The Charles Schwab Corporation (SCHW) Earnings Call Transcript & Summary

Thank you.

I have the privilege of introducing the next speaker, which I warned him that this was a gift from Walt that I get to introduce him, and then he reminded me that he gets the last word. So I'm going to be very, very cautious here. But Jonathan Craig, our Head of Investor Services and Marketing, a great friend, a great colleague and somebody we'd like to play together a lot.

We're playing. Definitely, I have the last word, and I will say I had the pleasure of driving over this morning with Bernie and Peter and Joe and did dawn on me that these transitions are very, very real. So I do want to just pass along my congratulations to all 3 of you on the transition I think were reflected. I think it's been decades working together and not just adding hopefully a lot of value to Schwab, but also great friendships and great colleagues. So I know no one's going anywhere, but I have to say that, Bernie, that was a nice thing to say. I'll say something different later. So what I'd like to do is use the next 20 minutes to give you a quick update on the retail business, the core strength of the business and then talk about the priorities for the rest of 2024 and beyond. I'm happy to say this is the first year in a while in first Investor Day and I guess 3 or 4 years where I won't have to talk about a coming integration weekend, which is exciting. Obviously, as you know, Joe covered, but we've completed the retail integration at least as it relates to client conversion. You've seen some of the stats. I'll share a few more stats specific to retail. But really, what I want to do is talk about where we go from here moving forward as no longer Schwab Blue and Schwab Green, but truly one Schwab. And I think that is going to be an incredible, incredible unlock of value for the firm and for our clients. Just to get started, let me level set on some numbers for the retail business. As a result of Through Clients' Eyes strategy very strong organic growth year after year. And of course, the acquisition of Ameritrade. We're now sitting in retail at $4.1 trillion in assets, 25 million plus brokerage accounts, over $600 billion in managed investing and 4.6 million daily average trades. Despite that incredible growth, what's also remarkable is we stuck to a very focused business model. Every single employee in retail comes to work every day with one objective, one simple objective, which is how do we help individual investors and traders achieve great financial outcomes, outcomes that they richly deserve. And of course, we do that by bringing a broad set of capabilities to the table from wealth management, advice, banking, self-directed trading, active trading and much more. And then we complement that with individual capabilities for individual client segments. Yes. I want to look back a little bit on 2023. And I would describe 2023 as a challenging year, but also a year in that environment where we delivered some really strong results across key areas. And I'm happy to say each of those -- in each of those areas, those results have only accelerated materially in 2024. I described 2023 is a challenging year for a couple of reasons. Certainly, the regional banking phenomenon and some of the negative press, most of it, I would characterize as misleading that we had to deal with was part of it, but also it was also a year where investor confidence and the VIX continue their downward trend. And yet in that environment in retail, over $100 billion in net new assets, MI flows up 20% year-over-year, 27.7 billion. Schwab CPS score near industry highs at 66, just shy of 1 million firm retail households and 4 million daily average trades. On the far right, you can see how those numbers compare in Q1, 2024 already strong growth across each of those dimensions. So $34.9 billion in net new assets in retail in Q1, $12.4 billion in MI flows. You're going to hear a lot about this, you already did from Rick and others. You'll hear more from Neesha, but very strong interest in advice, some of our retail clients and strong adoption there, CPS up to 69 and 275,000 households and that's up as well to 4.6. So overall, I think, strong momentum coming towards the end of the year in '23 and accelerating into '24. We also made meaningful enhancements to our retail offer in the last 15 months or so. I won't go through them all, but let me hit on a couple of significant enhancements to Schwab Wealth Advisory, our premier wealth management solution for our clients leading to record advice flows in that program. We made meaningful enhancements to Schwab personalized index unit. You can see a demo over here, a really strong capability for our affluent clients, who are looking for customized indexing, and most importantly, tax alpha. We launched thematic investing. We brought thinkorswim over to Schwab Blue. We also most recently brought over futures 4x and portfolio margin to Schwab Blue made meaningful web enhancements, meaningful mobile enhancements, including streaming and Snap ticket and other enhancements. Walt, I think, mentioned this in the high net worth and ultra-high net worth space last year, we launched Schwab Private Client Services and Schwab Private Wealth Services. This was about delivering differentiated experiences for $1 million-plus and $10 million plus. And then last thing I'll highlight significant enhancements in making it easier for our clients to enroll and manage investing and to enroll in things like pledged asset lines. Our value proposition also continues to be recognized as industry-leading. Everyone has a trophy shelf, I guess. We have a bigger one, but I chose all of these for a couple of reasons. First, I think investor Business Daily, #1 online broker, we take great pride in that; U.S. news just came out and rated Schwab the #1 overall investing platform. But underneath that, they also said we are #1 for stock trading, #1 for options trading and #1 for ForEx trading. J.D. Power on the far right ranked TD Ameritrade and Schwab #1 and #2, respectively, in the self-directed trading space. When you think about that, think about the power of the 2 firms coming together when you bring 1 and 2 together. And then I included the customer service, which I think Walt, you had as well on your chart. I included that one because in our industry, we talk a lot often about product price platform and those are all important. But make no mistake, I think increasingly, it's service that makes the difference. And it's often Schwab service that makes a difference. And replicating the Schwab service model is not an easy thing to do. It takes meaningful investments, sustained investment. It takes a service ethos top to bottom, it starts with Chuck and goes all the way down. It takes great service people and it takes us Through Clients' Eyes strategy. And I think the sum total of those are -- I don't think you're going to find anywhere else. And why Forbes named us #1 in service. And when you get underneath all of our accolades or awards, service almost always pops to the top. So before I move on to where we go from here, I did want to make a couple of final comments about the integration. This will be a little bit repetitive, but it's worth highlighting, and I'll pull out some new numbers as well. From a retail standpoint, we did it over 5 transition weekends. Unlike an advisory services, we had to spread it out. Those 5 transition weekends started in February of 2023. But in those weekends, we successfully moved 13 million accounts and over $1 trillion in assets. I think hoping objective observer would have to describe it as an incredibly successful integration on so many dimensions, whether it's the technical or operational acumen that it was done with, the service that we delivered or even the complaints per million. I want to spend a second on complaints here because I'm quoting the number as well, 55 million complaints per million. That number is real. That number is audited. That is a broker-dealer when clients complain when they register a complaint, we have to send it to our client advocacy team and audit it and resolve it. So I just want to reiterate, that's not a loose definition of complaints, it's a very specific definition and accurate. I will tell you, as a head of retail, I spent a lot of time even though it's 55, you can imagine I can look at every single one, and I do look at everyone and often I get everyone actually. And when you -- what the complaints tend to be almost always or most of the time, they're about change. Change is hard. People don't like change. And that's understandable. And they tend to be when it's about change, it tends to not be about thinkorswim because there was not a change there. It tends to be about the mobile app because the mobile app is what many TDA clients use who don't use thinkorswim. And they're going from one experience TDA Mobile to Schwab mobile. The example I use for what it's like to go through change, I say this all the time with my teams. Imagine if you woke up one morning and then you drive, let's say, a BMW, you're late for work, and you run down the garage, and there's a Mercedes in the garage. You jump in the garage and you try to drive away, it's raining out. You can't find the winter wipers, you don't know where the turn signal is, all the way to work, you're going to be complaining about this car and say, who designed this car. It doesn't mean that the car is not well designed, it just means it's different. And I think that's a lot of what we're dealing with some of the very, very small complaints with some of the complaints that we've been getting. I'll also say as Walt said, our -- what Schwab does is far more significant from a capability standpoint than what Ameritrade did. So as you'd expect, our app, our web experiences are more comprehensive. We're also a lot larger. So in the retail space, we have about 3x Schwab retail clients relative to the $1 trillion that we moved over. So some TDA clients would say to me, why don't you just use a TDA app. Well, for a lot of reasons, we wouldn't, but one of the most obvious ones would be we'd have 3x as many complaints on the Blue side. And then the last thing I'd say is that if you look at the mobile app store ratings, for Android in the Play Store or from the Play Store and the Apple Store prior to conversions, our app and mobile experiences were rated quite high and either at par or better than Ameritrade. So I digress a little bit on that one because we're getting a very, very small number of complaints. They tend to be about change. And yet at the same time, we are trying to take the best of what Ameritrade has and the best of what Schwab has, and we'll continue to make enhancements as we go. Let me -- a few more seconds on this page. Joe, I think you talked about attrition and CPS. Attrition has been coming in well below our forecast for every transition group, and that continues with this most recent transition group. So that is great to see. CPS is also on the rise immediately after every conversion group, almost hockey stick type growth, starting that sort of neutral where you'd expect. When you convert a client, it didn't have to be converted, but then dramatic improvement in the first couple of quarters. CPS is great. CPS is just what clients say. What's probably more interesting is what they do. And I can also tell you that the behaviors of these clients are very, very promising. So far, on the asset side, $60 billion of converted assets already. Converted clients have already brought in inflows of $60 billion. So a very meaningful number. Related to that, for clients who converted who were assigned to a financial consultant, we had a 99% retention rate. Trading levels. We looked at the trading levels of clients who converted pre and post. This is the November DG group, where we had a couple of million thinkorswim users, trading post conversion increased 22% relative to pre. No doubt, some of that was the market performance, but that is indicative of these clients willing to trade at Schwab and willing to trade on our platforms. And then the most compelling stats at the bottom of the page, tremendous engagement with managed investing. The green client adoption of our managed investing capabilities has been fantastic. $17 billion of inflows already. Just one stat to put that in perspective. In 2023, 25% of our inflows to manage investing came from green converted clients and those clients -- proportionally, those clients are already converted only represented 22% of our total retail asset base. So think about that disproportionate engagement with Schwab advice in year 1 relative to Blue clients. I'm really, really bullish on this. So let me -- so hopefully you have a sense of the overall strength of the retail business and the strength of the franchise. As we think about it, where we go from here and how we build upon that strength I wanted to share some client and industry trends that are informing that strategy. And I will say these aren't new, but I think they're generally instructive to consider. The first one is that I say convergence is here. And what I mean by that is competitors broadly are starting to look more and more similar from things like price, product, in some cases, platform. And that's not to say that there are differences. There are absolutely differences. And for many clients, those differences are fundamental. And in many cases, we may pride ourselves on those differences. But it is to say that increasingly people are making decisions more based on service and experience, and that's the world we live in. Second trend, you hear this a lot. There's a bull market for advice without question. And that should not be a surprise when you consider the last couple of years, 2022, every asset class down, many down double digits, 2023 fastest rate rise in history. 2024 appears to be a strong bull market, navigating in the last couple of years, the last 3 years has been difficult for retail investors. And as much as we have some amazing self-directed investors, we're also seeing clients leaning into advice more and more at all asset levels. The third trend that we think a lot about is this demand for ease, very simply, clients expect easy and intuitive experiences. They expect you as a firm to respect their time and they're not going to compare their experiences with Schwab to other financial services firms. They're going to compare their experiences to all firms to interact with. That's a world we live in, and that's what we have to live up to, which is why we talk a lot about the brilliant basics. And then finally, Walt touched on this, but the desire for personalization and customization is fundamental. People want -- it's everywhere. People want curation personalization in the service they receive, the content they get, the experiences they have, the products and solutions they buy. And so if you're sitting in my shoes, or our shoes, that's a high priority. And I'll tell you, it's easy to say. It's hard to do at scale, but I'm quite proud of the progress that Schwab is making because we are doing it at scale. So with those trends in mind and the integration behind us, touch on 4 key areas of focus going forward for retail. First, we've got to continue to drive growth, household and asset growth leveraging our multichannel acquisition model. Second, continue to deliver differentiated experiences for our clients in particular, high net worth, ultra-high net worth and trader. Third, deepen client relationships, primarily with a focus on wealth and banking where there's such opportunity. And then finally, again, continue to build intuitive and easy experiences for our clients. On the growth side, the most important thing we could do to drive growth without question is brilliant basis. What I mean by that is great operational experiences, great service experiences, tight relationship management the brilliant basics. But beyond that, we will continue to leverage what has been a very effective multilevel acquisition model that brings together breakthrough and insight-driven marketing, deep personal client relationships, a growing and increasingly important workplace business and of course, referral, which is such a core part of this business. Each one of these works independently but also together to sort of symbiotically create the asset gathering machine that Schwab is and is known for and will continue to be known for. I think Stacy is going to spend more time touching on these, so I'll move on. The second priority is we have to continue to and will emphasize the importance of client segmentation and in particular, again, high net worth and trader. For high net worth, we define high net worth, the Schwab Retail is $1 million-plus at Schwab. We define ultra-high net worth as $10 million-plus at Schwab. Both of these segments collectively represent about 70% of our assets. Maybe more importantly, they represent the areas where we've seen the strongest growth, 5-year CAGR growth over the last 5 years. In 2023, we launched private client services and private wealth services. Again, that was about delivering differentiated service relationships, ops, product, price, platform experience for each of those segments. 2024 and beyond is about building on those, adding more to what we deliver for those clients, things like continued investment in operational enhancements and experiences, family benefits, launch of new products like alternative investments, which you'll hear more about, enhanced banking, which we talked yesterday a lot about. So a lot of continued investment in delivering for those incredibly important clients. And then the trader segment has become even more important to Schwab. It has been for 50 years. But with the acquisition of Ameritrade, it's become even more important. Trading represents over 1/4 of retail revenue right now. Traders, which is up significantly from 2019 before Ameritrade, traders represent even more than that. So a very significant client segment. James is going to come up and follow me, so he'll do a deeper dive on trader. I would just say our focus there really is about investing in the Schwab trading powered by Ameritrade ecosystem of product platform, education and service. Third opportunity, you'll hear a lot more about this, too, is how do we continue to deepen client relationships in particular with areas like wealth and banking. Our clients want to do more with us. We have capital to do more with our clients. These are both significant opportunities with both legacy blue clients, but absolutely also with the newly converted green clients. We talked about there's a bull market for advice. People want advice. That's absolutely true. We also know that when our clients enroll in advice, they generally get better financial outcomes. They generally have lower attrition. They generally consolidate more, and they generally refer more. So it is the definition of win-win monetization. And so given that, probably not surprisingly, a lot of our focus for my team is to really make our clients more and more aware of the capabilities that we offer, things like personalized indexing lots of interest in tax alpha. Obviously, Wasmer Schroeder and lots of interest in this market and fixed income. Beyond Wasmer Schroeder, we have a lot of other fixed income capabilities, thematic investing you name it, plus a lot of focus on Schwab Wealth Advisory. Again, our premier wealth management offer. We will launch a discretionary version later this year that will -- that I know will be very well received. And then we're also going to launch a retail alternative investment platform for our retail clients that I know Neesha will talk more about. But this is another area that is of high interest to our clients, and I think we'll be very well received. On the banking side, we've talked a little bit already about strong penetration opportunity there as well. A lot of our focus for the rest of the year in retail, '24 into '25 will be on 2 things: number one, building out more premier banking solutions for our private wealth clients. They're used to a more bespoke tailored experience, and we've made great progress there, but we'll continue to do that. And then leveraging PAL, the pledged asset line for our client base is a highly, highly sought after credit facility. We've seen great success in the investments we've made with the new technology that takes enrollment from days and weeks to hours and minutes. It's got a long way with the field. We've got a long way with clients. And also matching that with our investor advantage pricing, which is about relationship pricing is going to be a continued focus for us as we deepen the relationships with clients beyond just investing beyond wealth to get to banking. The last priority, maybe the most important is being relentless about delivering easy and intuitive experiences for our clients and our financial services professionals who deal with clients every day. On the client side, I won't go through it all. I would just say you can count on meaningful web and mobile enhancements in the areas of research, move money, trading, performance reporting. And on the client side, you can expect meaningful investments in things like our sales and service desktop investments and continuing to make it easy for financial consultants to enroll people and advice from MI discovery to enrollment all the way through to disclosure delivery. And then as was referenced earlier, there's lots of opportunity in the artificial intelligence area to leverage artificial intelligence to make our financial services professionals even more efficient in interacting with clients. And we'll be -- we've made some good progress there. And we'll have more meaningful progress with the launch of what we're calling knowledge assistant this summer. So I hope so far, you've got a sense of the tremendous strength of where the retail franchise is today and how optimistic I am about it, not just where we are today, but the next decade of growth. I believe we sit in a very, very enviable position. We sit here with differentiated leadership positions in self-directed trading, investing, active trading and those seeking advice. We've got premium services for our high net worth and ultra-high net worth, all backed by a no trade-offs value proposition, and of course, wrapped in a satisfaction guarantee. And despite that incredibly enviable position we still have tremendous opportunity in front of us. $9 trillion in assets for the firm, $4 trillion for retail. We still operate in a business in our -- the retail side with a single-digit market share in an industry that's growing double digits. So tremendous opportunity to grow externally. And then internally, there's a question about share of wallet before, a lot of opportunity to grow our share of wallet, but also drive deeper penetration, where it makes sense for the client in areas like advice like banking and utilization of our advanced trading tools. In all those cases, our penetration rates are either in the low teens or low single digits. So I'll close there with -- I've been at Schwab 24 years, been in this role for a while. I don't think I've ever been as optimistic now that we're past this integration, integration that went incredibly well but I don't think I've ever been as optimistic about the organic growth opportunity in front of us as we move forward as one Schwab. So with that, I'm going to bring up James to talk trader.

Thank you, appreciate it. Thanks so much. I'm honored to be here in my first Investor Day with Schwab after 20-plus years at TD Ameritrade. It's truly an honor to get a chance to represent the trader business. So when we think about Trader, I mean the team has done an amazing job, I think, of giving background on the integration. And obviously, bringing over sort of a trader value proposition of Schwab trading power by Ameritrade was a mission-critical component of what we did as part of the integration. And so I think it's important to start off sort of with what is a continuum of Trader. And so the value proposition that we talk about is amazing for the most entry-level person who's interested in the world of trading all the way up through to the most sophisticated traders that we have who are trading across multi-asset classes, trading complex, sophisticated strategies, leveraging portfolio margin. But across the platforms, across the products, across the services across the tools, we've got a value proposition that meets all of their needs. Obviously, we've seen huge growth in trading at Schwab, right? The Ameritrade acquisition added millions of traders into the mix. We also have the mean stock frenzy, obviously, which pumped in a lot of new interest within trading. And I think very important to note, a lot of that business has stayed with us and grown along that continuum over the course of the last few years. A lot of the traders we brought in are much more experienced, are much more skilled than they were when they got here. And that's a lot of what we tried to do, and I think we do really effectively across the full value proposition that we offer. And then there's been a growth in derivatives trading, as many of you know, for sure. And once you start to trade derivatives products, we classify you as a trader and have a lot of things to meet your specific unique needs as a derivatives trader. And why that's all important, as Jonathan talked about, traders drive a disproportionate amount of new assets to the firm. Their ROCA is higher and we're seeing that great adoption of other products, which is one of the things I am so excited about as a guy who gets a chance to lead the trading services business. We think about the value proposition here, intentionally multi-legged, right? All firms have some form of a trading platform. We like to believe and the industry will tell us. We believe it's the best trading platform, bar none. But it's not just about the platform, it's about the education and content we put around that. Again, content that starts with most novice of strategies of very basics like covered calls through cash secured puts all the way up to multi-legged sophisticated option strategies. So where you are on the continuum. We have education for you, and hopefully, education to help you move up along that continuum, if that's something that you want. If ultimately, you're very content at cover call strategies and don't want to go any further, that's wonderful and that's fine with us. A lot of times people come for the platform. I say that the platform is sort of at the epicenter of the offering. But quite frankly, they stay and they fall in love with the service. And any firm can say they have a platform, any firm can say they have a form of service. We believe the combination of those 2 with education on top of it is an absolute differentiator for us. And I'd be remiss if I didn't talk about sort of risk management permeating through all of that. One of the things we really try to do with our traders is teach them how to be more like professional traders in terms of how they think about specific positions and how they think about their entry points and their exit points and how they manage their portfolio. So whether that'd be risk management tools within the platform, courses on risk management, specialists in the risk management area when you call in and have a specific question heading into exploration and want to talk about something like pin risk, we have people to do that at the highest levels. And I think that's a really important differentiator to the value proposition that we provide. Let's dive in a little bit. We'll talk about the platforms, right? I think Walt has talked about it. Whatever form factor you want to use, multiple monitor setup, I've seen up to 10 monitor setups that people have monitoring the markets to your iPhone out of your pocket, your Android device or sort of a more simplistic web version. I don't want to say simple, but more simplistic than the actual desktop. So 3 platforms across the board, all the bells and whistles, anyone could want. I think one of the things to stress on here, an unbelievable excitement by the team about -- it's like palpable in the room of finishing the integration, how important it was, but some of the things we did to add scale. Some of the things we did to ensure performance would not take any sort of a hit post the integration. And when we look at the growth trajectory we want to be on the ability to grow with the infrastructure we have was critically important, but the teams get excited about the innovation piece, right? Everybody is really excited about getting back into the world where we're not working through the integration, and we're getting focused on innovation to grow the business. We've got a long list of enhancements clients have been asking us for. Some of the teams have already started that now, even though we finished the integration last week, but overachievers, which is fantastic. And so a lot of great work is happening there in the innovation space. To the box on the right, I think it's important to call out the interest of the Schwab community and new clients relative to its thinkorswim, but it is the broader value proposition. So basically, 4 out of 10 new clients are saying, hey, we have some level of interest in the platform in this trader value proposition, which is a fantastic number, quite frankly. And the 220,000 number of households who have downloaded and started to explore thinkorswim really since October was when we ultimately sort of formalized the launch is a number we're also really proud of. And so you can already see the effects of the STP -- sorry, I shouldn't say that, Schwab trading powered by Ameritrade value proposition per meeting across the Schwab client base. When we talk about education and coaching, there's a lot to it. So a quick plug to my team and my friends back here. Please check out the booths. During your launch, you can get a quick look at the platform. You can see some of the education and you can see a little bit of the Schwab network in action, all important components of the value proposition, right? And so again, all firms have platforms, most have at least some form of service. This is a place where we absolutely differentiate. 25-plus hours of live content a week. All of that gets archived, so clients can access on-demand, computer-based training modules, courses, live events. We just wrapped up live event outside of Chicago last week. We had standing room only, 350, 375 people they are doing some intense work around the platforms around different trading and investing strategies. It was a phenomenal event. And we had only opened that up to the Schwab client base for a couple of compliance reasons with the broker-dealer. So now we're going to be able to grow that, probably double and maybe even triple the size of those combined events, which we are incredibly excited about paperMoney. We call it Guest Pass now is another unique product that's very important in the education space as clients come in and they want to test, especially their first sort of derivatives trading strategy, being able to do that in a riskless way and a paperMoney account is an important component of it. We launched that early this year. Back in January, we've had 10,000-plus clients sign up or prospect sign up as a way to sort of get into the funnel for broader trading exposure, which we are super proud of as well. And then the network gives our clients an opportunity to see real-time news program throughout the market day. Again, we'll take a look at that when you get a chance during the break. Let's talk a little bit about service. I said this before, clients come for the platform, they often stay for the service. And the other thing we have found is when clients leave, they do occasionally, not often, but they very often come back for the service, right? And that gets into what we talk about as traders talking to traders. The experience level of our folks, mirrors that continuum I talked about. So a level 1 client who's just getting interested in derivatives will talk to somebody who's very experienced in that space. But as they work up that continuum, you can get to folks who have 20-plus years' experience trading derivatives in the pits in Chicago. And we pride ourselves on the best service in the business. Jonathan also alluded to a little bit of the symbiosis here that exists as well. We had a phenomenal Trade Desk at TD Ameritrade and all the way up to the top, what we've called trade or private client services. The ecosystem now though that exists with financial consultants with some of the wealth managers that Neesha will talk a little bit about and a lot of the experts that we have, we've seen an unbelievable amount of interest and uptake from our most sophisticated ultra-high net worth traders who, as Jonathan pointed out, didn't have that available to them at Ameritrade. And so we had about 1.1 million what we would call dual clients. So they had relationships with Schwab and Ameritrade. And I think, as Rick pointed out earlier, a lot of that was they like to do their trading at Ameritrade and they like to do their broader wealth management Schwab, and that's fantastic. That said, that leaves us 13, 14, depending upon how you break up the adviser business, million clients who had relationships at Ameritrade but didn't have a relationship with Schwab, and if they had it, second relationship, had it somewhere else. And so what an amazing opportunity, and I think it just speaks to the numbers Jonathan talked about relative to the uptake in advice as one example of the power we have going forward of all the Schwab products and services to the trader clients from Ameritrade. And then lastly, on this slide, the trader solutions team, another unique component of the value proposition and a team that's been incredibly busy over the course of the last few months through the integration. The team will do one-on-one platform demos in some cases for clients that need it, they will do in-person visits, whether that be in a branch for a small group of people or whether it be one-on-one consultations to help those folks who want that 10 monitor set up, get set up to ultimately create their trader cockpit. That team has done an amazing job, and I think is a key component of some of the clients who are working through that change, Jonathan talked about, hey, something has changed for me. What does that look like? And how can I best acclimate myself to that change? Looking ahead, we see great opportunities to grow those relationships. I talked a bit about this. I think I was a little bit ahead sort of on this slide here. I do think that the bank is another place where TD Ameritrade didn't have a bank and we're already seeing great uptake, not only on some of the lending products that Jonathan talked about, but just sort of some of the core basic components of a bank offering, which I think are great. Again, the platforms are here now on the Schwab side. And so the trick now from my perspective is how do we sort of take what used to be a bit of a more monolithic trading business and sort of expand the lanes on the highway. So to me, I sort of see 3 lanes on this highway. I see the new clients who are coming in and want to be or want to experience some elements of trading and ultimately, may want to move up that trader continuum. But I think the beauty of the way that this was set up is for those clients, it's not an either/or. There's not a trade-off decision here. And I think one of the really critical components of my role sitting within the retail business as there's no sort of conflict over clients. I think our best clients are going to use a plethora of our products and services. Ideally, they're going to be trading in an account for them, seeking alpha within the markets. They may have an adviser relationship as well in Bernie and John's business. They may be taking advantage of wealth management products in niche of the world. And that gets back to that share of wallet element that I think is going to be such a great opportunity. Coming from Ameritrade, having led the thinkorswim integration back in 2008 and 2011. And then I was also able to lead the Scottrade integration back in 2016. We saw the same formula, whether you bring clients to a new trading platform like we did at Scottrade, we brought them over or you bring their trading platform to a new group of clients, we see increased engagement. We see increased interest in a broader set of products because, again, traders are typically going to have more of their money here and are going to be interested in the broader wealth management spectrum that we ultimately provide. Everything I've seen from the transition groups we've executed before and this most recent one that we just executed now indicated it's going to be more of the same. It's not just about the platform, though now. It's about the entire broader value proposition and trader ecosystem that we're bringing to the Schwab client base. The beauty here again is with also moving over the 17 million Ameritrade clients, we're giving them access to the full world of Schwab. And so you've got new clients coming down one lane of the highway. You've got the green -- sorry, the Ameritrade clients coming down the center lane with access to everything that Schwab has to offer. And then you've got the Schwab clients coming down the final lane to this value proposition of Schwab Trading Powered by Ameritrade that's, quite frankly, a much more robust value proposition than Schwab had previously. I could not be more excited about the seat I sit in terms of the opportunities for trading to grow and expand across Schwab, but also for the trader segment to continue to grow at Schwab with access to everything that Schwab has. That was all I had. I know I can talk fast. Really appreciate the time today. I look forward to taking questions after I turn it over to Lisa Hunt for the international update.

I just want to point out that James, you've got claps, Jonathan, I don't think you did. So good morning, everyone. And please clap for me. I value that greatly at the end. Good morning, and I am going to one-up James and Jonathan's excitement, I think, to tell you how excited I am to talk about our International Services business, thought we've spent most of the morning talking about the U.S. that we could spend maybe 10 minutes talking about the rest of the world. And more importantly, the opportunities that Schwab has to continue to grow our global exposure and really to diversify the growth story for Schwab overall, especially in retail. I've been at Schwab, for those of you that I haven't met, for almost 33 years, and I've been leading this business for a while, but I have never been more excited and enjoyed working on something that is such a great growth story as I have the privilege of leading the international business. So for some of you, it may be a surprise that Schwab is and has been involved in our international business. We work with clients in over 200 countries globally, but we really focus on about 60. 60 countries where we believe we have a great opportunity to deliver great value and take a terrific market share. And we do most of that work through our U.S. broker-dealer on a cross-border basis. But we do have 3 foreign affiliates in the other major global financial centers in the U.K., in our London office and then in Hong Kong and Singapore. And we really believe in those markets, that local presence, that ability to serve those individuals, both through our normal phone service, chat and web and digital-based services, but in-person really gives us a very powerful competitive advantage over many of our competitors that are in those markets or not in those markets at all. And we've been in those markets for a while. I think I tell a story that Chuck actually opens the Hong Kong broker-dealer back in 1984. It was a little bit of a different business model, but we had an office in Asia before we opened our first retail branch in Manhattan. And I think that speaks to his commitment to really democratizing investing not just here in the United States, but worldwide. And I'll tell you why it works so well. Our no trade-offs approach really is a value proposition everywhere. You don't have to be lucky enough to be born and live in the United States to value things like transparency, great service and trust. It's a basic human desire and when you're talking about money and financial services, it matters and ours translate quite nicely. And in fact, our clients that live outside of the United States really mirror quite closely our client profile in our domestic retail business. It's a little different because as most of us know, in your own portfolio, I would imagine, maybe you have 5%, 10%, 15% of your money invested outside the United States. So we're never going to get 100% of a client's investable dollars today. But as you would probably imagine, most investors, if they're going to start investing really look to the United States. They want to come to that market that has the most liquid, the most mature, the most transparent capital market system in the world. And frankly, they want to take advantage of the growth story of the great American entrepreneurial spirit with some of the securities that we know are uniquely traded here in the United States. So it's a little different for us as 53% of our clients have their investments outside of their home country. So that's a big percentage higher than what we would see here domestically, where it's a much smaller percentage. So we definitely get the benefit of being in the United States and being the leaders of investing in the United States when our clients or prospects for that matter, are thinking about a platform or a company to engage with. The good news is of that 53% of investable assets that they're taking outside their home country, 80% of our clients consider Schwab, their primary or sole broker for investing in the United States. So we have deep loyalty and a lot of great engagement with them. 70% of them consider themselves self-directed, an area that we've heard all morning about how we lead and do so well in. And that's important for us. These people are driven. They're excited about investing, and they want to come to Schwab, but it gives us a little bit of room for some help and advising guidance, and I'll talk about where we're expanding our capabilities here in a minute. 86% of our clients consider themselves to be highly or somewhat highly experienced investors. So they have experience, they're familiar with growing their wealth and how to go about doing that. And we definitely see a much -- a bit higher uptick in initial funding in these accounts, about 25% higher from what we see with domestic retail when clients open an account and come to Schwab. And then 25% of our clients are active traders. And this study was done last year, so it doesn't include yet the majority of the TD Ameritrade clients that converted over. We know from just our data and our numbers within international, the majority of those were very active traders. So we are excited to see not only those clients convert, which we completed our successful conversion, but also introducing Schwab Trading Powered by Ameritrade to the majority of our existing clients who haven't had that capability. So let's talk a little bit about scale. To be clear, we are not establishing a bunch of bespoke models in 60 different countries. We are taking the very best that Schwab has to offer and trans and exporting that into other jurisdictions that are very interested in engaging with us. We are tapping into our proactive client outreach. We are taking our products and solutions that we have built for our domestic clients and to the extent we can, exporting them overseas. And we're not just exporting our products, one of the things that I think really differentiates Schwab's international offering from other competitors is we're also exporting our service. And as you've heard today, that matters. And I will tell you, it really matters outside the U.S. The fact that we pick up our phones in a handful of rings that we have individuals that will spend time with you to educate, you help you, is very unique and quite disruptive outside of the United States. What we would consider table stakes for most firms today is still quite unique and disruptive outside. So that delivering best-in-class service, relationship management and education in multiple languages goes a long way. Now why do we care about this international business? Why do we think that there's a great opportunity? Well, there's 300-plus trillion reasons why we are interested in that business. And while there's 67 trillion in investable assets in the United States, 70% of all global wealth is actually outside of the U.S. And you've got this massively growing emerging middle class with rising expectations and a convergence of external environmental forces that are turning the rest of the world into what we saw, quite frankly, here in the '70s and '80s, as we move from defined benefit plans to defined contribution plans, putting more responsibility in the hands of individuals to invest and we know how that exploded this business model. The U.S. market is where people want to come. As I said earlier, it's mature, it's liquid. It's a trusted market. So if you're going to invest from another country, you're going to start here, and you want Meta, Apple, NVIDIA. You want to see that growth and you're going to come to the U.S. to do that. The other thing that's been really helpful, I think, in just fueling a lot of this business is the fact that social media and information is so readily available now that people are learning how to invest from their computers. They are understanding where to go from key opinion leaders and we have a lot of sort of marketing halo, if you will, from just social media. If you travel at all and go to Asia and other markets like that, you will understand how this really can fuel the growth and turn things around. And we've also seen a pretty big policy shift in most countries outside the U.S., whether it's been austerity measures that have been put in place over the years with challenging budgets, the demographic shift of less workers supporting a massive base of retirees, and you're seeing governments start to pull back on some of the social safety nets that were in place before. And what does that do? It puts a lot of responsibility on the individual for the type of retirement they want to have, the type of education they might want to deliver for their children, the type of health care they want to have later on in life. And so that need to invest and some of the regulatory policies, creating things like the IRA accounts that we have here in the United States that all help individuals want to invest and grow their wealth. Maybe I'm biased, but if they're going to do that and do it in the U.S., they're going to come to the leader investing in the U.S., and that's Charles Schwab. The nice thing, too, about our strategy is that our Through Clients' Eyes approach resonates and is something that we leverage in international as well. Our strategy not only aligns with what our clients need, but it aligns very nicely with the corporate strategic priorities as well. And so not unusual you're seeing the exact same elements of success that we employ here domestically. All we're doing is tapping into that and leveraging it. Scale and efficiency, and I'll just go through a couple of these rather than spend time on each one of them. I'm happy to talk more about any of them. We do a great job with our education with our content on our digital devices. And we really have transported that into our international business, and we've translated it. So we serve clients today in Mandarin, Cantonese and Spanish and we're working to really grow the languages that we can also provide to our clients. So we not only provide live service in those languages, but we also provide content and information so that while they're investing in the U.S., they're doing it in a way that is in their native language and they can understand and help. We're investing heavily in our digital-first experience. For most people, you can imagine they're outside the U.S., they don't have access to a local branch. They're also a little bit more digitally savvy than maybe the American population is. Mobile-first and web have been major elements of our ability to connect with these clients. And again, we do that in multiple languages. And we take a very scalable approach. As I said earlier, we're not setting up a bunch of different business models in different locations. We have leveraged technology to make it very scalable and easy for our service professionals to serve clients in a variety of different jurisdictions and being very compliant and clear on what is allowed permissible and okay to do in each of those jurisdictions. It's really helped us to take a very reactive business and going forward to be very proactive in how we reach out and how we engage with clients. We're very excited about adding to our platform. We have been primarily and only a U.S. dollar stock and option trading platform. But over the next few years, starting with this year, we will be introducing, if you will, our existing clients and capturing new clients by talking to them about our powerful trading tool that James just spoke about, Schwab Trading Powered by Ameritrade. We'll be expanding in Stacy will be up later, we're going to be tapping into the marketing campaigns that we use domestically to really shout our message about 0 commission, 0 minimum, things that are, again, very unique outside the U.S. to share that news. And we will be launching several of our managed investing products, starting with managed accounts and our Schwab Advisor Network before the end of the year in partnership with Neesha's team. We also provide a very differentiated experience for our traders, our high net worth and ultra-high net worth clients. And we are just beginning to tap into that relationship model. We are adding to -- we have a very small handful of financial consultants and we'll be adding to that over time to ensure that our high net worth -- our high net worth traders and ultra-high net worth clients have that level of personalized experience that we know they expect. We also have local websites that are very clear for some of our clients. And then the brilliant basics, I think, is really what differentiates us outside the United States. We have service professionals. We answer our phones. There are a lot of our competitors that are in other markets where you cannot -- there's no phone number. You have to send an e-mail. You have to wait for someone to respond to you. And that ability to engage with us is important. If you think about it, if you were going to send money over to a foreign country, you really want to make sure you could reach out to somebody, get a question answered and get help immediately and not have to rely on a phone coming -- a phone call coming back in. So to talk -- just to wrap up because I know we want to jump into Q&A here. We have a very robust road map of things that we want to drive forward. Just speak, I spoke about the managed investing. We're actually going to be in 53 different jurisdictions where we can actually reach out the clients and talk to them about our capabilities. And just as it is in the United States, that helped that guidance no matter how active or driven or sophisticated you are as an investor, they matter. Things like managed accounts, things like Thematic are going to be game changers for us and very unique outside of the United States. We haven't really been offering margin in most of these jurisdictions. With the advent of thinkorswim coming over and a lot of our other capabilities, we are adding margins. So that allows -- is going to allow us to trade more options, futures and ForEx. And then we're just going to continue to expand our client experience, continue with not only our digital education but create more of the live education sessions. It's very easy for us to do that, even around the entire world. We are, like I said earlier, expanding our translation capabilities. We will be leveraging the Schwab Intelligent Assistant as well in multiple languages. So clients can engage with us very scalable, very quickly, and we will deepen those relationship models. And as you saw in one of the previous slides, we continue to grow. We have $92 billion in client assets, somewhere around 600 -- across 670,000 accounts. We are about 2x the amount of ROCA than our retail business and we see tremendous scale and opportunity there. And we are looking forward to capturing our fair share of the global market, really our time-tested model that has worked so well for decades here in the United States. We are ready to serve investors, both big and small around the world. And as I say to my team, if we can just get 1% of market share of that $303 trillion over the next couple of years, we're going to be doing okay. So we're excited. Jonathan, James.

The lack of applause. They were in awe. They were in awe of the comprehensiveness. By the way, it's James birthday today. So hard questions go to James.

Very exciting. Very exciting. Happy birthday James.

No clapping, no cake. This is not great.

Brennan Hawken, UBS. You guys made a couple of references to banking throughout the various presentations. So I'm curious if there's a goal to drive more day-to-day banking into the retail business. And what's the plan in which to do that? You talked about expanding the premium banking offering. So could you add a little bit of meat to that bone and is the goal -- obviously, lending is a big strategic priority, but is another side benefit to get more of the day-to-day banking deposits, which might be a bit more sticky.

Sure. I mean I think from the genesis of the bank, many have, I think, 2008, 2009, goal is always built to build the world's best bank for investors. So we start with the investor mindset and then say, how can we ensure that if you're an investor first or primarily, what adjacent banking capabilities that we need to bring to the table to support that. And those are both on the deposit and on the lending side. Certainly on the deposit side with high-yield checking with savings, obviously with money funds, which are not the bank, but we've got a lot of great cash management solutions. Adoption of that high-yield investor checking and investor checking continues to be a strong growth driver to the firm. It's actually been -- we've seen really good early adoption for green clients as well. TDA converted clients, even though there's a relationship with TD Bank, I think the Schwab Bank relationship is much stronger. So very strong in terms of that referral opportunity. So much stronger adoption there I think will come. In terms of our more affluent clients, lending is a big priority. Again, the pledged asset line, but also mortgage, HELOC, things of that nature. And the premier banking that we talked about was really about [indiscernible] not as much more capability, but also just a more bespoke experience and more relationship pricing, things like that to match the needs of what these clients have and what they expect. I think over time, we've got a road map for other potential capabilities in both the deposit and lending space, but we are definitely interested in serving retail investors and their banking needs as robustly as we can. A little different, it's a domestic view internationally.

Thank you. Thanks for pointing that out.

This is a question for Lisa on International. I think you framed the opportunity well. I guess I have a question about the ability to trade overseas. And I take the point that it's a big world and the U.S. is the biggest, deepest, most trusted, maybe most desirable market in the world. But I'm curious how important it might be now or over time to allow everybody in the world to trade not only in the U.S. but to trade anywhere they want? And maybe even for Americans to increasingly want to do that?

Yes. So we do offer in the U.S. to our domestic clients the ability to trade in multi-markets in multicurrency. We've had that offer for a few years now. We don't really market it broadly. And there's reasons for that, but we will. So that's an important component of our offering, especially as we've brought over so many traders from the TD Ameritrade acquisition. We don't offer that to our international clients today. It's definitely on our road map. We agree it's a -- the reason why we only have 53% of their investable assets are not 100% because there's a big world out there and there's other markets as well. For now, we believe that our best and most immediate opportunity is really expanding the products that we offer today, in particular, in the advice space. So that's our focus for the next, I'd say, 18 months. But that multicurrency, multi-market effort is on our road map, and we believe an important further differentiator for us.

Ben Budish from Barclays. John, I was wondering if you could talk a little bit about the behavior or treatment of cash on the retail side. I think for us as we think about Schwab and sort of the overall cash levels, we sort of understand that generally on the advisory side, you tend to get more full allocations to invested assets. So what are you seeing on the retail side? And how do you think about the addition of these banking products that you've been talking about as being additive? Or is this sort of near-term expectation that investors will sort of follow the trends that you've been seeing in the past but sort of slowing the cash sorting. So if you could talk about that a little bit. Appreciate it.

Yes. I mean I know -- and Peter is probably going to talk to this a little bit later. I don't know if I have a lot to add about cash trends specific to retail other than to say a lot of it, of course, is market-dependent, rate-dependent, active trader engagement dependent. Without question, though, is we do deepen relationships with green clients, and they do more banking with us, including things like check-in, that is a transactional -- meaningful transactional cash opportunity. But I don't want to -- I don't think I would project here now what I think the retail cash penetration rates would be. From where I sit and from where we sit, our focus, which shouldn't be a surprise with a true clients, our strategy is to make sure we're there for our clients, providing a broader set of capabilities we can, making sure that we keep them inside the Schwab franchise. And a big part of that is making sure that their investment cash is getting great returns. And that's why you see things like money funds, treasury, CDs, things of those nature -- of that nature, having strong volume last year, you'd expect that in a rapid rate rise environment. So, going forward, my focus is less on specific cash levels and more on net new assets, client satisfaction and growth. And then at the same time, broadening the capabilities we offer. And again, on the green side, especially as we deepen banking penetration, there's certainly transactional cash opportunity there. Also, as we bring in NNA and continue to bring in new households, which is a priority, a lot of that can come in, in cash and then get deployed over time depending on the markets.

Yes. I might just add from a trader client perspective, obviously, depending upon your strategies, depending upon the products that you trade, depending upon how actively you trade your cash needs may be different. And as Walt sort of highlighted out, we have opportunities or options for any client trading whatever kind of strategy they want. So if they need to keep more free cash because their trading futures versus they want to go into Schwab money funds to earn some yield and then free up cash for trading opportunities. All of those are available. And I think that is one of the additional benefits for the more active green traders coming over relative to access to some of the Schwab funds.

Mike Cyprys from Morgan Stanley. Just curious how you're thinking about the implications of longevity as people are living longer. How do you see that impacting customer demand trends? And how do you think about the opportunity to partner, say, more closely with insurance for guaranteed income streams and otherwise?

Yes. I mean certainly longevity, but also wealth transfer sort of related topic. I can't see inverse. I mean there's certainly -- and so as we think about it and Neesha may talk a little bit about this as we think about the broader set of wealth management capabilities we bring to the table, particularly under Schwab Wealth Advisory. That's a really primary focus area. A lot of our conversations with clients are both how can you -- what is the positive side of longevity mean for your portfolio and how do we support that and family planning around it and then also all the trust in the state that goes along with that. So it is definitely and we have a lot of insurance product that we can bring to the table as necessary for those conversations. Again, the inverse of that is the wealth transfer, which comes up a lot, which is sort of how do we prepare as an industry for the massive wealth transfer that's coming. And I always say to my team, a couple of things; number one, we've got to build a deep relationship with the whole family easier said than done, but that's critical. That's a priority. Number two, we've got to expand the relationships that we have, which is -- and ensure those relationships are tight. But, number three, well, 3 and 4 -- third is we've got to build capabilities to make it easy for people to transfer their wealth within the franchise and have them not leave things like family benefits and things like that go a long way. But maybe the most important thing is we also need to continue to win the younger generation. When you look at this wealth transfer, a lot of it may initially go from a spouse, one spouse to another, but often the decision makers are the children. And those children tend to be GenX or maybe millennial or younger boomers. So I do feel like relative to our competitors, we are very well positioned for this wealth transfer, both because of the depth of our relationships and the high CPS that our clients have with the firm, but also we are really good at acquiring you'll hear this from Stacy. We are really good at acquiring less than 40 year olds -- 40 to 50, that's where the decision-makers are going to be in many of these cases.

Steve Chubak Wolfe Research. I actually wasn't sure who this question was best for, but someone is going to have to feel that. And Jonathan, you mentioned retail all. So they'll need to be you. It's on the -- this dynamic around the all-in fees to the customer. And certainly, there's a lot of demand for alternative products. The one thing that we've been hearing is Schwab will need to get a platform fee, high capital, is also going to have to charge a fee as a facilitator in addition to the management fees to the all manager. And I was hoping you get some perspective just given you've always been a leader in terms of pricing, how you're ensuring you're managing that to a zone of reasonableness. And are there any incentives are offered to the advisers to market these products as well?

So let me answer briefly and Neesha is coming up later, and she can probably provide a deeper response or correct anything. But I would just say without getting into the individual specifics on pricing, number one, really, really excited from where I sit, to be able to offer our clients directly retail alternatives. Right now as a retail client, we custody reactively and through our Schwab Advisor Network, a really important partnership, clients can access [ Alts ], but they can't directly within retail. That will change later this year. It's going to be a robust set of private equity, private credit, hedge funds, exchange funds, and you'll hear more from Neesha. It will be institutional quality due diligence, as you expect around those funds, a great digital experience supporting it and will be priced in a way that is consistent with Schwab, which is a strong value to the marketplace. So let me leave it at that, and then I think Neesha can answer more specifically.

Thanks so much, Devin Ryan into JMP. A question just around the evolution of the self-directed trader and really what that means for Schwab. And so the last few years, you had pandemic, this was huge amount of first-time investors come into the market, had the acquisition come together. You guys are leading with education as well. And so trying to think about like what this all means in a more "normal" market backdrop for the ability to grow debts and engagement with new products like derivatives and how that all comes together. So effectively, where the market goes over the next 5 years from a self-directed perspective because of all the things you guys are doing but also the market backdrop. How many more derivatives are there being traded, how much do people evolve their engagement, if you will.

Yes. Let me have James, but just I want to really quickly say, I mean the Schwab philosophy, we're not out there trying to create traders are getting traders to do things that they might not otherwise done. We want to be the world's best place for self-direct investors. We believe we are and for very active traders from early stage to the most sophisticated and provide them with great education and support. But like maybe some other firms, we don't come to work every day and say how do we get people to trade something new or trade more? That is not necessarily through client-size strategy. It's how do we support them as they get smarter and engage more with trading, James, you probably.

Yes. I would -- I mean well said, but I would add a couple of things. I think, one, the backdrop of the markets, obviously, we are -- I don't want to say historic, but near historic lows and sort of volatility, I think [ closure ] on 12 yesterday, which I think it's about 4.5 year low. And so in these times, clients who are trading more actively and are seeking to look for volatility or seeking alpha are obviously turning more towards derivatives, right? So we continue to see a growth in derivatives. It's not a crazy growth. I'd say it's a healthy growth in those products. So for us, you could think of on the retail side, somewhere between sort of 25% and 30% of the DAT in the derivatives category. We obviously want to do a lot to make sure if clients want to make that move from equities to the derivative side that as you pointed out, we're educating them. We're providing them all the tools and services that they need. We spend a lot of time trying to understand, especially if they have a relationship with a financial consultant, what their investment objectives are, what their risk tolerance is and then based on that and their strategies, how derivatives may play a part in that? And then there's obviously that pool of traders who use derivatives for more speculative type of trading, right? And our goal there are not to encourage that or discourage that but to provide them anything and everything they need to be able to do that in the most successful and most responsible way possible. I think the one thing I would point to, what I sort of hit on briefly before, was just the clients that we saw sort of come in the door for your GMEs and your AMCs, they have grown with us, and they have absolutely evolved with us. And obviously, we saw the return of [indiscernible] last week and a little bit of the rekindling of that, certainly not as hot, certainly not as long as it sort of fizzled out a little bit. But in talking to some people about that sort of what we saw. I think we've absolutely seen that sort of growth in our client base in terms of the maturation of their trading. I think we would like to continue to see that. Though one caveat to your question, Devin, is just sort of what are the markets going to do, if all of a sudden, we start to see huge spikes in volatility, we may see some different things. Lastly, I would just say, in times like this, where we've been in a pretty good market, right? So a good market run with lower volatility. We have seen more of a flight into equity, so that will change the trade mix a little bit. Derivative volume stays consistent, sort of is consistently going up. So the mix isn't affected because derivatives trading is going down. It's just because equities trading is going up. And that, again, is just sort of a factor of the market. So we'll cross our fingers on the markets and sort of continue to keep doing what we're doing.

And maybe I'll just sort of echo a little bit of what Jonathan and James also said and provide just a couple of additional thoughts, too. Again, we don't -- we're not in the business to create traders and sort of nudge people along to place transactions. We're really here to change people's lives. And for some that does mean fairly active trading and taking advantage of that. And I think what really differentiates us from many of our competitors. And I see this, in particular, overseas, is the amount of education and support that we have to help our clients, as James just said, grow with us. And they may get started because a buddy says, "Hey, do this, but then they realize it's a pretty complicated market out there, and there's a lot of information. There's a lot of details. There's a lot of things that you need to help you. And we provide all of that. And we provide it live over the phone with the human being. I mean there are a lot of competitors that are primarily digital. You can't get a hold of a human being if you wanted to. I think that over time is really what is going to set Schwab apart as we continue to see the growth of trading.

I think maybe we have time for one more question here from the console. This could be maybe Jonathan or James. Question, it's a little specific to how does the new to firm acquisition sort of trends and characteristics from an active trader perspective compared to maybe a broader traditional retail client. And this is a question from Brian Bedell at Deutsche Bank.

I could start and then Stacy is coming up, too, so she can add to it later. But I mean, first, when you look at our new-to-firm profile, a couple of stats I'll share. One is 58% are under 40. So we often sometimes get the question of are we continuing to acquire younger clients? The answer is we absolutely will, we absolutely are, and we'll continue to do so. It shouldn't be a surprise when you think about the breadth and depth of our value proposition for folks who are just getting started, whether it's no account fees, no account minimums, 0 commissions, thematic investing, Schwab Intelligent Portfolios, all the incredible education. I think we are a great firm for folks who are just getting started, and that's a good portion of new to firm. The other side, though, is we acquire a lot of very wealthy, very wealthy new-to-firm households and $10 million clients, $100 million clients, many hundreds of millions of our clients. I see them every week through -- primarily through our branch network. These clients tend to -- some are self-directed, but many increasingly are coming direct to advice. So they're coming direct to Schwab to enroll in Schwab Wealth Advisory or one of our sand partners. So that's also been a change, I'd say, over the last 5 or 10 years, a lot of strong director advice, ultra-high net worth. So I think we're acquired across the spectrum. I'll let James talk about the traders as well.

Yes. I mean I would just add, 40% of new to firm being interested, right? And we can sort of define interested in different ways, but interested in the trading value proposition, I think, is a very healthy number. Obviously, at TD Ameritrade, we had a strong sort of trader population, were strongly attractive to the new traders. I think -- and Stacy will talk about it. The marketing team has done a great job of rebranding and capitalizing on the Ameritrade brand within Schwab trading powered by Ameritrade. So I feel really good about that new pipeline. And I think the other thing is it's interesting from my perspective is how many nontraders that we wouldn't put them in the trader segment but are interested in watching Schwab network or leveraging the platform or taking an education class. And I think especially as we look at the high net worth and ultra-high net worth world. So Neesha's team and my team have been talking about sort of the overlap there, right? When you have a high-net-worth client, they're going to have a lot of specific needs. And one of those needs may be advice and it may be more managed solutions. But most of them are also interested in some level of alpha seeking sort of on their own with where we are. And I think as we talk somewhat about the generational wealth transfer, that sort of client in that sort of mid-40s area is probably interested across the spectrum. So I don't think it's just a trader to the question, but I think it's trading in general, to me feels really, really healthy right now.

I think we should get applauses I think lunches got skipped out. I know we're around lunch.

Stop for lunch.

Okay, everyone, well, want to make sure I got on stage, I was close to the celebrities. I don't -- it's good to be close. But yes, it is lunch time, time to get some refreshments. As noted throughout the various remarks today, we do have sort of what we feel is a really special opportunity for all of you all as you have a chance to take a breath, to go visit some of the demo booths and the experts that are deeply involved in the product, talking with clients, the strategy, the approach. We have the Schwab Network. We have the TOS trading platform, we have the power platform and then we have kind of the suite of personalized investing in both thematic and Schwab Personalized Indexing. So we strongly encourage everybody to take some time out. If you don't have a chance to get to everybody during the lunch break, they will be sticking around for a little bit afterwards. So I think it would be a great experience. For those of you on the web, they couldn't be here live, we have added a little module in the top right corner of the screen, biased to the folks in the room, it's probably not quite as engaging, but there are a set of resources that go over these same demo booths that we think will be really helpful. So thank you all very much. We'll be back in roughly about an hour after lunch. [Break]

We are back and once again, Jeff Edwards.

All right, everyone. I hope you're able to take advantage of the longer break and stayed inside. It does look a little bit darker and we're hearing some rough weather. So hopefully, most folks that are here that had different travel plans are able to ultimately make sure they get home safe. But that aside, very excited to bring up on stage next, our Chief Marketing Officer, Stacy Hammond. She's going to bring a lot of post-lunch energy and talk about client acquisition.

Hey, everyone. I'm Stacy Hammond, like Jeff said, I'm your Chief Marketing Officer, and I am very used to marketing being probably the most engaging and entertaining part of any presentation. However, I'm not usually competing with a pretty spectacular show going on outside. So let's hope we can keep the focus in here. A lot of the things that have already been teed up today, and I need my clicker or, sorry -- a lot of the things that have already been teed up today are the themes that you're going to hear as we talk a little bit about marketing's role in driving growth. We have 4 priorities in marketing. The first is to drive organic growth. And when I think about organic growth, I think about that as growth from the new clients, so attracting either new advisers to the platform, new advisers who will custody their 401k with us or new retail clients into retail. We engage in deepened relationships with existing clients. So we increased share of wallet. We present them with solutions that may meet their needs at any moment in time. And we do that in an efficient way. So it's quite easy to drive growth if you have unlimited resources. But one of the hallmarks, I think, of Schwab's marketing is that we are an incredibly efficient growth machine. We'll talk a little bit about how we achieve that in a minute here. And of course, throughout all of that, we are strengthening the deep trust that investors have in our brand. We market across a wide range of channels, some of which you probably experience as consumers in your everyday life. And we think about these as paid, owned and earned. So paid is like advertising. If you've been watching the NBA playoffs, you may have seen [indiscernible] and the investing themes ads. So paid is traditional advertising you would consume in paid media environments or The Charles Schwab challenge, which as was referenced earlier, kicks off this week. Owned media is things that we own and control. This would be like schwab.com, which sees something like 800,000 visits every single day or e-mails that we send to clients. I heard a great stat the other day, in 2023, we sent 600 million e-mails to clients across all of our enterprises. So clearly, lots of communication going on. And finally, earned media. This is the media that people contribute to us and might think of those as industry accolades or the articles that we see in PR and we do this for all of our enterprises. Some of the examples that you'll see as we talk through this, we'll look very familiar from a retail perspective like investing themes. We, of course, also support our workplace business in acquiring new employers to Schwab and supporting their participants on their financial wellness journey. And of course, supported by Advisor Services and championing, as Brenie was explaining earlier for the individual -- sorry, for the registered investment adviser and the individual investors that they serve. Jonathan teed up earlier, the 4 levers that we use when we think about retail growth. So I thought I might talk a little bit about how each of those levers is complementary and some of the unique outcomes that they drive. I do think of these levers as a portfolio like you would if you had a diverse investment portfolio because they all perform differently in different market environments, and they all serve a different purpose, bringing a different type of growth to Schwab. So the first, which is the one we're going to spend the most time talking about today is marketing. We use an econometric model to understand how efficiently we are spending and allocating our marketing dollars. And consistently, we see that our media spend is driving about 40% of our new client outcomes. Of course, we work really closely with our partners in sales, across the branch network, across call teams, to work with the more affluent investors and the role that the branches play and the [ teams ] play in acquisition really has to do with the quality of the client that we're interacting with. So when somebody interacts with a branch before becoming a Schwab client, we see that they bring us 7 times more NNA than if they're just opening online. So clearly, they're playing a very important role. Clearly, a huge part of our acquisition strategy is engaging participants in our workplace business beyond the reason why their employer chose us. So their employer chose us to administer their 401(k) or their stock plan, but they have financial needs that are well beyond that 401(k) and their stock plan, which the rest of Schwab can help meet need -- or meet those needs. And finally, you've heard this reference multiple times today. At the foundation of the way that we grow is by delivering an exceptional client experience every single day, referrals are one of our key components of growth. So when somebody has an excellent experience at Schwab, they tell their friend. When they're on their golf course, they tell their kids to open in a stock slices account. But when we deliver the brilliant basics every single day, it helps fuel our organic growth. As promised, we're going to talk a little bit about marketing. You have heard from all the enterprise leaders today, that our value proposition is stronger than ever. When I think about the power of the best of both worlds of Ameritrade and Schwab and what that brings to the individual investor, it gives me tremendous optimism for our growth potential in the future. And when I think about what Ameritrade brings to Schwab clients, you heard earlier that we're already talking to Blue clients about trading on TOS. We're seeing tremendous engagement. But of course, we have an opportunity to really deepen the share of wallet that we have with the kind to transition from Ameritrade by exposing them to the advice offers by exposing them to bank. And quite frankly, first by meeting their basic needs so that we earn their trust so that when they need a solution, they think of us, and we can expose those to them. As I mentioned earlier, one of the hallmarks, I think, of Schwab Marketing is our efficiency. So similar to the rest of the organization, we delivered really significant marketing synergies. So we've been able to increase our efficiency and our spend over time. We saw an 11% growth in our efficiency when we think about dollars spent to dollar in. So this is a number that we'd like to see continue to grow, especially as we're realizing the tail end of our synergies here. And finally, I heard this question asked earlier with this incredible value proposition and with our incredible efficiency. We're really pleased with the type of investor who was attracted to Schwab. I heard a question earlier about Active Traders and coming to Schwab. Since we launched Schwab Trading powered by Ameritrade, we've seen a 100% increase in the number of new clients to Schwab who are demonstrating either active trading behaviors or engaging with products that are traditionally active trader of products like ForEx or futures or options. As Jonathan referenced earlier, about 60% of our new clients are less than 40. We definitely saw more younger clients attracted to the Ameritrade platform. So as we continue to market Schwab Trading Powered by Ameritrade, I have a lot of confidence that, that will help us continue to grow the number of younger clients that we have, that fuel the future pipeline of growth at Schwab. And then last but not least, about -- we saw about a 50% increase in the percent of clients coming to Schwab who are affluent. When you think about our value proposition, our unique ability is to meet the needs of so many different types of investors. There are as many ways to invest at Schwab as there are investors as demonstrated by the fact that we can equally acquire affluent clients, younger clients and clients who trade. Of course, a huge part of marketing is also getting our solutions in front of existing clients to deepen our relationship with them and earn their trust over time, as evidenced by a couple of statistics here on the screen. So you'll see about a 30% increase in visits to Schwab.com. This is, of course the channel where the most clients engage with us the most frequently. We brought over the best of Ameritrade Education to Schwab through our insights and education. We've seen a 100% increase in prospect and client interaction with our education. We think of education as a pipeline to future growth because if we are meeting your need and the moment with what you need to know right now, you are more likely to consider us when you're trying to grow and manage your wealth. And finally, we've seen a 60% increase in client engagement with Advice solutions. I think I've heard today multiple times now that it is a bull market for Advice, and we are seeing that in client behaviors by getting the right solutions in front of them at the right time. So let's talk a little bit about how we achieve those outcomes in marketing. And we're going to talk about a relentless focus on measurement, so we can continue to drive efficiency, deep creative insight driven by client insights and finally, continuous innovation. So a couple of examples here. The list is very long of the ways in which we measure the outcomes that we are driving so that we can drive greater efficiency in the future, but I'll hit on a couple of them. So many of you may be aware or not, that cookies are being redacted from all of our digital behaviors. So you're no longer being followed around the Internet when you buy something on a site. We no longer know who you are personally due to privacy rules. This dramatically impacts the digital marketers' ability to understand which of their placements and which of their messages are the most efficient. So we are building a multi-touch attribution model that will enable us to anonymize the digital behaviors of prospects and clients so that we continue to gain that visibility and we can optimize our spend across digital channels and live channels. So this is an incredibly powerful model that will allow us to see the benefits of both our digital media spend and our live channels. We use a marketing mix optimization model, which is a model that allows us to assign partial touch attribution, which is important in the world of marketing because last touch attribution overweights the emphasis on the efficiency of the last thing you interacted with, which, quite frankly, is usually something in the digital channel. So we use the marketing mix optimization model to do 2 things for us. So the first is to help us understand how to allocate our media spend across channels, whether that's digital, TV, podcasts, programmatic media, search, all of it. And it helps us forecast outcomes. So if we were to spend a little less or spend a little more, spend it differently, how would that impact our outcomes. We can orient the model towards affluent clients. We can order -- orient it towards new trader clients, but we're constantly looking at how we optimize that spend to drive the profile of client that we're seeking to acquire. And finally, of course, we use data-driven targeting. This is sort of the original machine learning that happens in marketing, which is it is our job to get the right message in front of the right client in the right channel at the right time. That's harder than it sounds. That's 4 dimensions that need to work really well at any given moment and propensity models are one of the ways in which we do that. So we are constantly using the data that we have about our clients to identify what solution might be right for that client in any given moment. And then using digital channels, whether it's smart banners on schwab.com or e-mail to reach out to that client. We see things through client size, which gives us unique insight into our clients and allows us to deliver industry-leading creativity. You've heard already today and hopefully got to experience in the back of the room here, the launch of Schwab Trading Powered by Ameritrade, which truly brings the value of the combined entities to bear on the market. We are so excited about this, not only for the traders who are clearly attracted to the platforms, the products, the coaching, the education, but also because it signals to the average investor that if we can meet their needs, we can meet your needs as well. So we have found Schwab Trading Powered by Ameritrade not only to be a great acquisition vehicle for traders, but also for a broader market. Schwab Investing Themes is something that we've had a lot of fun within marketing. You may have heard us say before, depending on what the market is looking like, we're in a low engagement category. Not everybody gets as excited as the people in this room do about investing about their finances. And Schwab Investing Themes allows you to invest in the things that you are passionate about. So we get to go to places where investors are already engaged. A great example of this would be like an EV charging station, we can talk about the renewable theme. In gyms, we can talk about the fitness team. With the delivery robots that bring us food, we can talk about dining out. But it's been a really surprising way to break-through and find investors where they are and engage them in their money rather than making them come to us. And then finally, another example is our really robust stable of podcast which is a new media that we use to reach a broader range of investors with much deeper content. If you think about Schwab Investing Themes or Schwab Training Powered by Ameritrade you're talking about a 30-second commercial. The average on investing episode is about 30 minutes. We've had over 1 million downloads of our podcast so far this year and 84% of the people who start them finish them. I don't think I finish 84% of the podcast that I start listening to. So we know that they're really resonating with clients. And that's why we use education. This is a way to be there when investors need us, so that when they are making a decision about where to entrust their wealth, they do choose Schwab. And finally, as a marketing organization, we have to continue to innovate. We have to be where consumers are. You've heard The Charles Schwab Challenge mentioned multiple times today. Lots of financial services companies sponsor golf tournament, this should not be a surprise to anybody. The way in which we create the experience around the Charles Schwab challenge demonstrates our commitment to seeing through things through clients' eyes. We have thought about it from the players' experience. We have thought about it from the attendees experience. We have thought about it from the people who watch it on TV's experience, trying to, at every single touch point, understand that it is our job to ensure that we are meeting your needs no matter where we are, whether it's on a golf course or on schwab.com or in the mobile app. I hope you've already had a chance to see the 1975 Stingray, that is the car prize this year. Who would have ever thought that a prize for a golf tournament might be a restored car? Well, here we are, and the reason why it's the Stingray is, of course, the Corvette Stingray, was one of the first mass market sports cars in the United States, so it democratized access to a real fast, fun car the same way that Schwab democratized investing also in 1975. We talked a little bit about how we continue to innovate with insights and education. One of the things that I find the most engaging is we've created courses that are a series of different opportunities for education around topics that you might be interested in, with a wide range appealing to affluent investors who are thinking about transitioning to retirement, like retirement income or people who are looking to like learn a little bit about derivatives. So our education comes in all kinds of formats and modalities, again, to demonstrate that we're meeting you where you are. You heard Bernie talk about how we celebrate our independent advisers, every year it impacts. This is an opportunity for us to showcase how we stand beside the independent investor in terms of helping them build their business, helping them recruit talent and being advocates for them in the industry while also building the category by celebrating what an RIA can do for an individual investor. And finally, and this is one I get a lot of questions about, is, where is Schwab on TikTok? And I say it just like that because I think it's one of the places where you might not expect to see us. We actually -- we're in a campaign this year with 15 influencers who happen to already be Schwab clients, and they created content about their experience at Schwab, but in their unique style. So one example was [ Lacy ], who did a get-ready-with-me video. And if you don't know what a get-ready-with-me video is, ask me after the presentation. But as she got ready, she described her experience with Schwab and how easy we made it for her to learn about investing and how easy it was to get started and then how fun it was for her to watch and learn about all the equities in her portfolio. So this is not about trying to make investing feel like something that is quick and transactional. It is about going to where investors are needing them in that space, where it's a place where they're already engaged and then deeply engaging us -- engaging with us around their content. That was like the punchline for the influencer, yes. So just really quickly in summary and then time for a couple of questions here, so the key to our success in driving the outcomes that we do through marketing is this continuous focus on innovation, creativity driven by client insight and a relentless focus on measurement. We will continue to optimize our acquisition levers as we see trends in the industry. And finally, we will continue with rigorous measurement because we need to do everything I just said, absolutely efficiently. And maybe the underlying I would put on all of this reflects what I think everybody said today, which is there has really never been a more exciting time to be a marketer at Schwab because of this incredible value proposition that we can bring. The fact that there are as many ways to invest at Schwab as there are investors is truly a no trade-offs value proposition. And I know the entire team is excited about marking that every single day. So with that, I would love to take some questions.

Great. Mike Cyprys of Morgan Stanley. I was hoping you'd talk about customer acquisition costs. How do you see that trending? Where you see the biggest bang for the buck in ROI?

So the biggest bang for the buck is almost always in what we call programmatic digital, which means that we can buy anonymized and yet highly targeted profiles of prospects and we can target ads at them. So we tend to buy -- and this won't surprise anybody, given the outcomes that I was describing; we tend to target affluent clients. We tend to the client, our target traders who are -- our clients who are traders. And we also do a lot of competitive conquesting. So if we know that you're in -- if you're in the market for -- somewhere to invest, then we want to be there. So programmatic is definitely where the biggest bang for the buck is. I will say, cost per acquisition varies. It's heavily dependent not only on how much we're spending, but also on economic factors. Like when there's a lot of market volatility, a lot of people are shopping and a lot of people are engaged in the market, which drives down everybody's CPA. It's also determined by competitive spend. So we actually find, when competitors spend, it helps boost the category overall because you have more eyeballs on the topic of investing. So CPA does vary, but we're in the business of driving it down. Any other questions? I'm waiting for a strike of thunder out there to like bring us outside.

All right. I was hoping to introduce Neesha, who has a lightning bolt of energy, but come on up, Neesha.

Thank you. Hello, everybody. I feel like we got the sleepy spot. I hope you're not sleepy because there's a show going on outside. But also, hopefully, you're as excited as we are. I'm sure you've heard from all of us and felt a little bit of that energy that we're all feeling about, kind of being in this new chapter and focusing on the growth of the firm and serving our clients. I've had the pleasure of meeting many of you over the years, and I'm sure when I was serving in my previous role as Chief Digital Officer, I talked about how excited I was, and that was all the momentum that we had around digital. And when I was in Retail, I talked about how excited I was about Retail. And I spent over a decade working with our RIAs on the Advisor Services side, and I was very excited about that. But I can honestly say that I am most excited about wealth and advice and what we can do for clients. And I think the reason why I have so much passion around this is because I think it's at the heart of what Schwab is. At the heart of what Schwab is, is we try to get clients to better outcomes. And it used to be, the way to get clients to better outcomes was to provide them access to basically make it accessible for them to get to the markets or for them to get to products. But more and more often these days, it's not enough to just provide them access. What they really need is more support. They need someone to talk to. They need some help. They need some guidance. And sometimes they need holistic wealth management. And I think we are perfectly positioned to be able to offer that because of what we've done over the years and the credibility that we've built. So today, I'm going to talk a little bit about what is Wealth and Advice Solutions, because everyone defines this differently, so I want to level set for all of you. And then I want to talk a little bit about the momentum that we're seeing. You heard a little bit of this today, but the momentum that we're seeing from investors and advisors around how they leverage the capabilities that we offer. And then finally, I'm going to spend some time talking about our strategy, how are we going to capitalize on this opportunity and what are we focused on in terms of priorities. So let's start with the level set. So Wealth and Advice Solutions, there's really 3 main parts of this organization in this area that I'm going to be talking about today. The first is advice solutions. Think about this as managed investing, we've often called it. These are solutions where an investor is coming to us, looking for more than just a fund or equities. They're actually looking for a solution. And Schwab Wealth Advisory that you've heard about is an example of this, but even Schwab Intelligent Portfolios or our proprietary separately managed accounts would fall into this category. The second column here, I call these our hidden gems of Schwab. These are our wealth management specialists. These are the folks who have deep expertise in very specific areas that are relevant to wealth management. Sometimes that's about the portfolio. But often, it's outside the portfolio, so CPAs, [ JVs ], CFPs, all the various expertise that you need to be able to support wealth management needs, whether it's a tax conversation -- tax planning conversation or income planning conversations or equity comp conversation. We have these experts and these specialists that serve our clients every day. And then finally, last but not least, our third-party products. And these are the vast group of asset managers that we work with every day that help us stock the shelves and make sure that we have really compelling products and solutions that serve, again, both our Retail clients as well as our RIA clients. And when you total all this up, it's a significant part of our business, over $4 trillion of our AUM and over $4 billion of our revenue over the last 12 months. And what you heard a little bit about is the momentum that we have in this area. And I'll talk a little bit about the trends that we're seeing and why we think that this momentum is going to continue, but it's great to be able to talk what we've seen just over the last 12 months. Some of this, you've heard, is fueled by Ameritrade and those clients that are becoming aware of all we can offer to Schwab. But it really is more -- fueled more fundamentally by the broad trend we see, that [ bull ] market for advice that you've been hearing about all day. So the left side of this slide is really what we've seen in the first quarter, and these are holistic wealth management solutions. So holistic meaning beyond the portfolio, includes financial planning, often income planning, whatever a client needs with regards to support for holistic wealth management. And both of our offers here had record first quarters after a very strong 2023. Together, this constitutes almost $450 billion of that $600 billion in managed investing assets that you heard about. But what I'm most excited about is what's at the bottom of those columns. Look at those CPS scores. Those are some of the best CPS scores in the entire company. And these are clients who are paying for advice and wanting more and more that deepening of relationship with Schwab. It's a really compelling story when we see the type of growth and enthusiasm we're seeing from clients with regards to those holistic wealth management solutions. But it's also really exciting when we think about what our scale and our business model allows us to do because there are folks out there who want to step into advice or who have very specific needs about or ideas about what advice means to them. And because of our scale and our capabilities, we're able to provide these types of services in unbundled ways as well. And examples of those, sometimes that looks like an investment solution. So Wasmer Schroeder, Schwab Personalized Indexing, which is our direct indexing solution; they also had record first quarters. And both of those were also -- those are solutions where an investor is looking for or an advisor is looking for a specialized investment management solution. Maybe not holistic wealth management, but a specialized solution. The Tax, Trust and Estate team, this is a team of those wealth management specialists that I pointed out on the prior slide. They've seen an over 100% increase in engagement year-over-year. As clients are understanding what Schwab can do in these areas, we're continuing to see more and more demand. And again, that 97% easy score. When a client engages with one of these professionals, and I've done it myself many times, you kind of often walk away inspired, awed, "Oh, wow, you solved the question for me. You validated something. You helped something in a broader way." It's a really compelling interaction and a great way for us, for example, to not only fuel the path towards advice but also capture more of that share of wallet in the NNA that you heard throughout the day. Stacy already touched on Schwab investing themes, but I think of that as almost a pre-advice experience. So when we think about investors and that huge population of self-directed investors that we have out there, how do we help them understand what Schwab can do? And sometimes, the way they step into that is through something like Schwab investing themes or a lot of the digital financial planning that we offer. And then finally, Schwab Intelligent Portfolios, our robo advice, our automated investing offer, which is now over $80 billion in AUM and again, with a very strong CPS score. We continue to attract investors of all shapes and sizes to that offer. So as you can see, a really strong first quarter after a really strong 2023. But we know that this momentum is here to last. And the reason is because we see these macro trends that are fueling the growth. And I'm going to spend a few minutes on those. You heard a lot about that growth in the demand for advice, that bull market for advice. But I think it's important to understand that's not just coming from a certain demographic of investors, it's not just coming from older clients who are now deciding that they're at a life stage that they want advice. Actually, some of the most interesting stats are around Gen Z and millennial investors, who are saying that their lives are complicated enough that they're ready for financial advice. The other thing you heard a little bit about, I think, from Rick this morning, was around willingness to pay. And one of the things that when we were often considering is willingness to [ pay ] within the Schwab client base. As you can see here, if you look across the industry, 64% of affluent investors are willing to pay for advice. If you take that within the Schwab house, it comes down to 37%, the 37% when we're only serving 5% of those households. One of the questions I often got was, "Well, what about the Ameritrade client base? They're not going to be -- they're traders. They're not going to be nearly as engaged," and James touched on this earlier. Well, actually, they're quite engaged. That willingness to pay is 31% with the Ameritrade audience. So very similar to the Schwab audience. And that's why we're so excited about this opportunity with those clients as well. Another trend on this slide is around the demand for holistic advice. You saw that stat around the Tax, Trust and Estate team. We see that kind of momentum with all of those specialty teams. And more and more clients are looking for that holistic wealth management. The one-stop shop experience that we can offer at Schwab is differentiating, especially when we can do it at the value and with the service that we can provide here. Alternatives has already been a popular topic. I won't spend much time there, except to say, we see this demand across the entire company. So our Advisor Services, RIAs are leveraging alts more and more often. We're working to improve those capabilities for them. And then on the Retail side, you heard about our launch that's coming up this year around retail alternative investments, which will bring alternative investments to qualified investors over $5 million investors, self-directed, and then we'll also be introducing that into Schwab Wealth Advisory. So really kind of making sure that we're taking advantage of this trend that we see in the marketplace and really serving the needs that our clients have for diversifying their investment, especially given all the wealth creation in the private markets. And then I want to spend just a second on this last trend. Bernie talked quite a bit about outsourcing. I think it was one of his [ trends ] as well. But the RIA community is really looking increasingly to that ecosystem that you saw on his slides as to how are they going to scale and grow their platform. And for us, our job is to continue to work with all those -- that ecosystem of providers, but also continue to look at how can we support within Schwab, within our custody platform. An outsourcing portfolio manager wasn't really a popular thing if you talk to those RIAs 5, 10 years ago. It's really changing in that industry with regards to looking to Schwab to provide more. And that's a trend that we can help support those RIAs for sure. So when you wrap that momentum and all those trends together, I hope you get a sense of why we're so excited about the size of this opportunity. On the left side of the slide here is our asset management fee revenue. And you can see that it's grown significantly over the last 5 years. But what I call out for you is if you look at the breakdown between the fee-based advice, so think about that managed investing bucket that I highlighted on the first slide relative to the rest of that AMAF revenue. And you can see not only is it growing faster, but it delivers a much higher ROCA for the firm. And again, a much higher ROCA but highly competitive. We're not going to be charging fees that don't feel like Schwab. These are really competitive products, really compelling and still really attractive from a win-win monetization perspective. The middle column here, I'm highlighting some of the Ameritrade momentum, and my colleagues really stole my thunder today. But anyway, some of the Ameritrade momentum, we're seeing really strong engagement from those Ameritrade financial consultants as well as the investors. And just to give you a little bit of behind the scenes, a financial consultant who came from Ameritrade, they had none of this capability. And so they're coming into Schwab and we spend quite a bit of time helping them understand what are all the capabilities that we have at Schwab. I was actually in a branch just this week in Los Angeles and one of the Ameritrade FCs said, "Yes, I've learned about Schwab Wealth Advisory. And when I [ sat on ] again, learned about the third time, third time, oh my God, I got it. And now every client, I'm so excited about being able to bring this offer to our clients." So it sometimes takes those financial consultants a minute, but you can tell by those great flows, 30% of our [ SWA ] flows in the first quarter were from those Ameritrade clients. So you can see that, that momentum is starting to build. And we're just getting started. So this chart shows you've heard Retail investable assets, we just kind of pulled out the advice portion of those Retail investable assets. And if you think about that 600 billion in managed investing relative to the size in the marketplace, we not only have a lot of opportunity within the Schwab and Ameritrade client base, we have a lot of opportunity outside of it as well. So what are we going to do about it? Let's talk about how we're going to capitalize on this opportunity. So there's 4 key pillars here that I'll highlight, and I won't walk through all this, just in the interest of making sure we have some time for questions. But there are 4 key pillars here. First of all, we need to continue to make our offers better in terms of making sure we're filling competitive gaps, so alternative investments is one of the ones that we're talking about here, and I'll spend a minute on that; but as well as just continuing to enhance and bring our human expertise and digital capabilities together in even more powerful ways. So Schwab Wealth Advisory, this is one of our key areas of investment this year and has been and will be again next year. What we're doing with Schwab Wealth Advisory is we're introducing a discretionary option, so clients will be able to choose whether they want nondiscretionary or discretionary, based on their needs. And we have a lot of clients, by the way, who currently use Schwab Wealth Advisory and say to us, "You know, I'm ready. Like you can take this now, like I don't need a nondiscretionary option." So it's a really great -- it's going to be a great solution for them as well as new clients, who really are ready to have a more kind of hands-off type experience. We're also going to be introducing alternative investments in Schwab Wealth Advisory. So Schwab Wealth Advisory will have the same kind of capability that any competitive wealth management offering would have. And then finally, bringing more digital capabilities into the experience. This is an area, I think, as a whole industry, when you think about wealth management, there's opportunities to bring more digital capabilities into that experience to make it really even more compelling for an investor. And that's something we're really focused on with Schwab Wealth Advisory. Retail alternative investments. So we're introducing Retail alternative investments later this year in phases. Again, qualified investors, over 5 million plus. It will be a curated shelf across the major categories: private equity, private credit, hedge fund and so on. And Jonathan, I think, talked about this. There will be a dedicated specialized team of alts experts, who will be supporting the financial consultant and the client to, first of all, qualify the investor, but also talk to them about the specific products that are on the shelf. As you can imagine, given the distribution opportunity that our alts manager partners out there see, we have a lot of demand from managers who want to participate in this offer. So we are really working hard to make sure we have a curated shelf that we're really kind of working through the process as we launch this to make sure that we're managing risks for our clients and that they're really [ educated ] around alternatives and what this experience is going to be because it is different from investing as in a mutual fund or an equity as they may be more used to. So that is rolling out later this year. And then, of course, continuing to look at capabilities around Tax, Trust and Estate. This is a really exciting area, I think, where some of the technologies around Gen AI and some of the things we can do will be really exciting to be able to kind of create scale in areas that maybe haven't traditionally been as scalable when you think about these outside of the portfolio kind of services of wealth management. Second column is streamlining the path to advice. So we have to have great offers. And then we have to make it easy for clients to get to advice. Some of this is like really tactical, right, making the enrollment easier, making sure that clients can kind of transition, one click kind of experiences that we really need to focus on, and we've made lots and lots of progress there. But also tax-aware transition. So we stood up a team last year called the transition support team, and that team is really focused on making sure that clients can get access to kind of the type of experience to help them understand what the tax implications will be of a transition to an offer. It's been very popular with Schwab Personalized Indexing. Supercharging our professionals, that is all about our talent. If you haven't thought -- heard this enough today, our people are really our secret sauce, and it couldn't be more true it comes to advice. Our expertise is critical. Technology plays a huge role, but our expertise is critical. But we can provide them a lot more capability in terms of modernizing the platforms that they're leveraging and again, leveraging some of the really modern technology to kind of help them scale and be able to serve our clients even better. And then finally, being able to support that growth and scale of the RIA community that we continue to serve. Lots of different ways that we do this through like institutional no transaction fee platform that we launched last year, we're actually going to be expanding it. The Model Market Center, which is really an opportunity for advisors to actually be able to leverage models right on our platform, and we're using the Ameritrade to enable that. And then again, alternative investments. Our RIAs are also asking for more and more when it comes to alternative investments. So we are working on operational improvements, making, again, enrollment easier, making reporting easier and really trying to improve that experience overall. So lots going on, but I hope that you get a sense of the magnitude of the investment and the impact that we can have and why we see such a big opportunity. At the end of the day, we truly believe that we are in the best position to win in this marketplace. And if you think about when an investor, that population investors, whether they work at Schwab or not, when they're thinking about who do they take advice from, what's the first thing they're going to think about? They're going to think about, "Do I trust this provider? Is this a provider that has integrity? Is this a provider that's going to be able to support my needs as I grow through time? Is this a provider that will give me great value?" Actually one of the reasons why investors don't get professional advice, actually the #2 reason, is because they're not sure it's worth it. So we know we're in a great position. We have this really differentiated value proposition, and we can grow with advisors through -- investors throughout the advice journey. So I'm going to pause there and open it up for questions.

Thank you. Just a quick question on the offering advice in wealth management. You walked through it, the different pieces seem really interesting and compelling. But it does seem somewhat complex or at least varied. And I guess I'm wondering, what challenges, if any, that might present, from a client perspective, making them aware of all these different options without maybe overwhelming or confusing them?

Yes. Well, I mean, that's -- I think, we were talking about that with the mobile app. One of challenges, we offer so much, right? We have so many different experiences, so many different capabilities. How do we curate that and bring that into the eyes of the investor in the right way? First of all, I would say, our financial consultants play a big role on that. And that is when I mentioned like, for example, our Ameritrade financial consultants and helping them understand what these offers are and how to position these offers, what is the value for the client. So our financial consultants play a really big role in that. But beyond that, I think there's a lot of things. Stacy talked about marketing and some of the things we're doing in marketing, around being able to target better and trying to make sure we're getting the right messages to the client. Actually, in the Ameritrade onboarding, so when our Ameritrade clients onboarded into Schwab, they had an onboarding experience. And that's another opportunity for us to position the types of investments that we are -- investment solutions or advice solutions that we think will be most compelling. So it's a multipronged approach that we're taking to make sure that we get the right solution in front of the right client. But I think that is something that we're going to continue to work on because it is -- we have a lot. And I think one of our biggest opportunities is our clients don't know all the things that we can do for them. And that's why when we bring attention to something, we start seeing that momentum.

Mike Cyprys of Morgan Stanley. I wanted to come back to the outsourcing trend. That's come up a number of times today. I think you mentioned 18% of RIAs outsourced all or a portion of their portfolio. Is that to you guys or to others? Where do you see that rising to as you look out over the next 5 years? What are some of the steps you're taking to sort of increase that? And what are the economics to Schwab?

Yes, it's a great point. That is an industry-wide stat. So that's not 18% outsourcing to us. That's out 18% who are now outsourcing either a portion or all of their investment management, their portfolio management. I think overall -- I mean, it used to be, again, that the RIAs have thought of that as their secret sauce, that they had to develop those portfolios. And they might use separate account managers, but they were certainly not using kind of models and some of these more holistic solutions. That's what we're seeing changing. And when we -- I mean, the Model Market Center, after we kind of brought it over from Ameritrade, put it on the Schwab platform, we've seen incredible engagement from our [ blue ] -- our Schwab advisers in -- with the that platform. So we see a lot of engagement. The fact of the matter is there are other solutions out in the marketplace that I think -- kind of similar to, I think, an analogy Stacy was using. The more solutions that are out there, the more advisors are actually thinking about, "Oh, well, maybe I could outsource this." And that trend towards model management and being able to use models, I think, is continuing to grow because there are a lot of other providers in that ecosystem, the [ tamps ], for example, that are actually providing some of this as well. So we see a big to participate in there, and we do it in a Schwab way. We also have, obviously, very strong relationships with asset managers who very much want to be a part of that ecosystem. And then -- and similar to the relationships that we have, for example, with the institutional no transaction fee platform, we have certain asset managers that we partner even more closely with that we have the opportunity to do a similar -- have to take a similar approach with Model Market Centers. So there are attractive economics that come along with that kind of a relationship that we have with those asset managers. Neesha, here. Let's do one. Right here. Let's do -- what we'll do -- time running -- I think, for squeezing one final question.

Patrick Moley at Piper Sandler. Could you characterize the opportunity amongst the Ameritrade clients that have recently come over and converted between maybe those that are having exposure to wealth and advice for the first time versus those that maybe have preexisting advice relationships?

Yes. I mean we're seeing momentum in both areas. So we are seeing investors who actually didn't have assets held away or wealth management relationship held away. They just were a trader. And often, when a client decides to leverage an advice solution, it's because of a life event. They had a child, they got married, they -- something happened in their family, and they decided to leverage some sort of advice solution or just get more help. And so we certainly are seeing that. And you see that in some of those Schwab Wealth Advisory metrics for sure. But we are also seeing the consolidation effect, where you have an investor who's a -- really liked Ameritrade, they're now happy with Schwab, they're getting comfortable with the platform. And now their Ameritrade -- the management consultant or their Schwab financial consultant has engaged them and talked to them about, "Oh, you could now leverage, let's say, Wasmer Schroeder, think about what's going on with fixed income in the markets, and this might be a time for you to take advantage of that." So we are seeing both of those dynamics play out, and I think we're going to continue to. So I am out of time, and I'm excited now because I get to introduce, let's say, I'll say my neighbor because not only do Peter and I live close together, but we sit next to each other. And close friend, and I'm going to miss him a lot, but Peter Crawford, our Chief Financial Officer.

We are in the home stretch here. So thank you all for sitting here for the last several hours and out on the web. I do -- before I get started, I do want to just briefly touch on the announcement we made last week. And from my perspective, which is working at Schwab last nearly 23 years and serving as CFO over the last 7 years has just been a tremendous privilege. I mean there's been no more rewarding or satisfying experience in my career than working along thousands of just incredibly dedicated, talented individuals to really advance our mission and to serve more clients and serve them better. While I'm excited about my next chapter, I really want to make sure that we did this transition at a time when it was good for Schwab and that we made the transition to somebody who would be good for Schwab. Walt talked about why this is a great time to make this transition. I think my colleagues did a great job over the last several hours talking about the momentum we have and our confidence and our optimism. But I also want to say how I've gotten to know Mike over the last several months. He is absolutely the right person to take up the mantle and lead the finance function, not only with his talent and his experience, but also with his alignment with our culture and our values. I think you're all going to really enjoy getting to know him. But I'm not leaving yet. So this is -- so we'll have at least another opportunity to hear from me in the months ahead. So let's get into it. So over the last several hours, you've heard from my colleagues about how and where we're winning in the market, about the enhancements we've made to our value proposition, our offer for clients and our business, about the substantial opportunities we have to better serve our clients and grow and also about our strategy and our game plan for executing on those opportunities. So my time, I want to talk about our financial formula, sort of financial strategy, if you will, that really supports our overall corporate strategy. And it's grounded, of course, as everything at Schwab is, in our relentless focus on clients. And there's 4 broad pillars or principles that should look familiar to all of you who've followed the company for a long time. Our ability to gather assets, our ability to convert that asset growth into revenue growth, the discipline with which we manage expenses and then our opportunity through our business model to return capital to stockholders through the cycle over time. Now over time, the tactics have changed, but the principles really haven't changed. And if you look over the last couple of decades, through a lot of change and some challenges, areas of prime headwinds, tailwinds, the decline of equity commissions to 0. This financial formula has not only helped us win in the market, but has produced very solid financial performance as well, 12% growth in total client assets, 9% annual increase in revenue and 11% annualized stockholder return. Now it starts, of course, with our focus on clients and our ability to gather assets. When you combine the power of our Through Clients' Eyes strategy, with our no trade-offs positioning that Walt talked about, our leading position in the 2 fastest-growing segments in Wealth Management, that hasn't helped us emerge from a relatively crowded group of competitors 10 years ago to the clear leader today among publicly traded companies in Wealth Management. Now we have a proven track record of being able to convert that asset growth into revenue growth through our business model, the combined banking, brokerage and asset management. Now we, of course, report our revenue based on the 3 primary components: net interest revenue, asset management admin fees and trading. But I think another interesting way to think about it is based on the driver of that revenue. So there's always been a large component of our revenue, which has been a function of our clients' cash. Are there cash they have on our balance sheet or the cash that may be off our balance sheet in money funds? Not of course, it's heavily influenced by the level of interest rates. There's a second component, which is really a function of client engagement in the markets. That's things like trading, margin utilization and securities lending activity. And despite equity commissions going to 0, you can see this actually, this component of our revenues has become even more important following the acquisition of Ameritrade. Then there's a third component of our revenue, which is more recurring fee-based revenue, which is influenced by equity market valuations as well as our clients' preference for various solutions. Now today, you look at this, you say this sort of 3-legged stool is certainly very strong and resilient. And Walter got asked this question earlier, I would say, we never optimized. Never just seek to optimize to around an ideal revenue mix. We optimize around the client. That's our focus. I get asked this question a lot. We don't [indiscernible] the client. But at the same time, what I'd say is, if we think about the growth opportunities we have, well, certainly opportunities to grow. Net interest revenue and cash-based revenue as we add more clients and trading revenue, as James talked about, but on a relative basis, very, very bullish on the opportunity to add more of this recurring fee-based revenue for all the reasons that Neesha talked about. And that will create an even more resilient, even more diversified, all-weather business model. Now our cost structure is a very important, competitive advantage. In an industry where pricing matters, the firm that has a low-cost structure is structurally advantaged. And we have a commitment to continuously press that advantage. And the way you do that is by growing, allowing us to spread our fixed costs over an ever-increasing client base, by operating with a lot of discipline and how we manage expenses on ongoing basis and by making investments in driving greater efficiency throughout our business. It's not about constraining expenses to the greatest extent possible, rather it's about finding a balance between managing expenses in the near term and making appropriate investments that will drive long-term profitable growth and always allow us to continuously improve the client experience. Now what that means in practical terms, is that when we have tailwinds behind us, we tend to lean more in some of those longer-term investments. And when we're facing more headwinds, we tend to pull back, but never in a way that jeopardizes the leading client experience our clients have come to expect from us. And you can see over time -- in different periods of time, we've had more or less revenue growth, more or less expense growth. But through this period of time, we've been able to drive down our expense on client assets and increase our margins. So capital return is a very important part of our financial formula. At the same time, our #1 priority from a capital standpoint is to support the growth of our business. So we have, as I think you all know, we have paused our stock buyback as we seek to build our capital levels inclusive of AOCI back to our operating objective. Now the operating objective going forward is going to increase on a consolidated basis by about 25 basis points. So similar to kind of what we have maybe 5, 6 years ago. And that's a level that we're confident is sufficient to both support a decrease in interest rates as we saw in 2008 and 2020 that leads to a surge of client cash on the balance sheet that the capital is needed to support as well as a dramatic increase in interest rates we saw, of course, more recently in '22 and '23 and the impact that has on AOCI. Now we've intentionally designed our balance sheet strategy to support our overall finance strategy, to support our overall business strategy. We take very little credit risk. That's a function of focusing our lending on our existing brokerage clients and ensuring that virtually all of our loans are backed either by our clients' homes or securities that we custody. We align our duration of our assets with the duration of our liabilities. And we focus our investing activity on securities that have very, very little credit risk. Most investments are backed by the government that have a lot of liquidity and present relatively little convexity risk. Now going forward, as we seek to manage our capital levels inclusive of AOCI, we're going to be mindful of the size and duration of our available-for-sale portfolio. And what that means in practical terms is we'll size that AFS portfolio based off the level of our clients' investment cash, the rate-sensitive cash that's sitting on our balance sheet. So in a low-rate environment, when more of that investment cash comes on to our balance sheet, the AFS portfolio will be somewhat larger. In a higher rate environment as that investment cash gets deployed off our balance sheet into other solutions, the AFS portfolio will be somewhat shorter. And as we manage our AOCI, potential AOCI variability that could come from higher rates, we're going to throttle the, if you will, the duration of that AFS portfolio based on the size of that portfolio. So again, when the AFS portfolio is larger, we'll shorten up that duration, we use those inflows to shore up the duration. And as the AFS portfolio gets smaller, we have the opportunity to have that portfolio extend a bit. So going forward, it's really about optimization. It's about, of course, optimizing around the client, but optimizing our duration in light of revenue stability, OCI variability as well as minimizing the usage of supplemental borrowing when interest rates increase. And it's also about optimizing the -- where our clients' cash is between the banks, the broker-dealer, the IDA agreement with TD Bank. But again, focus on our clients, focusing on our clients' behavior, including, of course, their utilization margin. Now we said previously that Schwab benefits from a high-for-longer interest rate scenario. But even if interest rates decline significantly from current levels as the most recent dot plots would indicate and as the market expects, we continue to see a path to our net interest margin approaching 3% by the end of 2025. And that's not like a cap, right? As we reinvest, as the portfolio matures and we get pay down from the portfolio, much of which was invested when interest rates were 300-plus basis points below where they are today, that creates a long-term NIM tailwind that we are excited to capitalize on. So I want to talk about 2024. We'll talk more about 2024 as we always do at our July business update, but I do want to offer a few thoughts in the meantime. So 2024 has started off much better than we had expected at the beginning of the year, much better than we assumed in our financial plan at the beginning of the year with higher transactional cash deposits, strong equity market performance, strong growth in margin lending as well and strong trading. And so given that, we would now expect our exit velocity, if you will, at the end of the year to be on the upper end of the range that we previously communicated. But there are a couple of dynamics that I want to call your attention to that have an influence over our near term, I'll even say, our very near-term financial performance, but we really don't have any meaningful impact in terms of longer-term financial story. And the first is, while we are definitely taking steps and controlling the expenses that are within our control, there are some onetime unexpected expense items, things like the FDIC surcharge to the surcharge that we accrued in Q1 or our bonus funding, which is a function of our performance relative to the financial plan that the board is presenting in the year, but that resets back to 100% in the following year. And there's also some pass-through expenses like this thing called the SEC 31 fee. It's a pass-through expense, but because of accounting rules, it shows up in both revenue and expense has no impact on our bottom line performance. And so given these items, we would now expect our expenses to be -- to finish the year somewhat above the flattish level that we communicated back in January, assuming these trends continue. But again, those items are not things we would expect to influence our bottom line performance in '25 and beyond. And the second dynamic is with the interest rate-sensitive client cash realignment activity dwindling and our tax season basically behind us, we would expect the path of transactional cash to be heavily influenced by the level and mix of asset gathering as well as our clients' preference or allocation engagement in the equity markets. Now in May, transactional cash is down about 2%. Most of that happened in the first part of the month as we had sort of residual impact from tax season. And given that decline in transactional cash in May, combined with the decline in transactional cash that we saw at the beginning of the year, we'd expect relatively modest NIM expansion from Q1 to Q2. When you put all those dynamics together, I think, it's unlikely that our Q2 adjusted EPS will be higher than where we finished Q1. But I want to emphasize that as we look at Q4, we continue to see our exit rate, our adjusted EPS exiting Q4 going into 2025, on the upper end of the range that we talked about. So this we described back in January, described this as a transitional year. I think it's safe to say the transition is happening faster than we had expected even just a couple of months ago. And as the headwinds that we've been facing continue to abate and the fog that has been obscuring our financial performance clears, we see the potential for sequential revenue earnings' growth through '25 and, of course, over the years ahead. And that paves the way for our long-term financial formula to reassert itself. I won't go through all the bullets on here in the interest of time. I think my colleagues have talked about a lot of this. But when you put all this together, what you see is a company with the ability and to demonstrate the track record of strong organic growth, best-in-class profitability and substantial capital return through the cycle, a combination that we think is very unique and very, very powerful. So with that, I've got some time for some Q&A. But before we do Q&A or as we do Q&A, I do want to introduce you to Mike Verdeschi. Mike is our now Deputy CFO and will become CFO. And as I said, as I've gotten to know him, I think you will come to see in him someone who is as committed as all of us to interact with you all towards communicating with clarity and with candor.

And I'm going to do something, I don't usually get to do in these forums. I'm actually going to ask the first question. And I'm going to break our rules. And I'm asking a 2-part question. And Mike, maybe you can just tell us briefly about your background. And then I think what the investment community may want to know also is what's the plan for you to interact with the -- get to know something about the investment community?

Great. Peter, first of all, thank you very much for inviting me up here to share a few words today. And look, I would say many may know me already, but I had spent 3-plus decades at Citi in a variety of roles. And very early on in my career, I was in the banking business. I then moved on to the markets business. And that included an assignment overseas in Japan, where I was the Head of Markets and Country Treasurer for Citibank, Japan. At that point in my career, I had spent all of my time on the institutional side of the firm. And then coming back to New York, I joined the consumer bank in order to just expand my experiences there at the firm. From that assignment, I did a few other things, including centralizing a lot of the treasury activities across the firm at the time. I moved on to become the Chief Investment Officer. And then in 2017, I was appointed the Treasurer of the Citi Group, where I got to oversee the firm's balance sheet. So in many ways, from a career perspective, I got to experience the full breadth of Citi. And of course, with the industry continuing to evolve, I wanted to explore that next great opportunity. I'm absolutely thrilled to have joined Schwab. Thank you for the opportunity. I thank the management team for this great opportunity. There's so much to be excited about. When I hear even today from the management team, this is a firm that is really well positioned in this wealth space, a terrific management team. And what I'm most excited about is that comprehensive commitment to clients. And that is something to be very excited about, and I'm very happy to be a part of that. And so Peter, to your next question around the analyst community, look, I've always enjoyed the dialogue with the analysts. That's something I've done in the past. I look forward to doing it again. In addition to engaging in those business reviews, it's really important to get out on the road. So I'm looking forward to getting out on the road, meeting with many of you, and I look forward to doing that in partnership with you, Peter. So looking forward to that.

Thanks, Mike. So now we have some time for some questions from the audience. And given the fact this is Mike's third day on the job, I think I'll probably tend to take in the questions rather than Mike, but please fire away.

Kyle Voigt from KBW. So when speaking about revenue mix earlier, Walt mentioned potentially being able to capture some of the spread income economics without necessarily doing so on balance sheet. Obviously, you have the IDA agreement, which I think is moving towards a $60 billion floor. And I think there's some flexibility to keep up the $90 billion off balance sheet there. I guess does that contract allow you to onboard more third-party suite relationships? And how should we think about the optimal on balance sheet versus off-balance sheet deposit mix in the long run?

So the IDA agreement with TD Bank allows for us to enter a steady state to flex those deposits in the IDA between basically $60 billion and $90 billion. There's nothing exclusive about the agreement as long as we meet that. In terms of thinking about the optimal on balance sheet versus off-balance sheet approach, what I'd say is it's really about, we always want to figure out better ways to serve our clients. And so there are certainly some programs out there that allow you to offer extended FDIC coverage. And of course, that's something we want to take a look at. It's always -- we're always going to want to look at ways to further optimize capital-adjusted returns. The first priority is the most important priority. But the second one certainly is important as well. And so looking at a number of different ideas, it's very much more of the idea stage today versus anything that we're in close compared to discuss in any more detail.

Brennan Hawken, UBS. Peter, congrats on your retirement. Mike, look forward to working together. Could you help us think about the potential for capital returns? So you talked about how we're moving it back to the old range, I think actually which is clear. But we have the potential for a continued shrinking balance sheet here, '24, probably much to '25. We also have AOCI accretion. And so the potential for capital generation really is, from my perspective, seems pretty powerful. Can you talk about how we should be thinking about it? And how more importantly, you all are thinking about managing the capital base going forward?

I'll just say, there's 2 things you talked about is also just the organic capital formation that we get through the strong earnings that we're producing as well. So I would say there's nothing new to share on this relative to what we've shared previously. What I'd say is once our adjusted Tier 1 leverage ratio gets back to that operating objective -- new operating objective, again 25 basis points higher than what it's been previously, then the discussion of capital return becomes more of a live conversation, if you will. At the same time, we want to think about alternative uses, right? When I think about stock buybacks, we want to think about are there preferreds that we may want to redeem or call, either use like liquidity, things like our supplemental borrowings, which level of supplemental borrowings that we have outstanding, what's going on in the environment, what we see with the interest rate environment, what do we see with client activity. So it's a live conversation, but we've always said that our capital return philosophy is opportunistic, not -- we don't put on autopilot or anything like that. But through the cycle, it's a very, very important part of our financial formula.

Daniel Fannon, Jefferies. So I wanted to clarify a few things you said on the near term, Peter, just with regards to that you said Q2, not better than Q1 or Q2 higher. I just want to confirm what you said. And then in the context of the cash component, we're clearly towards the tail end, but maybe stepping back a bit from what we saw the trends earlier in the year. But as you think prospectively, do you think we're still talking about cash sorting and when we hear from you in July, it's the next update? And also just as we go through the end of the year, it seemed more like an expense dynamic that's a little bit higher than you thought and revenues may be a little bit the same. I just want to kind of clarify some of the dynamics of what's moved around.

Yes. So let me take that, I guess, in pieces. What I said was Q2 is unlikely to be higher than Q1. So the same are potentially lower. In terms of the client cash sorting, as we call the client cash realignment, hard to say when that sort of exactly when that inflection point is going to be. I certainly look forward to not talking about it on an earnings call or a business update, and I'm sure Mike will look forward to that as well as he steps into my role, but I can't say exactly when we're going to see that growth. It depends, as I mentioned, it depends on the pace and mix of asset gathering, how much cash or new accounts bringing in, and that offsets any residual client cash realignment activity that we have as well as cash that goes out for adviser fee payments, things like that. But we're clearly nearing the very end of the cycle and getting down to obviously a very low level. And I can't remember the third part of your question was. In terms of revenue versus expense, yes. We'll have -- July, we'll be able to share with you an updated, more fulsome view on 2024 in terms of updated -- the mathematic illustrations that we shared back in January and refresh those, which will include a conversation about both revenue and about expenses. We normally do that in July because we want to wait for some period of time for the year to unfold before we update that -- those illustrations and outlook for the year.

Thank you for, obviously, all the guidance that you've offered over the years. So although I know this is going to be your last at least public forum that you're going to be speaking at. The question I wanted to just unpack is really around the earnings' growth algorithm. It's not something you spend much time, at least speaking to at least in your prepared remarks, you did allude to at least some of the drivers of stable ROCA, revenue growth, high singles, and EPS growth or net income growth somewhere in that low-teens range. On a near-term basis, given the balance sheet is going to remix into higher-yielding securities, the revenue is expected to accelerate beyond 2024. How should we be thinking about operating leverage? And if you can maybe just give an update on that longer-term earnings' growth algorithm, if that's something we can underwrite? Or if there's potential for even acceleration just given higher ROCA, opportunities and maybe a little bit more potential to at least take advantage of your scale on the expense side?

Yes, absolutely. And I would say, as we think about the revenue algorithm going forward, I mean, you look at, we don't face the same degree of headwinds that we face on asset management fees, right, the trend from mutual fund one source to ETFs and the next funds, that's a much smaller trend than what we've -- which one sources a much smaller component of our overall revenue. Of course, equity commissions going to 0. Walt talked about that. We don't really see any significant areas of pricing compression. And so that's on the one side. And on the other side, we have the opportunity for significant revenue growth as we take the cash flows today that are earning 2-ish percent and pay down supplemental borrowing that -- which we're paying 5%. When you do the math on that, that's a significant growth of revenue. And so as we look forward, we want to continue to drive down our expense on client assets. We've talked about this before. Our expectation is through the cycle, sort of mid-digit expense growth. And so if you kind of do the math in terms of that substantial revenue growth in '25 and beyond, coupled with that level of expense growth is definitely the opportunity for some very significant operating leverage and very significant margin expansion and impact on our bottom line results as well.

And Peter, since you talked about that spread between what your securities portfolio is currently yielding as well as the high-cost liabilities, any addition to the fact that you're generating a lot of excess capital pretty quickly, just wanted to get a sense as to whether there's any appetite or willingness to reposition the securities portfolio, accelerate those pay-downs and cleanse the balance sheet a little bit sooner.

Yes. I mean again, I think our answer here will sound, I think pretty darn similar to what we said before, which is we certainly recognize the math, right? We got the math around if we take the loss onetime and what it does to our go for net interest revenue, revenue, earnings, et cetera, from repositioning the portfolio. At the same time, we're very confident that's something that's going to happen anyway. And so it's really about accelerating that. And what we're very mindful of is doing anything that risks any kind of erosion of client trust for the benefit of accelerating what will happen otherwise. And so I would say today, no appetite to do that. We're certainly always evaluating things, but nothing in the near term, I would say, looking at along those lines.

The risk of angering, Jeff, I'm going to ask a sort of 2 parter. One for Peter, one for Mike. It's not really a 2-parter. So Peter, the 2% expense growth, you flagged a couple of the items in there. How much of that 2% are onetime in nature? That might be helpful to understand. And then Mike, it'd be really interesting given some of the more recent dynamics within Schwab, and the balance sheet to hear your perspective on ALM and how you think might be an interesting framework or might be a different way in which you might approach.

I'm going to let Mike get off of the hook on the second part of it and say, he's 3 days in. So let's give him a little bit of time to sort of understand our structure and our liability structure before we put him on the spot to talk about the ALM, but let me talk about the expenses. I would say it's roughly 50-50, right? So it's roughly 50%, probably onetime items of 50%, broadly speaking, depends on level of client engagement because the SEC 31 fee is based on trading. So the more trades that we have, the higher that fee is, but broadly speaking, we talk about 50-50 they can. Important point is you look at 2025 and you think if you -- most of you are looking out multiple years, these are items that really don't have an impact in terms of the outer years financial performance. Maybe time for 1 more question, then I do want to make sure that we let you all of you trying to head off to the airport and get out of here before it gets too crazy outside. Well, then it's my pleasure to close. And I want to thank all of you, really appreciate you committing 5, 6 hours, whatever, I lost track, 6 hours I guess with us. Those of you who came here to Westlake, thank you for joining us in-person, those of you who have been joining us out on the web, thank you all for sitting in. We really appreciate you taking the opportunity to understand this company better. And hopefully, through the time that we spend today, you get a sense for our excitement, our confidence, our optimism about the future and also our satisfaction, gratification, if you will, around the trust our clients have with us and how well the business is performing, the momentum that we have. We look forward to speaking with you again in July and hope everyone has a safe trip back without too many delays. Thanks everyone.

Thank you.