How We Compensate Our Investment Professionals

ARCHIVED 2024-07-02, DATE APPROXIMATE · VERSION 20240702_rev01 · COMPARED WITH 20240501_rev01

Full text changes — 20240501_rev01 to 20240702_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://schwab.com/pricing).
+These pages summarize our compensation plans and incorporate all recent changes in effect as of April 1, 2024.
+These pages summarize our compensation plans and incorporate all recent changes in effect as of July 1, 2024.
 These pages are accurate as of the date indicated above. The most recent information is available at [schwab.com/compensationdisclosure](https://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
 ### 4\. Specialty Representatives
 - New Client Investment Consultant
 - Investor Development Consultants
 - Financial Consultants (Financial Solutions Branch)
 - Branch Managers (Financial Solutions Branch)
+- Financial Consultants (Participant Investor Concierge)
+- Senior Participant Consultants (Participant Investor Concierge)
+- Participant Investment Consultants
 - VP-Senior Wealth Consultants
 - Wealth Consultant Partners
 - Director-Schwab Private Wealth Services
 - VP-Corporate Financial Consultants
 - VP-Senior Client Consultants
 - Advice Consultants
 #### What They Do
 VP-Financial Consultants work with clients both in person (through our U.S. branch office locations) and by phone. They develop new and existing client relationships, generally using a planning-based approach to understand a client's needs and objectives. They provide education and recommendations to help clients select products-including investments, banking, and insurance-that meet client objectives. Each Financial Consultant supports a practice, which includes clients who are assigned to that Financial Consultant as a primary point of contact. Financial Consultants may also assist clients who are not in their practice.
 #### Compensation
+Financial Consultants receive a base salary for serving clients. Depending on their professional experience and past work performance, some Financial Consultants also receive Relationship Pay. In addition, Financial Consultants receive Solutions Pay. Financial Consultants may also be eligible to participate in a Career Achievement Award Program, which rewards and retains our top talent for being dedicated to Schwab and our clients.
+Financial Consultants receive a base salary for serving clients. Depending on their professional experience and past work performance, some Financial Consultants also receive Relationship Pay. In addition, Financial Consultants receive Solutions Pay. Financial Consultants may also be eligible to participate in a Career Achievement Award Program, which rewards and retains our top talent for being dedicated to Schwab and our clients. Additionally, Financial Consultants may be eligible for a discretionary incentive based on Client Retention and Client Satisfaction.
 Financial Consultants may give financial planning and investment advice to some of their clients. Although Schwab as a company may earn more or less revenue depending on the investment product or portfolio management service a Financial Consultant recommends, we have designed their compensation based on the time, complexity, and expertise necessary to understand, recommend, and provide ongoing service to a client for different categories of investment products and portfolio management services. [Schwab.com/schwabcompensation](https://schwab.com/schwabcompensation) includes more information on how Schwab as a company earns revenue.
 #### Relationship Pay
 Relationship Pay compensates a Financial Consultant for maintaining relationships with and providing service to clients in their practice. Compensation is divided into three categories. The first two have different asset multiplier rates,\* which reflect the time, complexity, and expertise associated with recommending and servicing accounts in each category ("compensation factors"). Category 1 covers fee-based portfolio management services, and Category 2 covers portfolio management referrals and non-managed accounts. The asset multiplier rates change monthly based on fluctuations over time in assets and revenue associated with the products and services in Category 1 and Category 2.
 The third category of Relationship Pay is for credit products.
 #### Relationship Pay Based on Account Balances
 <table><tbody><tr><td><h4 name="H4_HEAD">Category&nbsp;1</h4><h5 name="H5_HEAD">Portfolio Management Services <span name="C_BookRegular">(typically have more involved ongoing service&nbsp;needs)</span></h5></td><td><h4 name="H4_HEAD">Category&nbsp;1</h4><h5 name="H5_HEAD">Annual Relationship Pay per $100,000 of Client&nbsp;Balances</h5></td></tr><tr><td><ul><li name="P_BULLET_12pt">Schwab Wealth Advisory™</li><li name="P_BULLET_12pt">Schwab Managed Portfolios™</li><li name="P_BULLET_12pt">Schwab Managed Account Services™ (which includes ThomasPartners<span name="C_SuperscriptR">®</span> Strategies, Windhaven<span name="C_SuperscriptR">®</span> 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&nbsp;Indexing™)</li><li name="P_BULLET_12pt">USAA Managed Portfolios<span name="C_SuperscriptR">®</span></li><li name="P_BULLET_12pt" spaceafter="0px">Annuities (for Financial Consultants with an active insurance&nbsp;license)</li></ul></td><td><p name="P_BODY">The asset multiplier rate used for Category&nbsp;1 could range between 40 and 50 basis points, which is multiplied by a Financial Consultant's particular payout&nbsp;rate.</p><p name="P_BODY">This results in a payment between:</p><p name="P_BODY">$28.00 (100,000 × .004 × .07) and<br>$35.00 (100,000 × .005 × .07),</p><p name="P_BODY">$32.00 (100,000 × .004 × .08), and<br>$40.00 (100,000 × .005 × .08) or</p><p name="P_BODY_END">$36.00 (100,000 × .004 × .09) and<br>$45.00 (100,000 × .005 × .09)</p></td></tr></tbody></table>
+<table><tbody><tr><td><h4 name="H4_HEAD">Category&nbsp;2</h4><h5 name="H5_HEAD">Portfolio Management Referrals and non-managed Accounts&nbsp;<span name="C_BookRegular">(typically have less involved ongoing service&nbsp;needs)</span></h5></td><td><h4 name="H4_HEAD">Category&nbsp;2</h4><h5 name="H5_HEAD">Annual Relationship Pay per $100,000 of Client&nbsp;Balances</h5></td></tr><tr><td><ul><li name="P_BULLET_12pt">Schwab Advisor Network<span name="C_SuperscriptR">®</span></li><li name="P_BULLET_12pt">Schwab Intelligent Portfolios<span name="C_SuperscriptR">®</span></li><li name="P_BULLET_12pt">Schwab Intelligent Portfolios Premium<span name="C_SuperscriptR">®</span></li><li name="P_BULLET_12pt">Schwab Personal Trust</li><li name="P_BULLET_12pt">Wasmer Schroeder™ Ultra Short&nbsp;Strategies</li><li name="P_BULLET_12pt">Wasmer Schroeder™ Treasury Bond Ladder Strategies</li></ul><p name="P_BODY_END">Balances in self-directed or non-managed 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&nbsp;accounts.</p></td><td><p name="P_BODY">The asset multiplier rate used for Category&nbsp;2 could range between 11 and 14 basis points, which is multiplied by a Financial Consultant's particular payout&nbsp;rate.</p><p name="P_BODY">This results in a payment between:</p><p name="P_BODY">$7.70 (100,000 × .0011 × .07) and<br>$9.80 (100,000 × .0014 × .07),</p><p name="P_BODY">$8.80 (100,000 × .0011 × .08) and<br>$11.20 (100,000 × .0014 × .08), or</p><p name="P_BODY_END">$9.90 (100,000 × .0011 × .09) and<br>$12.60 (100,000 × .0014 × .09)<br></p></td></tr></tbody></table>
+<table><tbody><tr><td><h4 name="H4_HEAD">Category&nbsp;2</h4><h5 name="H5_HEAD">Portfolio Management Referrals and Non-Managed Accounts&nbsp;<span name="C_BookRegular">(typically have less involved ongoing service&nbsp;needs)</span></h5></td><td><h4 name="H4_HEAD">Category&nbsp;2</h4><h5 name="H5_HEAD">Annual Relationship Pay per $100,000 of Client&nbsp;Balances</h5></td></tr><tr><td><ul><li name="P_BULLET_12pt">Schwab Advisor Network<span name="C_SuperscriptR">®</span></li><li name="P_BULLET_12pt">Schwab Intelligent Portfolios<span name="C_SuperscriptR">®</span></li><li name="P_BULLET_12pt">Schwab Intelligent Portfolios Premium<span name="C_SuperscriptR">®</span></li><li name="P_BULLET_12pt">Schwab Personal Trust</li><li name="P_BULLET_12pt">Wasmer Schroeder™ Ultra Short&nbsp;Strategies</li><li name="P_BULLET_12pt">Wasmer Schroeder™ Treasury Bond Ladder Strategies</li></ul><p name="P_BODY_END">Balances in self-directed or non-managed 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&nbsp;accounts.</p></td><td><p name="P_BODY">The asset multiplier rate used for Category&nbsp;2 could range between 11 and 14 basis points, which is multiplied by a Financial Consultant's particular payout&nbsp;rate.</p><p name="P_BODY">This results in a payment between:</p><p name="P_BODY">$7.70 (100,000 × .0011 × .07) and<br>$9.80 (100,000 × .0014 × .07),</p><p name="P_BODY">$8.80 (100,000 × .0011 × .08) and<br>$11.20 (100,000 × .0014 × .08), or</p><p name="P_BODY_END">$9.90 (100,000 × .0011 × .09) and<br>$12.60 (100,000 × .0014 × .09)</p></td></tr></tbody></table>
 <table><tbody><tr><td><h4 name="H4_HEAD">Category&nbsp;3</h4><h5 name="H5_HEAD">Non-investment Advice Products and Activities</h5></td></tr><tr><td><h5 name="H5_HEAD">Credit Products:</h5><ul><li name="P_BULLET_12pt">Margin Loans</li><li name="P_BULLET_12pt">Schwab Bank Home Equity Line of Credit (HELOC)</li><li name="P_BULLET_12pt">Schwab Bank Pledged Asset Line<span name="C_SuperscriptR">®</span> (PAL)</li></ul><p name="P_BODY_END">Financial Consultants receive a payment of 4.4 basis points per $100,000 of client loan balance. This results in a payment of $44 per $100,000 loan ($100,000 × .00044).</p></td></tr></tbody></table>
 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
 VP-Branch Managers lead a local market team composed of Financial Consultants, Investment Consultants, Financial Consultant Partners, Client Relationship Staff, and various internal and external partners. They provide local strategic direction and execution support, and they recruit and manage the local team. They are responsible for the performance of their branch.
 #### Compensation
 In addition to a base salary, Branch Managers are eligible to earn an annual bonus that is funded based on Schwab's performance and determined based on manager discretion, which may include consideration of branch growth and productivity, client satisfaction, and development of staff. A Branch Manager's bonus can be a significant amount, typically, but not limited to, approximately 45% of their total compensation.
+Additionally, our U.S. Branch Representatives may be eligible for a discretionary incentive based on Client Net New Assets.
+#### Branch Personnel
+US Branch Representatives, including VP-Branch Managers, are eligible for discretionary incentive compensation that is based on exceeding periodic Net Asset Flow goals for their assigned Branch or group of Branches. This compensation is in addition to the Solutions Pay for which Financial Consultants are eligible.
 ## 2\. International Branch Representatives
 ### International VP-Financial Consultants
 #### What They Do
 Branch Managers lead centralized teams of Financial Consultants (Financial Solutions Branch) who work with clients in a phone-based and virtual meeting environment. They provide strategic direction and execution support, and they recruit and manage the centralized team. They are responsible for the performance of their branch.
 #### Compensation
 In addition to a base salary, Branch Managers are eligible to earn an annual bonus that is funded based on Schwab's performance and determined based on manager discretion, which may include consideration of client retention, branch growth and productivity, client satisfaction, and development of staff.
+### Financial Consultants (Participant Investor Concierges)
+### Senior Participant Consultants (Participant Investor Concierges)
 #### What They Do
+Financial Consultants (Participant Investor Concierges) provide help to participants of Schwab Corporate & Retirement Services (SCRS) including, but not limited to, Retirement Plan Services (RPS), Stock Plan Services (SPS), and Designated Brokerage (DB). For example, if a participant is eligible for a distribution or a rollover, the Financial Consultant discusses the participant's options, which may include keeping the participant's assets in their retirement plan, or recommendations to roll over to a Schwab IRA. Based on the participant's needs and objectives, the Financial Consultant may discuss and/or recommend additional products and solutions.
+Senior Participant Consultants (Participant Investor Concierges) provide help to participants of Schwab Corporate & Retirement Services (SCRS) including, but not limited to, Retirement Plan Services (RPS), Stock Plan Services (SPS), and Designated Brokerage (DB). For example, if a participant is eligible for a distribution or a rollover, the Senior Participant discusses the participant's options, which may include keeping the participant's assets in their retirement plan, or recommendations to roll over to a Schwab IRA. Based on the participant's needs and objectives, the Senior Participant Consultant may discuss and/or recommend additional products and solutions.
 #### Compensation
+In addition to a base salary, these Financial Consultants have the potential to earn additional incentive compensation based on the following criteria:
+In addition to a base salary, these Senior Participant Consultants have the potential to earn additional incentive compensation based on the following criteria:
+- Service Quality-A quarterly discretionary component that evaluates the Financial Consultant's performance in educating participants about their options, which may include taking a distribution, leaving their money in their plan, rolling over to a current employer's retirement plan, or opening and rolling over to a Schwab IRA. This also includes all processing and follow-up work involved with servicing participants.
+- Service Quality-A quarterly discretionary component that evaluates the Senior Participant Consultant's performance in educating participants about their options, which may include taking a distribution, leaving their money in their plan, rolling over to a current employer's retirement plan, or opening and rolling over to a Schwab IRA. This also includes all processing and follow-up work involved with servicing participants.
 - Client Navigation-A measurement of Net New Assets brought to Schwab.
+### Participant Investment Consultants
+#### What They Do
+Participant Investment Consultants assist and meet with clients who are not assigned to a Senior Participant Consultant as well as with potential new clients to identify and analyze their financial needs.
+#### Compensation
+In addition to a base salary, Participant 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.
 ### VP-Senior Wealth Consultants
 #### What They Do
 VP-Senior Wealth Consultants provide dedicated relationships to clients with at least $10M in investable assets at Schwab. They develop new and existing client relationships, taking a planning-based approach to understand a client's needs and objectives. They provide education and recommendations to help clients select the products that help meet their objectives and work with a team of experts in order to serve their complex and unique needs.
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 Please note that the information in these pages does not apply to Schwab accounts managed by an independent investment advisor. Independent investment advisors are not owned by, affiliated with, or supervised by Charles Schwab & Co., Inc. ("Schwab").
 ©2024 Charles Schwab & Co., Inc. All rights reserved. [Member SIPC](https://www.sipc.org/).
+E-0424-5865318444383076363 REG31752-50 (04/24)
+E-0724-5865318444383076405 REG31752-51 (07/24)