Thank you. Well, thank you very much. That brought back quite a few memories, to say the least. I don't know who that old guy was in the chair, but he had a beautiful red tie on, I know that. Well, welcome to our 31st meeting as a group of shareholders. 31 years later, it's incredible. Thank you for those on the website who are watching us also today and people here present in the auditorium. Thank you for coming and spending a little bit of your time with us. I am so happy to celebrate our 31st anniversary of being a public company. I just have to say as an aside, I am so proud to, and also humbled by the fact that we've had such incredible growth over these last 31 years.
Actually, the company went public when it was about 10 years old when we did go public. This 40-some years has just been a remarkable thing. As I see around today, we had our board meeting. It takes a big team, a bigger and bigger team, but somehow our magic, I think, is creating a team that can work together and solve issues for our clients and bring to them financial help all the way along. My belief had always been wonderful. You all think about your own personal health, but financial health is really fundamentally important to all of us in our society today. We need more people looking after their own financial health because as we get more complicated, certainly with kinds of ways that we're expected to save enough money for our own personal retirements.
That's one of the main goals that I personally am ambitious about in terms of trying to help people get there and have adequate sums to retire on, not knowing, not even suspecting that they're going to live 15 or 20 years longer than they ever anticipated. That's one of my big issues on my plate. Our meeting today, as always, is a chance for us as a group to show you what we're doing, what we have done, and give you a little perspective on where we're going and that we'll try to accomplish that today. We'll have a period of questions and answers, we have a young man over I know has a question on his mind. I think his name is Turbo Air. I think that's his nickname. Something like that. No, what is it? Turbo?
Turbo.
Okay, you're going to be first up on that microphone, sir. He was here last year. You remember, wonderful young man, investing for his future for sure. We'll have the Q&A, as I said, as always, our agenda is fairly straightforward. We'll start off with David Garfield giving us the general counsel perspective. He'll cover the business agenda, including the number of proxies and the results of those. We'll hear from Peter Crawford, our CFO, who was just coming on board last year and has done a fantastic job this last year as our CFO and doing a wonderful job. Peter, thank you. He'll talk about the results of 2017 and a little clue as to what's happening in '18. This is a sneak preview of what that is. All the news is good today.
You can leave here, have a cookie or a coffee, leave here feeling really good. You made the right decision to come here to the right company. After Peter's presentation, Walt will give us a CEO report. He does a very thorough job, and if you do have questions, he and I will be together at the end to try to take on any questions you might have. Before I sit down and hear these presentations, I want to first acknowledge our board of directors who are sitting right up here in front. I want to call out their names. As I call out your name, please stand up. First with John Adams. Thank you, John. Walt Bettinger. Of course, you know Walt. Preston Butcher, and I have a thing to say about Preston. Preston has been on our board for 30 years.
He whispered to me just a few months ago, "Chuck, I think it's the time I should probably step aside." We argued about it long and hard, for sure, finally, he won in the argument. He's going to go off play golf. He's going to fly-fish. He's going to do a lot of interesting things. He also told me he's going to spend a lot of his time giving away his money that he made so much money on the board, exercising his options and so forth. He's going to be the first guy you want to hit on any philanthropy deal. That's the first guy. Preston came and joined our board one year after we went public and has served through thick and thin, and we've had some thick and thin times along the way.
As I said today, we're really pretty thick on everything right now, to say the least. I want you all to help me thank Preston for a wonderful 30 years of service. Thank you, Preston. Remain standing. Oh, that's okay. You can sit down. I know, we're getting along in age. Other members of the board, Joan Dea, would you please stand and be recognized? Thank you, Joan. Chris Dodds, Steve Ellis, Mark Goldfarb, who is on our board, had to go back. He's expecting the birth of his first grandson, so we gave him a little time off to do that. Bill Haraf, Frank Herringer, Steve McLin, Arun Sarin, Paula Sneed. Paula. Roger Walther, and finally, but foremost, Mr. Wilson, Bob Wilson. Thank you so much, my board. How about a round of applause for all of them? I have one more introduction.
I think he's officially a member of the board, depending on the vote here. Our last, but our newest director. He's been with us actually nine years on our ETF Schwab board. We have several different boards here. We have money market fund, we have ETF boards. Anyway, Charlie Ruffel has been on that board. Charlie, will you stand up, please? Where are you? Here you are. Great. Just joined the board. How about a round of applause? Four of our members of the board sitting here that you just met are up for election this time period, and we'll hear about the results in a few moments. Walt Bettinger, Joan Dea, Chris Dodds, and Mark Goldfarb are all up for re-election, and I'm very optimistic that they'll be re-elected. Another round of applause for all our board members, including Charlie Ruffel.
I'd like to recognize our executive team. These are the people every day who really run the company and make things really tick and all the various complications that this company has grown into, they make it happen and make it look so smooth and easy like nothing could be more from the truth. It's very complicated and thank you for what you do every day. Maybe the executive board could stand up and be recognized. Thank you very much. They keep the company on an unbelievable curve, and we'll hear more about that later. That curve is definitely on the upward slope and going at a pretty good rate. I'd also like to recognize our fellow employees, who we have now almost, I think it's over 19,000 employees in total, which is a remarkable number. It's not our record number.
Years past, we had a large number, but we were pretty inefficient then. We've become very efficient, and 19,000 people help us do what we do every day. How about a round of applause for our hardworking employees? Those in the room who are Schwab employees, will you raise your hand? I don't know if there are any in here or not. Yeah. Used to be we had hundreds of them in here, but they're all working so hard, they're all upstairs. Thank you for doing all your work. Most importantly, I want to say thank you to our clients. I know that many of our clients are in here, are also shareholders, and they're looking after money and they're looking after their shareholdings by being here today.
Without them, without over 10, almost 11 million people who are shareholders or investors in Schwab through various kinds of accounts, thank you very much for being a part and trusting us with your money. We know that we earn your confidence every day, and we have to make that a commitment to you, and we certainly will. How about a round of applause for our clients? Now I'm going to ask David to come up and carry on the business portion of the meeting, and I'll be back with you with Walt after for the Q&A.
Thank you, Chuck. Thank you, Chuck. As the first item of business, I would like to introduce our Inspector of Election and our independent auditors. The board of directors appointed the Inspector of Election to conduct the voting for this meeting. This year, our Inspector of Election is Equiniti Trust Company. A representative of Equiniti, Matthew Pasieka, is with us today. Mr. Pasieka has filed a note of inspector with me. He also has informed me that based on a preliminary count, we have a quorum for this meeting because more than 94% of the company's approximately 1.3 billion shares that are entitled to vote are represented by proxy at this meeting. Our independent auditors are Deloitte & Touche LLP. Ms. Carol Larson of Deloitte & Touche is here at the meeting and will be happy to respond to your questions during the question and answer period.
The polls are now open for voting on the proposals. If you were a stockholder as of March 16th of this year and have not returned your proxy card, voted by telephone, or voted on the internet, or would like to change the instructions in your proxy card or your telephone or internet vote, you may vote at this time. For stockholders in the room, please raise your hand and one of our representatives will give you a ballot. For those of you attending our virtual meeting, you may click on the Vote Now button on the webcast console to cast your ballot. I would like to present the five proposals we are asking stockholders to vote on this year. The first proposal is to elect five directors. This year, Walter W. Bettinger II, Joan T. Dea, Christopher V. Dodds, and Charles A.
Ruffel have been nominated for election to the board of directors. The second proposal is to ratify the selection of Deloitte & Touche LLP as the company's independent auditors. The third proposal is the advisory approval of named executive officer compensation. The fourth proposal is for approval of the 2013 Stock Incentive Plan, as amended and restated. The fifth proposal is for approval of the amended and restated bylaws to adopt proxy access. The board of directors has recommended that you vote in favor of each of the proposals to elect directors, ratify the independent auditors, provide advisory approval of named executive compensation, approve the 2013 Stock Incentive Plan as amended and restated, and approve the amended and restated bylaws to adopt proxy access. Each of these proposals is described in the company's 2018 Proxy Statement.
If you'd like to review our 2018 Proxy Statement, you can pick up a copy at the registration desk. We also have been notified that stockholders intend to present two proposals for your consideration at this meeting. Todd Matley, representing the New York City Employees' Retirement System, the New York City Police Pension Fund, and the New York City Board of Education Retirement System, will present the first stockholder proposal requesting annual disclosure of EEO-1 data. Mr. Matley, will you please step forward to the microphone?
Thank you very much for the time. My name is Todd Matley. I'm with the California Public Employees' Retirement System. I would like to formally introduce proposal number six, filed by Scott Stringer and the New York City Comptroller on EEO-1 data. Thank you very much.
Thank you, Mr. Matley. Is Mr. Trevethan here? All right. Mr. Matley, would you also present the second proposal?
Yeah, I'd like to introduce proposal number seven into business as well on political contributions. Thank you.
Thank you. The board of directors has recommended that you vote against these stockholder proposals. The statements against these proposals are contained in the 2018 proxy statement. If you have completed a ballot, you may hand it to one of our Schwab representatives now. If you're participating in the virtual annual meeting, please click on the Vote Now button to cast your ballot electronically through the internet at this time. If you have completed a ballot during the meeting, your vote will be counted at the end of the meeting and reflected in the final report of the Inspector of Election and in the minutes of the annual meeting. The polls are now closed. The Inspector of Election has completed a preliminary count of the proxies that were voted during the weeks leading up to the meeting.
The preliminary count shows that more than 98% of the shares voting on the proposal and present at the meeting by proxy have been voted in favor of each of Walter W. Bettinger II, Joan T. Dea, Christopher V. Dodds, Mark A. Goldfarb, and Charles A. Ruffel. They have been elected to the board of directors. More than 97% of the shares voting on the proposal and present at the meeting by proxy have been voted in favor of the ratification of the selection of Deloitte & Touche LLP as the company's independent auditors, that proposal has been approved. More than 95% of the shares voting on the proposal and present at the meeting by proxy have been voted in favor of the advisory approval of named executive officer compensation, that proposal has been approved.
More than 96% of the shares voting on the proposal and present at the meeting by proxy have been voted in favor of the approval of the Stock Incentive Plan as amended and restated. That proposal has been approved. Less than 78% of outstanding shares have been voted in favor of the approval of the amended and restated bylaws to adopt proxy access. That proposal requires 80% of all outstanding shares voting in favor for approval. It has been defeated. Less than 36% of the shares voting on the proposal and present at the meeting by proxy have been voted in favor of approval of the stockholder proposal requesting annual disclosure of EEO-1 data. That proposal has been defeated.
Less than 25% of the shares voting on the proposal and present at the meeting by proxy have been voted in favor of approval of the stockholder proposal requesting disclosure of the company's political contribution and expenditures, recipients, and related policies and procedures. That proposal has been defeated. This adjourns the business portion of the meeting. Thank you very much for your attention. We'll now hear from our Chief Financial Officer, Peter Crawford.
All right. Well, thank you very much, David. Welcome everyone here in the room and on the webcast. It's certainly a pleasure and a privilege being here at our annual stockholder meeting, especially coming on the heels of a very strong 12 months for the company. One that brought a lot of rewards for both our clients and all of you, our stockholders. Now, I wish I could just do what Chuck did and just say, "All good news." It is all good news, but I wish my job was so easy that on the earnings call, I could just say, "All good news. Any questions?" I will provide a little bit more detail than what Chuck provided in his intro. First, before I get into the meat of it, we have this very important and eagerly anticipated forward-looking statements page.
The intent of which is to remind you that I will be talking about the future, as will Chuck and Walt following me. As much effort as we put into our forecasting process and our strategy, events often unfold in ways different from what we contemplate and different from what we envision. So to the extent that events unfold differently than that and you want to make sure you keep up to date on our latest news and information, make sure you check our latest disclosures on aboutschwab.com, tune in to our quarterly webcasts for the latest news, information, and perspective. Before I talk about the future, I want to talk about the past, and specifically about 2017. It seems like a long time ago. 2017 was clearly a remarkable year, and a remarkable year for this company.
Just about a year ago, my predecessor, Joe Martinetto, who's down there in the audience here, was up on stage laying out our baseline scenario for 2017. I emphasize it was a scenario, not a forecast. That scenario contemplated modest market appreciation. A single Fed increase in the middle of the year, a flattening of the yield curve, meaning we expected long-term rates to go up, but not as quite as much as the short-term rates, and we expected relatively flatter starts. In that scenario, we envisioned that we would have low double-digit revenue growth, even accounting for the $several hundred million of pricing reductions that we put into place in the first and second quarter of last year.
We figured we'd achieve a roughly 100-300 basis point spread between our revenue growth and our expense growth and achieve a pre-tax margin of just over 41% or so. Clearly 2017 evolved from a macro standpoint a lot better than that baseline scenario. The equity markets were up almost 20%. We had three Fed increases rather than the one that we assumed in our scenario. Client trading activity was actually up 10% year-over-year. In fact, the only macro factor that really worked against us was long-term rates that were lower for most of the year before rising towards the end of the year. Given all that, it's not at all surprising that our performance significantly outdid the scenario results that we anticipated.
With revenue growth of 15%, we capitalized on the favorable economic environment to make some significant investments in our business and driving the long-term growth of our business and grew expenses by 11% year-over-year. Even doing so, we achieved 440 basis points of operating leverage, meaning we grew our revenue by 4.4 percentage points more than our expenses and achieved a pre-tax margin of just over 42%. With all that enabled us to grow our earnings per share by 23% year-over-year, even accounting for a $46 million one-time tax adjustment related to the enactment of tax reform late last year. I'd be the first to say that our stock price is not the only barometer or even the most important barometer of our ability, our success in executing on our strategy.
Even so, certainly gratifying to see our steadily increasing earnings reflected in a rising price for SCHW, which all of you perhaps noticed as well. As we turn the page to 2018, our success in 2017 from both a financial and an operating standpoint paves the way for what we expect will be very strong results in 2018 as well. At our winter business update a couple of months ago, we did something a little bit different in that we laid out not one, but actually two different scenarios given the uncertainty around Fed policy this year. In one scenario, we assumed the Fed would increase one time in the middle of the year, and the second scenario, the more of the upside scenario, we assumed that the Fed would move actually three times over the course of the year.
What those scenarios have in common is the same assumption about that 6.5% market appreciation, a flattening of the yield curve, and in this case, a slight increase in trading activity, daily average revenue trades or DARTs. We said in those scenarios, in that range of scenarios, we'd expect our revenue to grow by low to mid double digits. We'd expect there to be a spread between our revenue growth and our expense growth of between 100 basis points and perhaps 400 basis points, in terms of the difference between revenue and expense growth, and a pre-tax margin of somewhere between 43% and perhaps 45%. The year thus far has unfolded in a way that looks a lot more like that three-rate hike scenario.
With the Fed already having moved in March, I think the odds are right now are close to 100% market is expecting the Fed to move in June and likely later this year as well. With long-term rates up sharply, even above the levels that we contemplated in this plan, and with our trading activity, our clients' trading activity definitely up more than that slightly level that we contemplated in the plan. From that standpoint, not at all surprising as we look at our first quarter results, that they reflect the benefit of those macro tailwinds that we have, as well as the continued strong business momentum that we've seen. Revenue growth in the first quarter was up 15%. It's our 11th consecutive quarter of record revenue. That 15% revenue growth was driven primarily by growth in net interest revenue.
Although I point out that we actually were up year-over-year on our trading revenue as well, despite the impact of the commission reductions in the first quarter of last year. Expenses were up 13% year-over-year, which is a little bit above our ingoing expectations and above the levels that you've seen in previous years. That's a function of a number of different things. That's a function of the strong asset gathering we had in the first quarter, which drives higher incentive compensation, the heavy call and trading volumes that we experienced from our clients, that heavy client engagement, higher flows into Schwab funds and ETFs, as well as the renewal of volatility that we saw in the first quarter.
Even with that 13% growth in expenses, we grew our pre-tax margin by 1.3 percentage points to 41.8% in the first quarter and grew pre-tax income, emphasis pre-tax income, by 19% year-over-year. This is not just a story of tax reform. Although I will say that tax reform certainly helped us and helped us achieve an 18% return on equity in the first quarter. Those of you doing the math at home perhaps figured that our expense growth rate in 2018 should look somewhat similar to the expense growth rate that we saw in 2017 or perhaps even a little bit higher. I want to emphasize that we're taking a little bit of a different approach to managing expenses this year than we have in previous years.
In previous years, we deliberately backloaded some of our spending and made it contingent on how the market would unfold, how the macroeconomic environment would unfold, figuring that if things unfolded well, then we could green light some of that spending. Given the nature of some of the investments that we're making this year, we wanted to move forward on those investments early in the year and make it less dependent on how the macro environment unfolded. That means a couple of things. First is our level of spending is likely to be somewhat more consistent quarter-over-quarter in 2018. Second is that level of spending is likely to fluctuate less based on the macro environment. The environment continues to be as favorable as it has been. We see something that looks more like that three rate hike scenario, or perhaps even better.
That means that operating leverage, that gap between our revenue and expense growth, should be higher than what we contemplated in those two scenarios I laid out earlier. I will point out that there are other factors that influence our expenses, volume-related factors and growth of assets and growth in our Schwab funds and ETFs as we saw in the first quarter. There may be a little bit of fluctuation anyway, but it'd be less about what happens in the macro environment in terms of our conscious choice to move forward or not move forward on some of the spending initiatives. Let me close by saying Schwab as a company has never been healthier. We've never been in a stronger competitive position than we are today.
Our Through the Client's Eyes strategy is working exactly as intended. Our financial formula, our financial model is working exactly as intended as well. That Through the Client's Eyes strategy , we're being recognized, being rewarded as clients bring us more of their business and prospects turn to us. Through our unique business model that combines banking and brokerage and asset management, we're able to turn that business growth into revenue growth. Then through ongoing expense discipline, turn that revenue growth even higher levels of earnings growth. Via a thoughtful approach to capital management, make sure we're rewarding all of you, our stockholders.
It is admittedly a pretty straightforward approach. It's really the discipline to stick with that through most of our 40-plus year history that I think has really set us apart and made us so successful in executing on that, and I think will make us successful in the years ahead. With that, let me turn it over to our CEO, Walt Bettinger.
Thank you. Thank you, Peter. Good afternoon, everyone. Thanks for joining us today here in San Francisco and also on the webcast. Chuck talked about 31 years that we've been having these meetings. I've had the honor to speak with you, I think, for 12 years. It truly is one of the highlights of what I get the opportunity to experience each year to spend these few minutes together. Whereas Peter spent a lot of time talking about the result of the extraordinary trust that our clients place in us, I'd like to spend my time talking about the strategies that we implement that have contributed in a great way to that trust. It really begins with the core of our Through the Client's Eyes strategy, and that is what we call the Virtuous Cycle.
Now, many people considering businesses and business strategies probably would look at this chart that we're about to spend a minute on and say, "That's not really how businesses operate." I have news for them. This is the way that Schwab operates. Our Virtuous Cycle begins with a very simple concept of challenging the status quo on behalf of our clients. What that means is we're using our knowledge and experience in this industry to constantly ask, "Isn't there a better way?
Isn't there a better way to deliver improved services at a lower cost, more value left in the pocket of the client whose money it actually is?" I'm going to go through some details on each one of these, but I just want to mention briefly, because it was shortly before our meeting a year ago, I shared, we made voluntary price moves that saved our clients almost $400 million last year, leaving that money back in their pocket. When Peter talked about things like 15% revenue growth, that was in addition to the savings that we passed on to clients. As a result, clients reward us with more business. It sounds simple, doesn't it? Do the right thing by your clients, and they will choose to do more business with you.
They brought us a record level of almost $200 billion in net new assets last year alone. Every time I say that number, it's sort of shocking to me. $200 billion of net money in one year alone, clients brought to us in our core assets. As a result, as they bring this additional business to us, it leads to record financial results. Just over $8.5 billion in revenue, 15% revenue growth, strong margins. That leads to outstanding stockholder value in terms of our return on equity and EPS growth. We reinvest, because in order to make the Virtuous Cycle continue year after year after year, it means putting money back into the business, hiring more professionals, investing in technology, ensuring that our risk management capabilities are world-class to protect our clients' assets and even taxpayers across our country who provide FDIC insurance guarantees to our clients.
We reinvest in the business, and it starts the cycle all over again. A beautiful, simple strategy of doing the right thing by other people, and the result being an extraordinary company with extraordinary results. To take a minute and talk in detail about a couple more of these, I mentioned earlier the commission reduction. Last year, we reduced stock trading commissions from $8.95 to $4.95. I don't know what commissions were when Chuck opened doors over four decades ago, but I know they were a lot more than $4.95. For under $5, a person can trade as many shares of stock as they would like to buy or sell. We also enhanced our money market cash-like investment instruments by lowering our management fees substantially, because by taking a lower fee in the money market funds, it leaves more interest left for our clients.
You may recall during the five or six years in which the Federal Open Market Committee maintained interest rates at a near zero rate, we waived our management fees to the tune of about $1 billion to ensure our clients didn't have negative yields. As soon as rates started to move up, we lowered our fees substantially down to levels that are near the lowest in the entire industry, so that we can provide the maximum amount of yield to our clients on their cash and money market funds. In the index space, we lowered our management fees for index mutual funds, the fastest-growing area for investing across our country, to the lowest rates across the industry. We took one other step, which I think is incredibly what I call Schwab-like, meaning this is the way Chuck has always thought about the business.
We said every investor, no matter their size, no matter how large or how small, pays one single rate for an index fund. For example, as low as three basis points, the lowest index fee in the industry, bar none. We gave that to everyone, where virtually all of our competitors use what's called a share class model, where maybe a person with $10 million pays three, four, five basis points, but a person with less pays often four or five times more. Very Schwab-like to say every client of ours gets the same extraordinary deal, the lowest cost across the industry. The last thing that I have up on the slide here, again, seems very straightforward, but unique in our business. We said we will have a very simple satisfaction guarantee.
If for any reason any of our clients are disappointed in the service they receive, the quality of service, the quality of advice, anything that we do for them in return for them paying us, if they're dissatisfied, all they have to do is raise their hand and we will return to them 100% of what they paid. It just seems extraordinary in our industry that we're the only one to do that and still the only one delivering a satisfaction guarantee. In an industry where so many other firms copy, no one has copied us into this space and say simply, "If we've disappointed you, that's on us, not on you, and we will return any amount that you've paid us." Step two in the Virtuous Cycle, it works.
You can see via this chart, a quarterly reflection of the net new assets that clients have brought to us. In the first quarter of 2018, again, another record, $66 billion in net new money. That's on top of the almost $200 billion in core net new assets clients brought us last year. I also want to identify the line graph at the top. I'm color blind, but they told me in my prep session that's purple, so I'm going to believe that they weren't playing a trick on me, and that that is a purple line. That's called a transfer of account or transfer of asset ratio. It's the cleanest measure in our industry of how you're doing on a market share basis.
What that 2.3 factor shows, which I've never seen a number like that in my 35-plus years in this industry, means that for every dollar that a client chooses to remove from Schwab and take to a competitor, someone else brings $2.30 to us. A rather extraordinary measure of market share acquisition, again, I think a reflection of a Through the Client's Eyes strategy. Third parties notice also. Third parties, in this case, J.D. Power, has recognized Schwab for the third consecutive year as being top-rated in full-service brokerage firms. Again, an interesting positioning with J.D.
Power recognizing Schwab, who many people may harken back to its origins four decades ago as a discount firm, when in reality today, we deliver a no trade-offs proposition where clients still benefit from the pricing of a discount firm, but actually receive a level of advice and full service not offered by anyone else. It's not just about the past, as Peter talked about. It's also positioning for the future. We're not only accelerating our rate of growth, as this chart shows in our net new asset figure, but we're doing it on an ever-growing base. We're growing faster than ever before as our percentage of net new asset acquisition is applied to a larger and larger base of client assets. Today, just short of $3.5 trillion.
Just in wrapping up my comments, I wanted to share with you some of the thinking that goes on inside our company, how we make decisions. Because a lot of times I'll have conversations like this with owners of our stock or analysts who cover our company or reporters, and they'll say, "I hear all the things you say, Walt, about the strategy Through the Client's Eyes, Virtuous Cycle, the no trade-offs approach, but how do you actually make it work inside the company?" One of the major ways we make it work inside the company is we operate with principles, what we call here guiding principles. What we try to do is apply these guiding principles in every situation that we're faced with. I just thought it would be helpful this year to actually share with all of you these. There's five very straightforward ones.
First, trust is everything. Earned over time, lost in an instant. We are fundamentally in the trust business. People save their money, invest their money with us, and they count on it being there. They count on us doing the right thing. They count on us using the knowledge we have in our business to give them a better value, not simply try to figure out a way to optimize our own economics at the corporate level. We know, as we have seen with many companies across many industries in recent years, trust can be lost in just that instant. Second is that price matters more than ever, and in our industry, more than most. Price matters because, as I often say about investing, everything is an uncertainty but one factor, and that is what you pay. Everything else is an uncertainty.
As I recommend in every case, try to pay as little as you possibly can to get the quality of advice and service that you want. We have a tremendous responsibility to ensure you're paying the absolute lowest that we can deliver quality service and results for our clients and still deliver appropriate rewards for our stockholders. Third, clients deserve efficient experiences every time. This is an issue of respect. As Chuck mentioned, with almost 11 million clients working with us and often interacting with us on a daily basis, we demonstrate respect for our clients by ensuring that they can get the things that they need done in an efficient, effective, and accurate manner. That doesn't mean we're perfect. That's why we have a satisfaction guarantee. Our aspiration is to ensure that every experience is as efficient as it can be.
Fourth, every prospective or existing client is critical to our future, no matter how large or small. Simple example, the one I referenced earlier, when we slashed the fees on our index mutual funds to the lowest level of any provider in the industry, we didn't do it just for the affluent client or the high-net-worth client. We did it for every client, no matter how large or how small. Last, and maybe this is most important in terms of the development of a company's brand and the building of an organization like Chuck has built over these last four-plus decades, actions matter more than words. My guess is you could come to an annual stockholders meeting like this one or any one of them across the country, and you'll hear a lot of fascinating commentary.
What we actually do matters a lot more than what we say. In fact, what we have to say about ourself probably matters less today than it ever has before. What really matters today is what we do and what others objectively and honestly have to say about us. These are the guiding principles that we utilize to implement our strategy. Hopefully in sharing these, it provides a bit more insight into the way we try to operate Charles Schwab here in 2018. Let me go ahead and make a couple of quick comments before Chuck joins me up on stage. We're going to transition into our Q&A segment. A couple of ground rules, if I could.
First, just out of respect for all of the stockholders here in the room, as well as those on the webcast, we'd like this to be a forum for questions, not for statements. There's plenty of opportunity for people to make statements, but out of respect for the people here in the room and on the webcast, we'd like this to be an interaction. Ideally, we'd like it to be an interaction about business, the things that we do at Charles Schwab to try to serve clients. We will ask if you could approach one of the mics if you have a question. Tell us your name and whether you're a stockholder or you're actually a proxy for a stockholder.
We would prefer if you could limit to one question for each person, again, out of respect for all attendees, rather than having individuals monopolize the time that Chuck and I have available. We'll try to get to as many questions as possible. If we're not able to get to it, hopefully we'll be able to provide another form of response to you. If you have an individual question about your account, out of privacy, we would not be able to address that. We do have Jeremy Hoover from one of our local branches here in the back of the room, and Jeremy would be more than happy to help you. With that, I'd love to have the opportunity to welcome our founder and chairman, Chuck Schwab, back on stage with me.
Who also, by the way, is the best person to work with that I could ever imagine.
Thank you, Walt. What a great presentation he just made. It makes me want to buy more stock. Can't get enough of it.
All right, we'll go ahead and open up the microphones for questions. I think if people on the webcast have questions, they can also send them in, and we have a representative here working with that to provide questions. Again, if you could start and offer us your name and whether you're a stockholder or proxy.
Hello, I'm William Schneider from San Francisco. I have about 800 shares. Using all the tools you have online, ABC ratings, and the great support we get from the branches, you think robo-investors, through your analysis of the success so far, you think they could beat the S&P?
I hope so.
Well, the track record of our Intelligent Portfolios program, which is a digital advisory or sometimes referred to as a robo advisory program, has actually performed quite well. Although I would emphasize that the objective of a program like Intelligent Portfolios is to build a diversified portfolio as opposed to a S&P 500 portfolio. It's probably going to have, over time, ideally a bit of a smoother ride than a 100% stock portfolio. Maybe not return as much over time, but probably not with some of the ups and downs.
Yeah, it's intended to be not a racehorse. It's supposed to be a very sound way to accumulate money, put money aside in a sound way, and to live through the ups and downs of the market, and hopefully meet your long-term goals.
Exactly. Thank you, William. Question here?
Hi, my name is Eric Sprague from Roseville. When you lowered the fees to $4.95, obviously, the main reason was it's part of the Virtuous Cycle and doing right by the clients. The competitive landscape has to be part of the thought process. How much of it was Ameritrade and E*TRADE versus future competitors? You tweeted that that Barron's journalist got carried away with what you said about Amazon. I think it was more about FAANG companies in general. If Google Ventures does more Robinhood type of funding to brokerages aimed at millennials, because I think the trading fees, they're already less than 10% of the total revenue, right?
Right.
$200 million on $2.4.
That's right.
theoretically, you could go to zero, but I'm just wondering about that thought process.
It's a really good question. From a strategy standpoint, I think what we want to do is find that right balance point between delivering as much value to our clients as we can, while still providing a reasonable return to shareholders. I'd actually like to recite a quick story from years past of a meeting I had with Chuck, which I believe informs the way we try to look at things like pricing strategies and competitors. This is early on in my tenure as president of the company. I don't even think I was CEO yet. This is probably maybe 12 years ago, and we were faced with a very complex pricing issue that involved competitors. We did in the classic business school format, we did a wonderful 50-page PowerPoint deck with charts and graphs, and it had what-if scenarios.
If competitors do this, we could do this, all these various choices. I sat down with Chuck to walk through it. Of course, those of you who know Chuck know what a gentleman he is. He was patient and let me get to about page two or three. Then Chuck interrupted me very nicely, and he said, "Walt, this looks like great work, and there's a tremendous amount of effort that's gone into it. I have a question. Forget the competition. What's the right thing to do by the client?" I said, "Well, that's easy. It's option A." Chuck said, "There's nothing really more to do. Do option A." That's the way we try to analyze those. Competitors will react or not react or do whatever they will do. If we consistently do the right thing by the client, I think we ultimately win.
I think the results of the last four decades demonstrate that.
Thank you.
Thank you. Yes, sir.
Hi, I'm Dirk Nyhart from Berkeley, California, and I have two questions. Why do we think 13% women on our board of directors is a fair gender ratio? Surely, we can do better. My second question is, one of the women outside gave me a card asking about compensation. I think that's a wonderful idea. We're not giving our shareholders much, less than 1% of dividend yield, and we're not giving our employees much. How many employees even had a 5% raise this year? Certainly, we can do a better job.
Thank you, Dirk. A reference to the board one is, Chair?
Well, the board, obviously, we try as a board to have the best board possible in terms of intellectual capacity, experience, all of those things, the diversity issues that we try to address. We want it to reflect our client base, the diversity component. We want to have people who have also may be investors, too, so they have empathy for our client base. That's important to me, have total empathy for our clients and the spectrum of our clients, whether they're small, young, or big or large investors. We need to have that perspective. I think we've done a reasonably good job. I think a very good job, frankly, and I hope that meets your test.
I think from a compensation standpoint, what we try to do with our employees, again, is find that right balance point between cash compensation and other forms of assisting our employees build wealth. For example, we offer a stock investment program where we discount the stock by about 15% and let employees purchase stock in the company at that discounted rate. Although it's correct that our dividend today is a relatively modest level, our total stockholder return in 2017 was 31%, compared to a Standard & Poor's 500 index, which did 22%. We try to provide a series of ways to assist our employees in salary, benefits, equity in Schwab.
Our most popular benefit we offer of all is our sabbatical program, which remains unique across our industry, where every five years, we provide employees the opportunity to have four weeks off, paid time to do whatever they want to do, volunteer in their communities, spend time traveling. That actually is the single most popular benefit that we offer. I guess the last thing I'd say, rolling it together is, the true measure is employee retention. Our employee retention rates, I believe, are near or at the envy of our entire industry. People want to come to work for Schwab, and when they get to Schwab, many of them enjoy being Schwabies for the rest of life.
Yes, sir. Welcome back.
Thank you. Good afternoon, Mr. Chuck and Mr. Walt. My name is Messiah, and I'm 10 years old, and I'm a stockholder. What steps are the board taking to improve stockholder value, especially mine?
Go ahead.
He just asked, what steps is the board taking to improve stockholder value?
Walt just made a wonderful presentation. I hope you go over that again and again. Maybe we can get you copies of that so you can take it back to some of your classmates and discuss that. You'll have probably some questions, and I'm sure Walt or myself will be happy to answer that sometime, maybe on the telephone. We work every day trying to, first of all, make experience for our clients, and you're a client. We want to make your experience every day a better one, so you bring more of your savings and more of your earnings along the way and put them in your account here and hopefully buy appropriate investments for yourself so that you meet your long-term goals eventually. You're just beginning. That's really pretty important. I'm really pleased to see you at this age, thinking about all these things.
I wish more kids your age were doing this. You're a perfect example of what should be done. Over the long term, we try to provide different services for you and help you invest and help you get appropriate returns and get the experience that you want and the outcomes that you want over the long term.
Thank you.
Thank you.
That's okay. You can come back again. You talk to your mom.
100% for Schwab and 100% going up, up.
Up. Thank you, Messiah. Yes, sir.
Hi, I'm John Foley from San Francisco. My question is about the movement toward sweep money market funds, being FDIC insured and in the Schwab Bank, I believe. These tend to yield less than the purchase money market funds. I'm wondering if there are plans to offer the option to sweep into the funds that are now purchased only.
What we've tried to do with our client cash strategy is offer our clients a variety of the best possible choices we can relative to the competitive marketplace. For example, for long-term investment cash, we offer a program called CD OneSource or Certificate of Deposit OneSource. What we do is we go around to all of the top banks in the country that would like to participate and offer the highest yielding certificates of deposit we possibly can that you can buy at Schwab without paying any form of a commission. Of course, those are FDIC insured up to the $250,000 limit.
For cash that you maybe have more of an intermediate term need for, we offer what are called purchased money funds, that's a money market mutual fund that you buy shares in and then sell shares when you want to utilize that money. That's the program I referenced earlier where we've lowered the fees to where we're near the lowest in the industry because the lower our fee, the more the net yield that accrues to our clients. That's where most cash should probably be invested for most people that you intend to keep in cash for the long term. For the purposes of things like sweep or a checking account balance, that should only be money that you intend to utilize in the near term.
The competitive set there is relative to most similar transaction accounts that have checking features, automated bill pay, the ability to withdraw money from any ATM worldwide with no fee, another feature of Schwab's program. The competitive set there on yields is actually quite low. We've chosen to pay several times more than most of our competitors for these types of transaction accounts. However, I would emphasize that if you intend to have your cash longer term, you do not want to have it sitting in a transaction account any more than you would leave large amounts of your money in a checking account. You want to go ahead and move it into one of the purchased money funds and then go ahead and liquidate that if you decide you want to get access to that cash for a transaction. That's the way to purely optimize your yield.
Thank you. Other questions we have? Do we have any questions from the web console? Okay, I guess we do not. If there are not any other questions, I'd like to thank all of you for joining us and turn it over, Chuck, for any parting words you might have for our attendees.
Again, thank you so much for attending our 31st meeting here of the shareholder, public shareholders now. It's been a great 31 years. I think the discipline that we've all gotten from being a public company, I think is really important. Some of our competitors are private. I've always thought we should be public and be transparent about everything we do and see. You see our financial statement, you see how we run the company very conservatively. The most important thing to me, frankly, is to make sure that we have safety and soundness and have an ethical operation all the time. You are counted as first in our order of business. Clients, we really honor you. We every day try to earn your trust.
Thank you so much. We'll be around for a few minutes and grab a coffee or a donut or something like that. No donuts, I don't think. Maybe cookies. Thank you very much.
Thank you.