Charles Schwab 2013 Annual Report Download - page 14

THE CHARLES SCHWAB CORPORATION
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 Mutual funds – third-party mutual funds through Mutual Fund Marketplace®, including no-load mutual funds
through the Mutual Fund OneSource® service, proprietary mutual funds from two fund families – Schwab Funds®
and Laudus Funds®, other third-party mutual funds, and mutual fund trading and clearing services to broker-dealers;
 Exchange-traded funds (ETFs) – third-party and proprietary ETFs, including Schwab ETFs, Schwab ETF
OneSource™, and separately managed portfolios of ETFs;
 Advice solutions – separately managed accounts, customized personal advice for tailored portfolios, and specialized
planning and full-time portfolio management;
 Banking – checking accounts linked to brokerage accounts, savings accounts, certificates of deposit, demand deposit
accounts, first lien residential real estate mortgage loans (First Mortgages), home equity lines of credit (HELOCs),
personal loans and entity lending collateralized by securities; and
 Trust – trust custody services, personal trust reporting services, and administrative trustee services.
These products, and the Company’s full array of investing services, are made available through its two segments – Investor
Services and Advisor Services. The Company’s major sources of revenues are generated by both of the Company’s
reportable segments. Revenue is attributable to a reportable segment based on which segment has the primary responsibility
for serving the client. The accounting policies of the Company’s reportable segments are the same as those described in
“Item 8 – Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – 2. Summary of
Significant Accounting Policies.” For financial information related to the Company’s reportable segments, see “Item 7 –
Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations – Segment
Information,” and “Item 8 – Financial Statement and Supplementary Data – Notes to the Consolidated Financial Statements –
23. Segment Information.”
Investor Services
Through the Investor Services segment, the Company provides retail brokerage and banking services to individual investors.
The Company offers research, analytic tools, performance reports, market analysis, and educational material to all clients.
Clients looking for more guidance have access to online portfolio planning tools, professional advice from Schwab’s
portfolio consultants who can help develop an investment strategy and carry out investment and portfolio management
decisions, as well as a range of fully delegated managed solutions that provide ongoing portfolio management.
Schwab strives to educate and assist clients in the development of investment plans. Educational tools include workshops,
interactive courses, and online information about investing, from which Schwab does not earn revenue. Additionally, Schwab
provides various internet-based research and analysis tools that are designed to help clients achieve better investment
outcomes. As an example of such tools, Schwab Equity Ratings® is a quantitative model-based stock rating system that
provides all clients with ratings on approximately 3,000 stocks, assigning each equity a single grade: A, B, C, D, or F.
Schwab Equity Ratings International®, an international ranking methodology, covers approximately 4,000 stocks in 27
foreign equity markets.
Clients may need specific investment recommendations, either from time to time or on an ongoing basis. The Company
provides clients seeking advice with customized solutions. The Company’s approach to advice is based on long-term
investment strategies and guidance on portfolio diversification and asset allocation. This approach is designed to be offered
consistently across all of Schwab’s delivery channels.
Schwab Private ClientTM features a personal advice relationship with a designated portfolio consultant, supported by a team
of investment professionals who provide individualized service, a customized investment strategy developed in collaboration
with the client, and ongoing guidance and execution.
For clients seeking a relationship in which investment decisions are fully delegated to a financial professional, the Company
offers several alternatives. The Company provides investors access to professional investment management in a diversified
account that is invested exclusively in either mutual funds or ETFs through the Schwab Managed PortfoliosTM and
Windhaven, or equity securities through ThomasPartners® programs. The Company also refers investors who want to utilize
a specific third-party money manager to direct a portion of their investment assets to the Schwab Managed Account program.
In addition, clients who want the assistance of an independent professional in managing their financial affairs may be referred
to IAs in the Schwab Advisor Network®. These IAs provide personalized portfolio management, financial planning, and
wealth management solutions.