The Charles Schwab Corporation

Financial Services / Brokerage & Wealth ManagementFounded 1971- HQ today: Westlake, Texas

Business Model Analysis

How Charles Schwab Makes Money

Annual Revenue: $23.9B

How does Charles Schwab make money?: Charles Schwab makes money from Net Interest Revenue, Asset Management and Administration Fees, Trading Revenue and Bank Deposit Account Fees.

Executive Summary

Charles Schwab generates revenue primarily through Financial Services / Brokerage & Wealth Management, with roughly $23.9B in annual revenue.

Core Growth Engine: Under CEO Rick Wurster, Schwab is focused on doing more for each client rather than just adding accounts. The playbook: grow wealth and advice (Schwab Wealth Advisory net flows rose 80% year over year in Q2 2026), expand...

Revenue Model & Pricing

Schwab offers $0 online commissions on U.S.-listed stocks and ETFs and earns revenue from five lines (FY2025 figures): 1) Net interest revenue, $11.75 billion: the spread between what Schwab earns on client cash swept to Charles Schwab Bank, margin loans, Pledged Asset Lines, and mortgages, and what it pays on those balances. 2) Asset management and administration fees, $6.51 billion: Schwab ETFs and mutual funds, money market funds, Schwab Wealth Advisory, managed portfolios, and third-party fund platform fees. 3) Trading revenue, $3.92 billion: options contract fees, payment for order flow, fixed-income markups, and futures. 4) Bank deposit account fees, $977 million: mainly fees from the insured deposit account arrangement with TD Bank. 5) Other revenue, $767 million. Retail investors, independent RIAs, and workplace retirement plans all feed the same asset base.

Core Revenue Streams

Net Interest Revenue

49%

$11.750 billion in FY2025. The spread between what Schwab earns on client cash swept to Charles Schwab Bank, its investment portfolio, margin loans, Pledged Asset Lines, and mortgages, and what it pays clients on those balances. It is the most rate-sensitive line and fell during the 2023 cash-sorting period before recovering in 2024-2025.

Asset Management and Administration Fees

27%

$6.506 billion in FY2025. Fees on Schwab ETFs, mutual funds, and money market funds, managed and advisory programs such as Schwab Wealth Advisory, and third-party funds on the Mutual Fund OneSource platform. This line grows with markets and net new assets, so it partly offsets rate risk. It reached $1.8 billion in Q2 2026, up 16% year over year.

Trading Revenue

16%

$3.921 billion in FY2025. Options contract fees, payment for order flow, futures, and fixed-income markups. Online stock and ETF trades have been commission-free since October 2019, but record activity (11.9 million daily average trades in Q2 2026) has made trading a growing contributor again.

Bank Deposit Account Fees

$977 million in FY2025, mostly fees earned from the insured deposit account arrangement under which certain client cash is swept to TD Bank.

Other Revenue

$767 million in FY2025, including software and data fees, exchange processing fees, and other items.

Growth Strategy

Under CEO Rick Wurster, Schwab is focused on doing more for each client rather than just adding accounts. The playbook: grow wealth and advice (Schwab Wealth Advisory net flows rose 80% year over year in Q2 2026), expand lending through Pledged Asset Lines and mortgages, widen product access with Schwab Crypto and private-company shares via the $660 million Forge Global acquisition (closed March 2, 2026), keep winning RIA breakaways from wirehouses, and use AI to lower service costs. Core net new assets of $519 billion in 2025 and $119.8 billion in Q2 2026 alone show the organic engine is still running.

How Charles Schwab Makes Money: FAQ

How does Charles Schwab generate revenue across its business segments?

In FY2025, Schwab earned $11.75 billion (49%) from net interest revenue, $6.51 billion (27%) from asset management and administration fees, $3.92 billion (16%) from trading, $977 million (4%) from bank deposit account fees, and $767 million (3%) from other revenue, for total net revenues of $23.921 billion.

What is the Net Interest Revenue (NIR) model in Schwab's banking business?

Schwab sweeps uninvested client cash into Charles Schwab Bank, paying clients competitive cash interest while investing those deposits into high-grade agency bonds, US Treasuries, and mortgages to earn a profitable Net Interest Margin spread.

How does Schwab generate revenue from Registered Investment Advisors (RIAs)?

Schwab is the largest custodian for independent RIAs, providing custody, trading technology, reporting, and practice support. It earns platform and fund fees and net interest revenue on cash held in advisor-managed client accounts.

What is Schwab Mutual Fund OneSource and how does it earn asset management fees?

Launched in 1992, Schwab Mutual Fund OneSource allows investors to buy hundreds of no-load mutual funds with zero transaction fees, while Schwab collects shareholder servicing fees (typically 25 to 40 basis points) directly from third-party fund managers.

How does Schwab monetize proprietary ETFs and Schwab Asset Management (SAM)?

Schwab Asset Management runs low-cost Schwab ETFs (such as SCHD, SCHX, and SCHG), index mutual funds, and money market funds. It earns small expense-ratio fees that add up across a very large asset base and are reported in asset management and administration fees ($6.506 billion in FY2025).

What is Schwab Wealth Advisory and how does it monetize financial planning?

Schwab Wealth Advisory provides personalized wealth management, tax optimization, and dedicated financial consultant access, charging an annual fee based on assets under management (typically 0.80% scaling down to 0.30% for multi-million-dollar portfolios).

How does Schwab monetize order flow (Payment for Order Flow / PFOF)?

While Schwab eliminated equity commissions, it receives modest Payment for Order Flow (PFOF) rebates from wholesale market makers for routing retail options orders, while executing equity shares primarily through internal and external market venues.

What is Schwab Workplace Financial Services for corporate 401(k) plans?

Schwab administers 401(k), defined benefit pension, and employee stock plan services for thousands of corporate employers, earning recurring administrative recordkeeping fees and capturing rollover IRA accounts as employees change jobs.

How does Charles Schwab make money if trading is free?

While they famously eliminated trading commissions, Schwab actually operates as a massive bank. They generate billions in "Net Interest Income" by sweeping customers' uninvested cash into their own bank and investing it in higher-yielding bonds and securities.

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