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Representatives' Compensation
Please click on the links below or scroll down to learn more about how each type of representative is compensated.
BRANCH REPRESENTATIVESClient Service Specialists respond to the specific needs of clients and may direct clients to the appropriate Schwab representative. In addition to a base salary, Client Service Specialists are eligible for a nominal bonus based on manager discretion.
Financial Consultants assist our clients through our branch office locations and also by phone. Each Financial Consultant supports a Practice, which is comprised of clients who are assigned to that representative as a primary point of contact. Financial Consultants also assist clients who are not in their Practice. Financial Consultants are compensated based on three components described below: Service, Revenue Growth, and Product Sales. They are also eligible to participate in a top performer program known as the “Circle of Excellence”. In addition, some phone-based Financial Consultants serve clients who have smaller accounts. When accounts in their Practice increase in size, these accounts are sometimes reassigned to a Financial Consultant who serves clients with similar asset levels. Representatives whose clients are reassigned due to account growth are paid $40 per $100,000 of client assets.
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Services |
Representative’s Compensation | ||
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Non Fee-based Services |
Stocks |
0.0028% of assets | |
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Mutual Funds (Schwab-affiliated funds and third party funds)
Money Funds
Cash Sweep (to Charles Schwab Bank or free credit balances in Schwab One accounts)
Fixed and Variable Annuities1
Margin Balances2 |
0.0350% of assets | ||
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Fee-based Services
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Assets in accounts enrolled in Schwab Private Client™ or Schwab Advisor Network® 3 as a result of a Financial Consultant’s initial recommendation |
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| Assets in accounts enrolled in Schwab Managed Portfolios™, Schwab Managed Account Select™, or Schwab Managed Account Affiliates™ 4 |
0.0595% of assets | ||
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Assets enrolled in Schwab Private Client ™ where Financial Consultant provides ongoing service. |
Client Assets less than $125 million, 0.0823% of assets | ||
| Client Assets between $125 million and $250 million, 0.0963% of assets | |||
| Client Assets above $250 million, 0.1085% of assets | |||
1 Applicable to insurance-licensed representatives only.
2 The proxy revenue for margin only applies to margin balances in a client’s account greater than $5,000 but not greater than 10% of a client’s margin buying power.
3 Effective April 1, 2008, Financial Consultants are no longer eligible for this referral credit for new Schwab Private Clientä referrals where the Financial Consultant provides ongoing service to the client. Also a different rate applies to certain enrollments between July 1, 2004 and December 31, 2006. Representatives earn a Service payment at a rate of 0.0595% of assets for three years from the date of enrollment where a client enrolled in Schwab Advised Investing Signature or Schwab Advisor Networkâ, or where a representative identified a sales opportunity for Schwab Private Client™ and the client ultimately enrolled in any of the following: Schwab Advised Investing Signature, Schwab Private Client™, or Schwab Advisor Network®.
4 Note that if an account which is enrolled in Schwab Managed Account Select® or Schwab Managed Account Affiliates® is also enrolled in Schwab Private Client™, those assets will be measured for compensation purposes at the Schwab Private Client™ credit rate.
Example: A client has $100,000 in stocks, $100,000 in mutual funds, and $100,000 in cash which are not enrolled in a fee-based service. The annualized proxy revenue Schwab receives from that client is $1,040. The Financial Consultant receives 7% of that $1,040, which equals $72.80 in annualized compensation. The calculation is ($100,000 x 0.000028 for stocks) + ($100,000 x 0.00035 for mutual funds) + ($100,000 x 0.00035 for cash) = $72.80.
If the client then sells $25,000 of stocks and buys the same amount of mutual funds either on her own or after talking to her Financial Consultant, the annualized proxy revenue Schwab receives increases by $115 to $1,155, and the Financial Consultant’s annualized compensation increases by $8.05 to $80.85.
The Revenue Growth component pays a Financial Consultant between 20%-40% of the incremental proxy revenue for the next 12 months based on the Financial Consultant’s tiered payout rate. The Financial Consultant’s tiered payout rate is determined by adding the amount of monthly Revenue Growth credits with the revenue credits from Product Sales in Table C and D.
For 12 months, a Financial Consultant can earn Revenue Growth for any client with whom the Financial Consultant has a relationship, regardless of whether the client is in the Financial Consultant’s Practice or not. After 12 months, a Financial Consultant can earn Revenue Growth for clients in her Practice. This applies to other clients with whom the Financial Consultant has a relationship regardless of whether they are in the Financial Consultants Practice or not.
To calculate Revenue Growth, each month client assets are sorted into the revenue categories set forth below in Table B, and all movement into, out of, and between categories is measured monthly for 12 months. When a client moves assets to a higher revenue category, a Financial Consultant receives between 20% and 40% of the incremental annual proxy revenue Schwab receives for the next 12 months based on the Financial Consultant’s graduated tiered payout schedule. Conversely, if a client’s investment activity (for example, selling a mutual fund to purchase individual bonds) places asset in a lower revenue category, the Financial Consultant receives a negative credit for the next 12 months. Revenue Growth is netted across a Financial Consultant’s Practice and other clients with whom the Financial Consultant has a relationship. Note that because Revenue Growth is tracked for a 12 month period, a Financial Consultant may continue to receive positive or negative credit for a period of time after the Financial Consultant no longer has a relationship with that client. Schwab may cap the amount of incentive compensation that a Financial Consultant can earn from any one client from the Revenue Growth component.
Table B:
Services |
Representatives' Compensation |
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Stocks
Options
Bonds
Certificates of Deposit
Exchange Traded Funds |
Payment Range from 0.008% to 0.016% |
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Mutual Funds (Schwab-affiliated funds and third party funds)
Money Funds
Cash Sweep (to Charles Schwab Bank or free credit balances in Schwab One accounts)
Fixed and Variable Annuities1 |
Payment Range from 0.10% to 0.20% |
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Assets in accounts enrolled in:
Schwab Managed Portfolios™
Schwab Managed Account Select™
Schwab Managed Account Affiliates™
Schwab Private Client™ 2
Schwab Advisor Network® 3 |
Payment Range from 0.17% to 0.34% |
1 Applicable to insurance-licensed representatives only. Non-licensed representatives may be eligible for one-time compensation as set forth in Table D below.
2 When a client enrolls in Schwab Private Client as a result of a Financial Consultant’s initial recommendation, the representative earns Revenue Growth for the 365 days of enrollment. After 365 days, the Financial Consultant who provides ongoing service to the client earns Revenue Growth as long as the client remains enrolled in Schwab Private Client. Sometimes the same Financial Consultant both makes the initial recommendation and provides ongoing service, and therefore receives Revenue Growth for the entire time that the client is enrolled.
3For accounts which are enrolled in Schwab Advisor Networkâ, the Financial Consultant who identified the sales opportunity receives Revenue Growth on transactions occurring within the first two years of client enrollment in accordance with Table B.
| Example: For the same client described above, assuming her Financial Consultant was in the 20% payout tier, if her portfolio remains unchanged after moving $25,000 from stocks to mutual funds, the Financial Consultant would receive an additional $23.00 for that first year. If, however, the client later moves the $25,000 from mutual funds back to stocks, the representative’s total compensation for this transaction nets to $0. |
For plans which include a Product Sales component, Schwab provides compensation to our representatives for helping clients select products and services. Schwab pays its Financial Consultants a percentage of the proxy revenue from the sale of products and services in Tables C and D based on the Financial Consultant’s payout rate which varies from 20%-40%. The payout rate is determined monthly by adding the amount of monthly Revenue Growth credits from Table B with the revenue from Product Sales in Tables C and D. Note that for a Financial Consultant, negative Revenue Growth (see above) could offset Product Sales, reducing or eliminating the Product Sales payment. We have two categories of products or services:
1. Banking Products (Table C)
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Financial
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Checking account, or credit |
From $23 to $46 | $13 | |
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Introductions to Charles these introductions is as follows: |
Representatives who are also employees of Schwab Bank: | ||
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Referrals to our Active |
Compensation during the first |
N/A |
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Referrals to International Representatives |
$300 to $600 for clients who are new to Schwab. The amount of compensation varies based on the Financial Consultant's payout rate. |
N/A |
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Transfers of Client Margin |
Margin balance multiplied by 0.360% or 0.72% |
N/A |
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Retirement Consultations1 |
$90 to $ 180 depending on the Financial Consultant's payout rate |
$50 |
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Financial Plans1 |
$180 to $360 depending on the Financial Consultant's payout rate |
$100 |
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Equity Compensation Consultations1 |
$180 to $360 depending on the Financial Consultant's payout rate |
$100 |
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Referrals for forward contracts, equity collars, and exchange funds |
Balances of $5M or less are multiplied by 0.092%-0.184; balances over $5M are multiplied by 0.009% to 0.018%. The amount of compensation varies based on the size of the balance and Financial Consultant's payout rate. |
N/A |
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Referrals for Principal Protected Notes |
Principal value of the note multiplied by 0.23% to 0.46% depending on the Financial Consultant's payout rate |
N/A |
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Securities Lending Fully Paid |
One-time compensation of $200 to $400 per household depending on the Financial Consultant's payout rate |
N/A |
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Referrals to Variable, Fixed and Immediate Annuities2 |
$50 to $100 depending on the Financial Consultant's payout rate |
$30 |
| Single Premium Immediate Annuity Sale by licensed Financial Consultant | 0.14% to 0.28% of contract for new to Schwab assets and 0.04% to 0.28% of contract for existing Schwab assets, depending on the Financial Consultant's payout rate and existing Schwab asset investment | N/A |
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Referrals to Term Life Insurance2 |
$27 to $54 depending on the Financial Consultant's payout rate |
$15 |
| Referrals to Corporate and Retirement Services | 0.14% to 0.28% of balance for new to Schwab assets and 0.04% to 0.28% of balance for existing Schwab assets, depending on the Financial Consultant's payout rate and existing Schwab asset investment | N/A |
| Schwab Institutional® |
Earn between $454 and $908 for referring an advisor to Schwab Institutional with less than $30million in converted assets
Earn between $2,000 and $4,000 for referring an advisor to Schwab Institutional with at least $30 million in converted assets |
N/A |
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529 Accounts |
$23 to $46 depending on the Financial Consultant's payout rate |
N/A |
1 Financial Consultants and Portfolio Consultants are not compensated for providing complimentary retirement consultations, financial plans or equity compensation consultations to clients.
2 Financial Consultants and Portfolio Consultants only refer clients to providers for whom Schwab performs services and from whom it receives compensation for those services. The Circle of Excellence is a top performer program through which Schwab awards additional compensation to the top 50% of its eligible branch representatives based on how well they compare to their peers in terms of sales growth and client satisfaction. The criteria are subject to change periodically. Currently, eligible representatives qualify based on:
Circle of Excellence
Financial Consultants-Phone Based. Some Financial Consultants provide services primarily to our clients with assets under $250,000. These representatives are paid according to the same incentive plan as other Financial Consultants, except for three differences:
Other phone-based Financial Consultants provide services primarily to our clients with assets over $250,000. These representatives are paid according to the same plan as other Financial Consultants, except for one difference. The Circle of Excellence is based on Practice Sales, Bank Product Sales, and Practice Asset Growth.
International Financial Consultants. Some Financial Consultants provide services primarily to our clients residing outside the United States, its territories and possessions. These representatives are paid according to the same incentive plan as other Financial Consultants, except for two differences. The Service rates may vary based on market locations; these rates are subject to different multipliers depending upon the international market that each business unit supports. In addition, there is no Circle of Excellence, but instead a discretionary payment.
Associate Financial Consultants assist clients in our branch offices. They meet with clients who are not assigned to a Financial Consultant’s Practice as well as potential new clients to identify and analyze their financial needs. They refer more complex financial situations to a Financial Consultant when appropriate. Associate Financial Consultants receive a salary and a quarterly bonus which can equal up to 40% of their annual salary. Bonuses are determined at the discretion of the Associate Financial Consultant’s manager, and may be based on Service Quality, Client Satisfaction, Teamwork, and ability to provide help and guidance that is suitable for each client need.
Customer Service Representatives and Investor Team Representatives provide service over the phone to meet client needs, respond to telephone inquiries from clients about the products and services we offer, and may contact clients by phone or email. In addition to a base salary, Customer Service and Investor Team Representatives are eligible for a bonus. Funding for the bonus depends on the company’s performance, and any allocation to individual representatives is based on productivity (which is a threshold that must be met before a bonus can be earned), client satisfaction, quality assurance, sales, and other factors such as teamwork, client feedback, special assignments and training, and personal initiative. For sales, they earn one point for each sale or referral to some of the products and services noted above in Table C and D, as well for referrals to Complimentary Consultations, and our StreetSmart Pro trading software. Representatives receive compensation based on the number of points that they earn as compared to their peers. In addition, these representatives are eligible for additional compensation which is measured at a team level and is based on customer satisfaction with their overall experience at Schwab, internal quality assessment and productivity.
Investment Consultants respond to telephone or email inquiries about products or services, and may contact clients by telephone. These representatives earn monthly compensation based on the following criteria:
Investment Consultants provide clients who are not currently assigned to another Financial Consultant with a complimentary portfolio analysis or retirement assessment. They conduct a one-time, needs-based portfolio assessment and make recommendations from the full array of advice solutions offered by the company. They proactively contact clients by telephone, receive direct calls from clients and receive call transfers from clients who have expressed interest to another Schwab representative. In addition to a base salary, these representatives earn additional monthly compensation based on the criteria listed below. This compensation may be modified, from 85% to120%, based on client satisfaction scores.
Online Specialists interact with prospects and clients via a live chat channel and make referrals via telephone to investment consultants when appropriate. In addition to a base salary, these representatives earn additional monthly compensation based on the following criteria:
Financial Consultants on our Participant Services team provide help to participants in retirement plans serviced by Schwab Retirement Plan Services, Inc. (“SRPS”). For example, if a participant is eligible for a distribution or a rollover, they discuss the participant’s options. These may include keeping their assets in their retirement plan or rolling over to a Schwab IRA. If a participant decides to open a Schwab IRA, once the account is opened the Financial Consultant may recommend investments or other products and solutions. In addition to a base salary, these representatives have the potential to earn additional monthly incentive compensation based on the following criteria:
Active Trader Representatives identify clients whose trading needs are an appropriate match for an active trading service. They do not provide trading advice. The group consists of regionally-based Active Trader Field Sales Market Managers who work with local branches, and phone-based Active Trader Consultants.
Active Trader Field Sales Market Managers support a designated region which consists of clients who are assigned to local Financial Consultants’ Practices. These Managers work with Financial Consultants by serving as their primary point of contact for Active Trader services. Active Trader Field Sales Market Managers also assist clients who are not assigned to a Financial Consultants’ Practice. Active Trader Field Sales Market Managers earn a salary and a quarterly bonus. In addition, they have the opportunity to earn additional quarterly incentive compensation when they attain the following:
- Conduct a minimum of 50 one-on-one client consultations per quarter
- Host at least 15 local market seminars and events per quarter
- Assist the branches in their local market to identify and refer qualified clients and prospects to Active Trader services. Active Trader Field Sales Market Managers also must enroll an average of one client per quarter for each full-time Financial Consultant located in the Manager's assigned market
Active Trader Consultants earn a salary and have the ability to earn additional monthly incentive compensation based on the following criteria:
Regional Bond Specialists provide advice and service to Schwab clients specific to their fixed income investing needs. They earn a salary and are eligible to receive a bonus.
A team bonus pool is funded based on the team’s performance compared to their quarterly goal of placing fixed income related securities and products as well as providing advice services to their clients. These securities and products are sorted into the tiers below which are weighted to determine the bonus funding for the team. To determine the team’s bonus pool, and as part of determining individual bonus awards from the pool, representatives earn points as follows:
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Product |
Representative's Compensation |
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US Treasury Securities Government Agencies |
1 point for each $1,000 of principal value, up to $1 million |
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Corporate Bonds Preferreds (ordinary, convertible, and hybrid) Certificates of Deposit Municipal Bonds Mortgage and Asset Backed Security Pools Mutual Funds, Closed End Funds Annuities |
4 points for each $1,000 of client assets or principal value, up to $1 million |
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Schwab Advisor Network® Schwab Private Client™ Schwab Managed Portfolios™ Schwab Managed Account Select® Schwab Managed Account Affiliates® 2 |
6 points for each $1,000 of client assets |
1 Actual maturity dates for particular fixed income securities may vary. The maximum number of points a Specialist can earn from a single transaction is 4,000.
2 When representatives refer clients to these fee-based advised offers, they can earn credit for up to $5 million in client assets. The maximum number of points a Specialist can earn in this category is 3,000.
Example: if a client purchases a $100,000 municipal bond which matures in 360 days, the representative would earn 400 points ($100,000/1,000 x 4 = 400 points). If a client purchases a six month treasury bill, the representative would earn 100 points ($100,000/1,000 x 1 = 100 points).
Once the bonus pool is funded, individual bonuses are assigned based on the Regional Bond Specialist’s total point score, as well as relationship management, teamwork, lead management, and quality assurance, which is based on accuracy of trade documentation and order entry.
Bond Investment Specialists advise and serve clients with their fixed income investing needs by responding to inbound phone calls. They earn a salary and are eligible to receive a bonus. A team bonus is funded based on the company’s performance.
Individual bonus allocations are determined primarily by productivity, quality assurance, the principal value of fixed income related transactions relative to their peers using the table above, and other factors such as professionalism, teamwork, and initiative.
Regional Bond Specialists and Bond Investment Specialists do not earn commissions on each transaction, and their compensation is not affected by whether an issue is underwritten by Schwab. Nor does it matter whether a transaction is executed as agent, riskless principal or from Schwab's own inventory.
Annuity Specialists provide clients with information and advice on annuities available through Schwab. They also provide existing annuity clients with ongoing service and support. Annuity Specialists receive a base salary and are eligible to receive an annual bonus which is currently targeted at 35% of their base salary. While performance goals and the amount of any bonus payments are directly tied to annuity sales, the bonus payments are neutral as to the type or duration of annuity recommended. As a general example, if a client decided to purchase a $100,000 fixed or variable annuity, the amount of any target bonus payment that an Annuity Specialist could receive would not exceed $100.
These representatives provide investment portfolio advice to clients who are enrolled in Schwab Private Client™. They do not receive differential compensation based on the securities that they recommend to enrolled clients.
Portfolio Consultants assess their clients’ financial needs, analyze their portfolios, deliver portfolio advice, and provide periodic portfolio review to clients enrolled in Schwab Private Client. Portfolio Consultants are eligible to earn a bonus which is funded based on the company’s performance. Individual bonus payments are assigned by ranking representatives on the basis of: the quality of the representatives’ interactions with clients; retaining clients in advised offers; client satisfaction; and manager discretion. Manager discretion takes into account factors such as teamwork, training, and accuracy. In addition, Portfolio Consultants are also employees of Charles Schwab Bank and can earn compensation for Banking Products, as well as other Product Sales listed in Tables C and D. Representatives can also earn an annual performance bonus based on how well they rank compared to their peers as to the amount of net new assets that their clients bring to Schwab.
Associate Portfolio Consultants provide ongoing service to clients in Schwab Private Client ™. In addition to a base salary, they are eligible to earn a bonus which is funded based on the company’s performance. Individual bonus payments are based on the quality of representatives’ interactions with clients, client satisfaction, and manager discretion. Manager discretion is based on current business objectives such as teamwork, accuracy, and following up with clients.
Financial Planners work with our clients to plan for their long-term financial goals. They earn a base salary as well as a bonus, which is based on the company's performance.
From time-to-time, one or more categories of our representatives may participate in short-term, temporary incentive programs that focus on a particular class of products or services. The goal is to raise representatives’ awareness about products and services and how they may serve our clients’ needs and thereby increase sales.
Certain representatives who demonstrate exceptional performance during the year may also be eligible to earn an annual trip through Schwab’s “Chairman’s Club.” Schwab may develop additional recognition events or programs from time to time. Please visit or return to our website at www.aboutschwab.com/schwabcorp/compensation.html.
The following is a list of the significant changes to Schwab’s incentive compensation plans since January 1, 2008:
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