Charles Schwab 1Q16 Investor Update Notes

The Charles Schwab (SCHW) Walter Bettinger – President & CEO

Clients really didn’t even panic during the first half of the quarter

“Interestingly, client cash balances remained relatively consistent, they grew pretty much in proportion to organic overall client growth that indicating, I think, the clients really didn’t panic even during that first half of the last quarter.”

You’re not going to see an accelerant away from active in the RIA space as result of DOL because that’s already been happening for 10 years

“I don’t think that you are likely to see an accelerant in the RIA space away from active because largely that’s played out already over the last ten full years and you have seen it in the declines one source balances from the RIA, so I don’t think you see something meaningful that comes out of that. ”

Digital or online advice ultimately isn’t that differentiated

“With respect to the digital or online advice I am going to go back to the broader response I have had on that in the past which is you could possibly see some money moving that way but I just think that everybody is going to have if they don’t already everybody is going to have these types of products these types of solutions. And so, you might see some money headed that way but I would be surprised if you see major market share move as a result of it because it’s just not that differentiated in many cases from one firm to the other”

DOL regulation wont cause major shift in RIA pipeline

“I think the factors that have led to that and we all know that there is modes trend of brokers going independent and you don’t have the reverse occurring so that’s played into more accelerated growth in the RIA space than maybe the wire house space, but I don’t think the DOL regulation has much impact on that. ”

Doubt that there will be general market share shifts from the DOL regulation

“I have great doubts about major market share shifts coming out of this what I think will happen is people will change people, people firms will change their model if you trust your broker your adviser, and that person comes to you and says we have been working in the following way for the last 15 years together and now we are going to need to make a shift because the laws changed you are still going to be trusting that person and so when they tell you that we are going to do this differently the odds are not great that you are going to take that impetus to go out and find a new adviser or new broker. So there will be an economic hit potentially to both firms as well as individual broker advisers, but I have a I guess a doubt that you are going to see big market share move as a result if you do see market share move I like our position market share movement I like our positioning.”