sure. So, the IDA agreement with TD Bank allows for us to, to, in sort of a steady state, to flex those deposits in the IDA between basically $60 billion and $90 billion. There's nothing exclusive about the agreement as long as we, we meet that. In terms of sort of our, our thinking about the optimal on-balance sheet versus off-balance sheet approach, what I'd say is, it's really about, you know, we're always wanting to figure out ways, better ways to serve our clients. And so there are certainly some programs out there that allow you to offer extended FDIC coverage, and so of course, that's something we wanna, we wanna take a look at. And we're always going to wanna look at ways to further optimize, you know, capital-adjusted returns.
The first priority is the most important priority, but the second one certainly is important as well. And so, you know, looking at a number of different, different ideas, it's very much in more of the idea stage today versus anything that we're, you know, even close to being prepared to, to discuss in any more detail.
Thanks, Brennan Hawken, UBS. Peter, congrats on your retirement. Mike, look forward to working together. Could you help us think about the potential for capital returns? So you talked about how we're moving it back to the old range, I think, actually-
Yeah.
which is clear. But, we have the potential for a continued shrinking balance sheet here, 2024, probably much of 2025. We also have AOCI accretion. And so the potential for capital generation really is, from my perspective, seems pretty powerful. Can you talk about how we should be thinking about it, and how, more importantly, you all are thinking about managing the capital base going forward?
Yeah, thank you for the question. I would say in addition to the two things you talked about, there's also just the organic capital formation that we get through the, you know, the strong earnings that we're producing as well. So, you know, I would say there's no nothing new to share on this relative to what we've shared previously. You know, what I'd say is once our adjusted Tier 1 leverage ratio gets back to that operating objective, that new operating objective, again, 25 basis points higher than what it's been previously, then the discussion of capital return becomes more of a live conversation, if you will. At the same time, we want to think about alternative uses, right? We want to think about stock buybacks.
We want to think about, are there preferreds that we may want to redeem or call. Are there other uses for that liquidity? Things like our supplemental borrowings. What's the level of supplemental borrowings that we have outstanding? What's going on in the environment? What do we see with the interest rate environment? What do we see with client activity? So it's a live conversation, but we've always said that our capital return philosophy is opportunistic, not, you know, we don't put it on autopilot or anything like that. But through the cycle, it's a very, very important part of our financial formula.
Dan Fannon, Jeffrey. So wanted to clarify a few things you said on the near term, Peter, just with regards to, that you said Q2 not better than Q1 or Q1 hi- Q2 higher. Just want to confirm what you said. And then in the context of the cash component, we're clearly too towards the tail end, but May is not maybe stepping back a bit from what we saw the trends earlier in the year. But as you think prospectively, you know, do you think we're still talking about cash sorting, and when we hear from you in July, it's the next update? And also, just the, as we go through the end of the year, it seemed more like an expense dynamic that's a little bit higher than you thought, and revenue is maybe a little bit as same.
Just want to kinda clarify some of the dynamics of what's moved around.
Yeah. So let me take that, I guess, in pieces. What I say is, you know, what I said was Q2 is unlikely to be higher than Q1, so, you know, the same or potentially lower. In terms of the client cash sorting, or what we, as we call it, the client cash realignment, you know, hard to say when that sort of exactly when that inflection point is going to be. I certainly look forward to not talking about it on an earnings call or a business update, and I'm sure Mike will look forward to that as well, as he steps into my role. But can't say exactly when we're going to see that growth.
It depends, as I mentioned, it depends on the pace and mix of asset gathering, what how much cash are new accounts bringing in, and that offsets the any residual client Cash Realignment activity that we have, as well as, you know, cash that goes out for advisor fee payments, things like that. But we're clearly nearing the very end of this cycle and getting down to a, you know, obviously a very low level. And I can't remember what the third part of your question was. In terms of... Oh, in terms of revenue versus expense.
Yeah, we'll have a, you know, in July, we'll be able to share with you an updated, more fulsome view on, on, on 2024 in terms of, of, sort of updated, you know, the mathematical illustrations that we shared back in January, and refresh those, which will include a conversation about both revenue and, about expenses. We don't really do that in July because we want to wait for some period of time for the, for the year to unfold before we, update that, those, illustrations and the outlook for the year.
Welcome, Mike, and, hello, Peter, and, thank you for, obviously, all the guidance that you've offered over the years. So, although I know it's not going to be your last, at least public, forum that you're going to be speaking at. The question I wanted to just, unpack is really around the earnings growth algorithm. It's not something you spent much time, at least speaking to, at least in, your prepared remarks, but you did allude to at least some of the drivers of, you know, stable ROCA, revenue growth, high singles, and EPS growth or net income growth somewhere in that low teens range. On a near-term basis, given the balance sheet is going to remix into higher-yielding securities, the revenue is expected to accelerate beyond 2024. How should we be thinking about operating leverage?
If you can, maybe just give an update on that longer-term earnings growth algorithm, if that's something we can underwrite, or if there's potential for even acceleration, just given higher ROCA opportunities and maybe a little bit more potential to at least take advantage of your scale on the expense side.
Yeah, absolutely. And I would say, you know, as we think about the revenue algorithm going forward, I mean, you look at... We don't face the same degree of headwinds that we face on asset management fees, right? We, you know, the trend from Mutual Fund OneS ource to ETFs and index funds, that's a much smaller trend than what we'v Mutual Fund OneS ource is a much smaller component of our overall revenue. Of course, equity commission is going to zero. Walt talked about that. We don't really see, you know, any significant areas of pricing compression, and so that's on the one side. And on the other side, you know, we have the opportunity for significant revenue growth as we take the cash flows today that are-...
Earning, you know, 2-ish% and pay down supplemental borrowing that's, on which we're paying 5%. When you do the math on that, that's a significant growth of revenue. And so, as we look forward, we want to continue to drive down our expense on client assets. We've talked about this before. Our expectation is through the cycle, sort of mid-digit expense growth. And so if you kind of do the math in terms of that substantial revenue growth in 25 and beyond, coupled with that level of expense growth, it's definitely the opportunity for some very significant operating leverage and very significant margin expansion and impact on our bottom line results as well.
Peter, since you talked about that spread between what your securities portfolio is currently yielding, as well as the high-cost liabilities, in addition to the fact that you're generating a lot of excess capital pretty quickly, just wanted to get a sense as to whether there's any appetite or willingness to reposition the securities portfolio, accelerate those pay downs, and cleanse the balance sheet a little bit sooner?
Yeah, I mean, again, I, you know, I think our answer here will sound, I think, pretty darn similar to what we said before, which is we certainly recognize the math, right? We, we get the math around if we, if we, take the loss one time and, and what it does to our, our go-forward net interest revenue, you know, revenue, earnings, et cetera, from, from repositioning the portfolio. At the same time, we're very confident that's something that's going to happen anyway, and so it's really about accelerating that. And what we're very mindful of is doing anything that risks any kind of erosion of, of client trust for, you know, for the, the benefit of accelerating what, what will happen otherwise. And so I would say today, you know, no, no appetite to do that.
We're certainly always evaluating things, but nothing, you know, nothing in the near term, I would say, we're looking at along those lines.
Okay, at the risk of angering Jeff, I'm gonna ask a sort of two-parter. One for Peter, one for Mike. So it's not really a two-parter. So, Peter, the 2% expense growth, you flagged a couple of the items in there. How much of that, how much of that 2% are one-time in nature? That might be helpful to understand. Then, Mike, it'd be really interesting, given some of the more recent dynamics within Schwab and the balance sheet, to hear your perspective on ALM and, you know, how you think might be an interesting framework or might be a different way in which you might approach.
Yeah. So let me, I'm probably going to let Mike get off the hook on the second part of it and say he's three days in. So let's give him a little bit of time to sort of understand our structure and our liability structure before we put him on the spot to talk about ALM. But let me talk about the expenses. I would say it's roughly 50/50, right? So it's roughly 50%, probably one-time items and 50%, broadly speaking, depends on the level of client engagement, because the SEC 31 fee is based on trading. So the more trades that we have, the higher that fee is. But broadly speaking, we're talking about 50/50.
But again, important point is, you look at 2025, and you're thinking if you, you know, I think most of you are looking out multiple years, these are items that, you know, really don't have an impact in terms of the, the outer years', you know, financial performance. Maybe time for one more question, then I would do wanna make sure that we let you, all of you try to head off to the airport and get out of here before it gets too crazy outside. We're good? Okay. Well, then it's my pleasure to close, and I wanna thank all of you. Really appreciate you committing however many hours, five, six, seven, whatever, I lost track. Six hours, I guess, with us. Those of you who came here to Westlake, thank you for joining us in person.
Those of you who've been joining us out on the web, thank you all for sitting in. We really appreciate you taking the opportunity to understand this company better. And hopefully, through the time that we've spent today, you get a sense for our excitement, our confidence, our optimism about the future, and also our satisfaction, you know, gratification, if you will, around the trust our clients have with us and how well the business is performing and the momentum that we have. We will look forward to speaking with you again in July, and I hope everyone has a safe trip back without too many delays. Thanks, everyone.
Thank you.