How We Compensate Our Investment Professionals

ARCHIVED 2023-10-06, DATE APPROXIMATE · VERSION 20231006_rev01 · COMPARED WITH 20230702_rev01

Full text changes — 20230702_rev01 to 20231006_rev01

COLOUR MARKS THE SEVERITY OF A FLAGGED CLAUSE · + AND − MARK ADDED AND REMOVED

 Since Charles Schwab & Co., Inc. ("Schwab") was founded more than 40 years ago, we've been committed to serving the needs of individual investors. One of our most important beliefs is that you should understand how the financial professionals assisting you are paid, so you can evaluate the recommendations you receive.
 In these pages, we identify the different categories of investment professionals who may serve you at Schwab and describe how they are compensated. This includes both Schwab employees and independent branch franchisees (and their employees) operating Schwab Independent Branches. Compensation for investment professionals who provide recommendations is designed to support the provision of advice in the client's best interest.
 Please note that the information below describes how Schwab pays employee professionals and shares revenue with Independent Branch professionals, not how you pay Schwab for the services you receive. Information about what you pay Schwab for the services we provide can be found at [schwab.com/pricing](https://www.schwab.com/public/schwab/investing/pricing_services/fees_minimums).
+These pages summarize our compensation plans and incorporate all recent changes in effect as of July 1, 2023.
+These pages summarize our compensation plans and incorporate all recent changes in effect as of October 1, 2023.
 These pages are accurate as of the date indicated above. The most recent information is available at [schwab.com/compensationdisclosure](https://www.schwab.com/compensationdisclosure).
 We invite you to read this information carefully and to contact us at **800-435-4000** if you have any questions. (For multilingual services, call **800-662-6068**. For services outside the U.S., call **+1-415-667-8400**.)
 ## Types of investment professionals
 As shown in the tables below, Financial Consultants receive more compensation for some products and services than others. Financial Consultants are eligible to receive 7%, 8%, or 9% of the amount resulting from application of the asset multiplier rate, depending on a Financial Consultant's professional experience and past work performance.
 The third category of Relationship Pay is for credit products.
 ## Relationship pay based on account balances
+<table><colgroup><col> <col></colgroup><tbody><tr><td tabindex="0"><strong>Category 1</strong><p><strong>Portfolio Management Services (typically have more involved ongoing service needs)</strong></p></td><td tabindex="0"><strong>Category 1</strong><p><strong>Annual Relationship Pay per $100,000 of Client Balances</strong></p></td></tr><tr><td tabindex="0"><ul><li>Schwab Wealth Advisory™</li><li>Schwab Managed Portfolios™</li><li>Schwab Managed Account Services™ (which includes ThomasPartners® Strategies, Windhaven® Strategies, Wasmer Schroeder™ Fixed Income Strategies, Wasmer Schroeder Municipal Bond Ladder Strategies, Wasmer Schroeder Taxable Bond Ladder Strategies, Charles Schwab Investment Management Separately Managed Accounts, Diversified Portfolios, Third-Party Managers, and Schwab Personalized Indexing™)&nbsp;</li><li>USAA Managed Portfolios®&nbsp;</li><li>Annuities (for Financial Consultants with an active insurance license)</li></ul></td><td tabindex="0">The asset multiplier rate used for Category 1 could range between <strong>48 and 58</strong> basis points, which is multiplied by a Financial Consultant's particular payout rate.<p>This results in a payment between:</p><p>$33.60 (100,000 x .0048 x .07) and $40.60 (100,000 x .0058 x .07),</p><p>$38.40 (100,000 x .0048 x .08) and $46.40 (100,000 x .0058 x .08), or&nbsp;</p><p>$43.20 (100,000 x .0048 x .09) and $52.20 (100,000 x .0058 x .09)</p></td></tr><tr><td tabindex="0"><strong>Category 2</strong><p><strong>Portfolio Management Referrals and Non-managed Accounts (typically have less involved ongoing service needs)</strong></p></td><td tabindex="0"><strong>Category 2</strong><p><strong>Annual Relationship Pay per $100,000 of Client Balances</strong>&nbsp;</p></td></tr><tr><td tabindex="0"><ul><li>Schwab Advisor Network®</li><li>Schwab Intelligent Portfolios®</li><li>Schwab Intelligent Portfolios Premium™</li><li>Schwab Personal Trust</li><li>Wasmer Schroeder Ultra Short Strategies</li></ul>Balances in self-directed or non-managed<strong> </strong>accounts are treated the same, regardless of whether the assets are in affiliated or third-party products or different share classes. The payout rate is the same for stocks, bonds, mutual funds, ETFs, cash (including Schwab Bank deposits), option positions, and 529 accounts.&nbsp;&nbsp;<br></td><td tabindex="0">The asset multiplier rate used for Category 2 could range between <strong>14 and 17</strong> basis points, which is multiplied by a Financial Consultant's particular payout rate.&nbsp;<p>This results in a payment between:&nbsp;</p><p>$9.80 (100,000 x .0014 x .07) and $11.90 (100,000 x .0017 x .07),&nbsp;</p><p>$11.20 (100,000 x .0014 x .08) and $13.60 (100,000 x .0017 x .08), or&nbsp;</p><p>$12.60 (100,000 x .0014 x .09) and $15.30 (100,000 x .0017 x .09)</p></td></tr><tr><td tabindex="0"><strong>Category 3</strong><p><strong>Non-Investment Advice Products and Activities</strong>&nbsp;</p></td><td tabindex="0"></td></tr><tr><td tabindex="0">Credit Products:&nbsp;<div><ul><li>Margin Loans Schwab Bank</li><li>Home Equity Line of Credit (HELOC)</li><li>Schwab Bank Pledged Asset Line® (PAL)&nbsp;</li></ul></div><p>Financial Consultants receive a payment of 4.4 basis points per $100,000 of client loan balance. This results in an annual payment of $44 per $100,000 loan ($100,000 × .00044).</p></td><td tabindex="0"></td></tr></tbody></table>
+<table><colgroup><col> <col></colgroup><tbody><tr><td tabindex="0"><strong>Category 1</strong><p><strong>Portfolio Management Services (typically have more involved ongoing service needs)</strong></p></td><td tabindex="0"><strong>Category 1</strong><p><strong>Annual Relationship Pay per $100,000 of Client Balances</strong></p></td></tr><tr><td tabindex="0"><ul><li>Schwab Wealth Advisory™</li><li>Schwab Managed Portfolios™</li><li>Schwab Managed Account Services™ (which includes ThomasPartners® Strategies, Windhaven® Strategies, Wasmer Schroeder™ Fixed Income Strategies, Wasmer Schroeder Municipal Bond Ladder Strategies, Wasmer Schroeder Taxable Bond Ladder Strategies, Charles Schwab Investment Management Separately Managed Accounts, Diversified Portfolios, Third-Party Managers, and Schwab Personalized Indexing™)&nbsp;</li><li>USAA Managed Portfolios®&nbsp;</li><li>Annuities (for Financial Consultants with an active insurance license)</li></ul></td><td tabindex="0">The asset multiplier rate used for Category 1 could range between <strong>40 and 50</strong> basis points, which is multiplied by a Financial Consultant's particular payout rate.<p>This results in a payment between:</p><p>$28.00 (100,000 x .004 x .07) and $35.00 (100,000 x .005 x .07),</p><p>$32.00 (100,000 x .004 x .08) and $40.00 (100,000 x .005 x .08), or&nbsp;</p><p>$36.00 (100,000 x .004 x .09) and $45.00 (100,000 x .005 x .09)</p></td></tr><tr><td tabindex="0"><strong>Category 2</strong><p><strong>Portfolio Management Referrals and Non-managed Accounts (typically have less involved ongoing service needs)</strong></p></td><td tabindex="0"><strong>Category 2</strong><p><strong>Annual Relationship Pay per $100,000 of Client Balances</strong>&nbsp;</p></td></tr><tr><td tabindex="0"><ul><li>Schwab Advisor Network®</li><li>Schwab Intelligent Portfolios®</li><li>Schwab Intelligent Portfolios Premium™</li><li>Schwab Personal Trust</li><li>Wasmer Schroeder™ Ultra Short Strategies</li><li>Wasmer Schroeder™ Treasury Bond Ladder Strategies<br></li></ul>Balances in self-directed or non-managed<strong> </strong>accounts are treated the same, regardless of whether the assets are in affiliated or third-party products or different share classes. The payout rate is the same for stocks, bonds, mutual funds, ETFs, cash (including Schwab Bank deposits), option positions, and 529 accounts.&nbsp;&nbsp;<br></td><td tabindex="0">The asset multiplier rate used for Category 2 could range between <strong>11 and 14</strong> basis points, which is multiplied by a Financial Consultant's particular payout rate.&nbsp;<p>This results in a payment between:&nbsp;</p><p>$7.70 (100,000 x .0011 x .07) and $9.80 (100,000 x .0014 x .07),&nbsp;</p><p>$8.80 (100,000 x .0011 x .08) and $11.20 (100,000 x .0014 x .08), or&nbsp;</p><p>$9.90 (100,000 x .0011 x .09) and $12.60 (100,000 x .0014 x .09)</p></td></tr><tr><td tabindex="0"><strong>Category 3</strong><p><strong>Non-Investment Advice Products and Activities</strong>&nbsp;</p></td><td tabindex="0"></td></tr><tr><td tabindex="0">Credit Products:&nbsp;<div><ul><li>Margin Loans Schwab Bank</li><li>Home Equity Line of Credit (HELOC)</li><li>Schwab Bank Pledged Asset Line® (PAL)&nbsp;</li></ul></div><p>Financial Consultants receive a payment of 4.4 basis points per $100,000 of client loan balance. This results in an annual payment of $44 per $100,000 loan ($100,000 × .00044).</p></td><td tabindex="0"></td></tr></tbody></table>
 \*The asset multiplier rate range is based on fluctuations in revenue and assets over time.
 ## Relationship Pay Based on Account Balances - conclusion
 When a client in a Financial Consultant's practice is enrolled in a participating portfolio management service and receives a refund of their program fee under the Schwab Satisfaction Guarantee, Schwab will debit the amount of Relationship Pay the Financial Consultant receives by a percentage of the amount of the fee refunded.
 ## Solutions pay
 Solutions Pay compensates a Financial Consultant for attracting new clients and assets to Schwab and recommending appropriate products and portfolio management services. It is a one-time payment and applies whether a Financial Consultant recommends a product or service or the client makes the purchase or enrollment decision on his or her own. The exceptions are for Schwab Intelligent Portfolios® and Schwab Intelligent Portfolios Premium™, which the Financial Consultant must recommend, and into which the client must enroll in order for the Financial Consultant to receive Solutions Pay.
+Category 1, asset consolidation, pays the same rate no matter what investment product a Financial Consultant might recommend or a client might purchase on his or her own. Category 2, which includes most portfolio management services (except for Wasmer Schroeder Ultra Short Strategies), pays the same rate no matter which service a Financial Consultant might recommend. The different rates paid between Category 1 and Category 2 are based on the additional time, complexity, and expertise necessary to assess a client's needs and recommend our portfolio management services. Category 3, other products, includes activities in which a Financial Consultant is not providing investment advice. Generally, if assets leave a Financial Consultant's practice, that loss is netted against asset gains to a Financial Consultant's practice for purposes of calculating Solutions Pay.
+Category 1, asset consolidation, pays the same rate no matter what investment product a Financial Consultant might recommend or a client might purchase on his or her own. Category 2, which includes most portfolio management services (except for Wasmer Schroeder™ Ultra Short Strategies and Wasmer Schroeder™ Treasury Bond Ladder Strategies), pays the same rate no matter which service a Financial Consultant might recommend. The different rates paid between Category 1 and Category 2 are based on the additional time, complexity, and expertise necessary to assess a client's needs and recommend our portfolio management services. Category 3, other products, includes activities in which a Financial Consultant is not providing investment advice. Generally, if assets leave a Financial Consultant's practice, that loss is netted against asset gains to a Financial Consultant's practice for purposes of calculating Solutions Pay.
 Solutions Pay is paid to the Financial Consultant monthly.
 <table><colgroup><col> <col> <col></colgroup><tbody><tr><td tabindex="0"><strong>Category 1&nbsp;</strong><p><strong>Asset Consolidation</strong></p></td><td tabindex="0"><strong>Category 1&nbsp;</strong><p><strong>Financial Consultant's Compensation<sup>1</sup></strong></p></td><td tabindex="0"><strong>Category 1&nbsp;</strong><p><strong>One-Time Solutions Payment</strong></p></td></tr><tr><td tabindex="0">Net Asset Flows (total inflow of client assets minus the total outflow of client assets)</td><td tabindex="0">0.0008 x Net Asset Flows</td><td tabindex="0">$80 per $100,000 of Client Balances</td></tr><tr><td tabindex="0"><strong>Category 2</strong>&nbsp;<p><strong>Portfolio Management Services*&nbsp;</strong></p></td><td tabindex="0"><strong>Category 2</strong>&nbsp;<p><strong>Financial Consultant's Compensation<sup>1</sup></strong></p></td><td tabindex="0"><strong>Category 2</strong>&nbsp;<p><strong>One-Time Solutions Payment</strong></p></td></tr><tr><td tabindex="0"><ul><li>Schwab Wealth Advisory™&nbsp;</li><li>Schwab Intelligent Portfolios®&nbsp;</li><li>Schwab Intelligent Portfolios Premium™&nbsp;</li><li>Schwab Advisor Network®&nbsp;</li><li>Schwab Personal Trust-Full Corporate Trustee&nbsp;</li><li>Schwab Managed Portfolios™&nbsp;</li><li>Schwab Managed Account Services™ (which includes ThomasPartners® Strategies, Windhaven® Strategies, Wasmer Schroeder™ Fixed Income Strategies, Wasmer Schroeder Municipal Bond Ladder Strategies, Wasmer Schroeder Taxable Bond Ladder Strategies, Charles Schwab Investment Management Separately Managed Accounts, Diversified Portfolios, Third-Party Managers, and Schwab Personalized Indexing™)&nbsp;</li><li>USAA Managed Portfolios®</li></ul></td><td tabindex="0">0.002 x amount enrolled&nbsp;</td><td tabindex="0">$200 per $100,000 of Client Balances</td></tr><tr><td tabindex="0">Annuities by a Financial Consultant with an active insurance license</td><td tabindex="0">0.002 x annuity amount&nbsp;</td><td tabindex="0">$200 per $100,000 of Client Balances</td></tr><tr><td tabindex="0"><strong>Category 3&nbsp;</strong><p><strong>Other Products</strong></p></td><td tabindex="0"><strong>Category 3&nbsp;</strong><p><strong>Financial Consultant's Compensation<sup>1</sup></strong></p></td><td tabindex="0"><strong>Category 3</strong><p><strong>One-Time Solutions Payment&nbsp;</strong><br></p></td></tr><tr><td tabindex="0">Introductions to Charles Schwab Bank, SSB for mortgages by Financial Consultants who are also employees of Charles Schwab Bank, SSB</td><td tabindex="0">0.002 × loan amount for new mortgages;&nbsp;<p>0.0011 × loan amount for refinanced loans&nbsp;</p></td><td tabindex="0">$200 per $100,000 of loan amount&nbsp;<p>$110 per $100,000 of loan amount</p></td></tr><tr><td tabindex="0">Schwab Personal Trust - Successor Trustee&nbsp;</td><td tabindex="0">$175 per household designation&nbsp;</td><td tabindex="0">$175&nbsp;</td></tr><tr><td tabindex="0">Referrals to a Schwab Charitable™ donor-advised fund<sup>2</sup></td><td tabindex="0">$175 per converted referral for new accounts over $25,000</td><td tabindex="0">$175&nbsp;</td></tr><tr><td tabindex="0">Referrals to Life Insurance by a Financial Consultant with an active insurance license</td><td tabindex="0">$450 per converted referral&nbsp;</td><td tabindex="0">$450&nbsp;</td></tr><tr><td tabindex="0">Referrals to Long-Term Care Insurance by a Financial Consultant with an active insurance license</td><td tabindex="0">$450 per converted referral</td><td tabindex="0">$450</td></tr><tr><td tabindex="0">Referrals to Schwab Advisor Services™&nbsp;</td><td tabindex="0">$800 for referrals up to $30 million;&nbsp;<p>$3,500 for referrals of $30+ million&nbsp;</p></td><td tabindex="0">$800 or $3,500</td></tr><tr><td tabindex="0">Referrals to Schwab Retirement Plan Services or Retirement Business Services&nbsp;</td><td tabindex="0">0.002 × amount of assets referred;&nbsp;<p>$250,000 minimum asset level to $10,000,000 maximum asset level&nbsp;&nbsp;</p></td><td tabindex="0">$500 for a $250,000 referral</td></tr></tbody></table>
+\*Excludes Wasmer Schroeder Ultra Short Strategies.
+\*Excludes Wasmer Schroeder™ Ultra Short Strategies and Wasmer Schroeder™ Treasury Bond Ladder Strategies.
 \. Schwab may cap the amount of incentive compensation that a Financial Consultant can earn from any one client from the Solutions Pay component.
 \. Schwab Charitable is the name used for the combined programs and services of Schwab Charitable Fund™, an independent nonprofit organization. Schwab Charitable Fund has entered into service agreements with certain affiliates of The Charles Schwab Corporation.
 ## Bringing together a Financial Consultant's pay
 - $100,000 into Mutual Funds
 - $100,000 into ETFs
 - $100,000 in Cash
 **The Financial Consultant would earn annual compensation as follows:**
+<table><colgroup><col> <col> <col></colgroup><tbody><tr><td tabindex="0"><strong>Payment type&nbsp;</strong></td><td tabindex="0"><strong>Description</strong></td><td tabindex="0"><strong>Compensation amount&nbsp;</strong></td></tr><tr><td tabindex="0">Solutions Pay (one-time payments)</td><td tabindex="0">$500,000 transfer into Schwab&nbsp;&nbsp;</td><td tabindex="0">$400&nbsp;&nbsp;</td></tr><tr><td tabindex="0">Solutions Pay (one-time payments)</td><td tabindex="0">$200,000 enrollment into Schwab Wealth Advisory™</td><td tabindex="0">$400&nbsp;&nbsp;</td></tr><tr><td tabindex="0">Relationship Pay (annual payments)</td><td tabindex="0">$200,000 balance in Schwab Wealth Advisory</td><td tabindex="0">$67.20 - $104.40</td></tr><tr><td tabindex="0">Relationship Pay (annual payments)</td><td tabindex="0">$100,000 balance in Mutual Funds</td><td tabindex="0">$9.80 - $15.30</td></tr><tr><td tabindex="0">Relationship Pay (annual payments)</td><td tabindex="0">$100,000 balance in Cash</td><td tabindex="0">$9.80 - $15.30</td></tr><tr><td tabindex="0">Relationship Pay (annual payments)</td><td tabindex="0">$100,000 balance in ETFs</td><td tabindex="0">$9.80 - $15.30</td></tr><tr><td tabindex="0">TOTAL</td><td tabindex="0"></td><td tabindex="0">$896.60 - $950.30</td></tr></tbody></table>
+<table><colgroup><col> <col> <col></colgroup><tbody><tr><td tabindex="0"><strong>Payment type&nbsp;</strong></td><td tabindex="0"><strong>Description</strong></td><td tabindex="0"><strong>Compensation amount&nbsp;</strong></td></tr><tr><td tabindex="0">Solutions Pay (one-time payments)</td><td tabindex="0">$500,000 transfer into Schwab&nbsp;&nbsp;</td><td tabindex="0">$400&nbsp;&nbsp;</td></tr><tr><td tabindex="0">Solutions Pay (one-time payments)</td><td tabindex="0">$200,000 enrollment into Schwab Wealth Advisory™</td><td tabindex="0">$400&nbsp;&nbsp;</td></tr><tr><td tabindex="0">Relationship Pay (annual payments)</td><td tabindex="0">$200,000 balance in Schwab Wealth Advisory™</td><td tabindex="0">$56.00 - $90.00</td></tr><tr><td tabindex="0">Relationship Pay (annual payments)</td><td tabindex="0">$100,000 balance in Mutual Funds</td><td tabindex="0">$7.70 - $12.60</td></tr><tr><td tabindex="0">Relationship Pay (annual payments)</td><td tabindex="0">$100,000 balance in Cash</td><td tabindex="0">$7.70 - $12.60</td></tr><tr><td tabindex="0">Relationship Pay (annual payments)</td><td tabindex="0">$100,000 balance in ETFs</td><td tabindex="0">$7.70 - $12.60</td></tr><tr><td tabindex="0">TOTAL</td><td tabindex="0"></td><td tabindex="0">$879.10 - $927.80</td></tr></tbody></table>
 ## Investment Consultants
 | What they do | Compensation |
 | --- | --- |
 | Investment Consultants assist clients in our branch offices. They meet with clients who are not assigned to a Financial Consultant's practice as well as with potential new clients to identify and analyze their financial needs. | In addition to a base salary, Investment Consultants are eligible to earn an annual bonus that is funded based on Schwab's Retail Net New Assets performance and determined based on manager discretion, which may include consideration of service quality, client satisfaction, teamwork, and the provision of education and recommendations to our clients. |
 ## Independent Branch Leaders
 ### Payout
 IBLs are not paid commissions for the sale of any specific product or service, nor does Schwab pay them a salary or the incentive compensation earned by representatives who are employed by Schwab. Instead, they earn revenue from their business, the overall amount of which is based on the revenue Schwab earns from clients whose accounts are assigned to their independent branch, and revenue for insurance and financial plans as described below.
+For purposes of revenue earned by the IBLs, the assets in accounts assigned to them are divided into two categories. As with employee representatives, the difference in average rates between these two categories is based on the time and expertise necessary to recommend and service different products and programs and the inherent complexity and variety attributable to such products and services. Because IBLs are franchisees rather than employees, and because they are therefore expected and encouraged to have more individual control of the management of their time, only two rates are applied to the assets assigned to them, rather than the three rates applied to assets in Financial Consultant Practices.
+For purposes of revenue earned by the IBLs, the assets in accounts assigned to them are divided into two categories. As with employee representatives, the difference in average rates between these two categories is based on the time and expertise necessary to recommend and service different products and programs and the inherent complexity and variety attributable to such products and services. Because IBLs are franchisees rather than employees, and because they are therefore expected and encouraged to have more individual control of the management of their time, only two rates are applied to the assets assigned to them.
+- **Advised Assets**-Assets in accounts enrolled in Schwab Wealth Advisory™, Schwab Managed Portfolios™, Schwab Managed Account Select®, Schwab Managed Account Connection® (discretionary wrap-fee programs that include ThomasPartners® Strategies, Windhaven® Strategies, and Wasmer Schroeder™ Strategies), Schwab Intelligent Portfolios®, Schwab Intelligent Portfolios Premium™, USAA Managed Portfolios®, or accounts managed by an independent third-party investment advisor to whom the client was referred through the Schwab Advisor Network® service, or assets invested in a registered annuity; and
+- **Non-Advised Assets**-Assets not in the Advised Asset category, which include stocks, bonds, mutual funds, and ETFs, as well as payment for providing cash management services.
+- **Advisor Assets**-Assets in accounts enrolled in Schwab Wealth Advisory™, Schwab Managed Portfolios™, Schwab Managed Account Select®, Schwab Managed Account Connection® (discretionary wrap-fee programs that include ThomasPartners® Strategies, Windhaven® Strategies, and Wasmer Schroeder™ Strategies), Schwab Intelligent Portfolios Premium™, USAA Managed Portfolios®, or accounts managed by an independent third-party investment advisor to whom the client was referred through the Schwab Advisor Network® service, or assets invested in a registered annuity; and
+- **Non-Advisor Assets**-Assets not in the Advisor Assets category, which include stocks, bonds, mutual funds, Schwab Intelligent Portfolios® and ETFs, as well as payment for providing cash management services.
+Each month, Schwab calculates and applies an Advised Asset Average Rate and a Non-Advised Asset Average Rate to the assets in accounts assigned to all Schwab Independent Branches.
+Each month, Schwab calculates and applies an Advisor Assets Average Rate and a Non-Advisor Assets Average Rate to the assets in accounts assigned to all Schwab Independent Branches.
 The rates are calculated by looking at 12-month trailing assets and revenue from all Schwab Independent Branch accounts.
+Schwab applies these Average Rates to the daily average assets in each category in accounts assigned to individual Schwab Independent Branches. The Average Rates change monthly, but the Advised Asset Average Rates are higher based on the factors noted above. An IBL, therefore, earns more money when recommending that a client enroll or open an account in one of the services in the Advised Asset category.
+Schwab applies these Average Rates to the daily average assets in each category in accounts assigned to individual Schwab Independent Branches. The Average Rates change monthly, but the Advisor Assets Average Rates are higher based on the factors noted above. An IBL, therefore, can earn more money when recommending that a client enrolls or opens an account in one of the services in the Advisor Assets category.
 Schwab also calculates the actual revenue earned by Schwab (often one-time but in some cases recurring) from sales of Immediate and Fixed Deferred Annuities, Long-Term Care Insurance, Permanent Life Insurance, Disability Insurance, and Term Life Insurance (collectively, "Insurance Products"). Additionally, IBLs may refer clients to the Schwab Plan Comprehensive or Personal Financial Plan (collectively, "Fee-Based Financial Plans").
+After adding together the figures for Advised Assets and Non-Advised Assets, Schwab applies a multiplier based on the tenure of the IBL and type of client. In years one through five, the IBL's payout share is adjusted using a multiplier ranging from 185% to 55%, and then, in years six and beyond, the payout share is adjusted using a 50% multiplier. Then revenue from insurance products and fee-based financial plans, adjusted using the 50% multiplier in all years, are added to the Advised and Non-Advised amounts. (Note: For assets of clients who transition to Schwab from an IBL's prior firm, the IBL may elect a constant multiplier of 50% in exchange for an increased ability to ask such clients to transition away from Schwab if the franchise agreement ends.)
+After adding together the figures for Advisor Assets and Non-Advisor Assets, Schwab applies a multiplier based on the tenure of the IBL and type of client. In years one through five, the IBL's payout share is adjusted using a multiplier ranging from 185% to 55%, and then, in years six and beyond, the payout share is adjusted using a 50% multiplier. Then revenue from insurance products and fee-based financial plans, adjusted using the 50% multiplier in all years, are added to the Advisor Assets and Non-Advisor Assets amounts. (Note: For assets of clients who transition to Schwab from an IBL's prior firm, the IBL may elect a constant multiplier of 50% in exchange for an increased ability to ask such clients to transition away from Schwab if the franchise agreement ends.)
 Finally, Schwab deducts certain monthly fees and expenses from the total adjusted revenue amount that the IBL owes to Schwab under the franchise agreement. This results in a net payout for the month.
 ## IB Representatives
 ### Compensation