While famous for zero-commission stock trading, Charles Schwab is a bank. The company generates the vast majority of its revenue (Net Interest Income) by taking the uninvested cash sitting in clients' brokerage accounts and investing it in higher-yielding bonds and mortgage-backed securities, capturing the "spread" between what it pays the client in interest and what it earns on the market. Charles Schwab operates a multi-faceted wealth management and brokerage model. While it is widely known for pioneering low-cost retail trading, it actually generates the vast majority of its profits not from trading commissions, but from net interest income. Schwab functions effectively as a bank; it takes the vast billions of dollars in uninvested cash sitting idly in its clients' brokerage accounts and reinvests those funds into higher-yielding government bonds and mortgage-backed securities, capturing the lucrative spread. Additionally, the company generates significant, sticky, recurring revenue through asset management fees on its proprietary mutual funds and ETFs, as well as advisory fees from its vast network of independent Registered Investment Advisors (RIAs) who utilize Schwab's platform for custody and clearing services. This diversified model ensures cash flow regardless of whether retail investors are actively trading or simply holding cash. Schwab also earns substantial net interest income on client cash balances swept into its affiliated bank, a revenue source that became a source of investor concern during the 2023 regional-banking crisis when rising rates made money-market funds more attractive than Schwab's bank sweep rates.