The Charles Schwab Corporation: Investor Day Takeaways

Research evidence excerpt

The Charles Schwab Corporation: Investor Day Takeaways

enetrated, with Forge expanding access.

Management reiterated the sizable opportunity within alternatives and private markets,

particularly given low current penetration across both Retail and RIA channels. Management

cited survey data showing retail clients with $1M+ in assets expect to allocate roughly ~5% of

portfolios to alts over time, representing a meaningful growth opportunity, while only 35% of

advisors on platform have an alts exposure today, and average allocation to alts is about one

fourth of what the industry average is in the RIA space. With the Forge acquisition now closed,

SCHW can over a more complete set of capabilities, spanning private share liquidity, fund-based

access, and direct private company investing.

Trading activity becoming less tethered to volatility - a positive indicator for the secular

trend - as clients rotate across asset classes. Management highlighted that trading

engagement has remained elevated even as headline market volatility - historically a key driver

of spikes in trading activity - has moved lower, and that the correlation between volatility and

trading activity has been declining. Instead, client behavior increasingly reflects rotation across

asset classes as customers continue to trade in different asset classes as opposed to stepping

away from the market (i.e., traders moved from trading metals early in the year to energy

products more recently amid geopolitical driven volatility), as well as a simple but broad pick

up in engagement. Management continues to believe that the growth in trading activity is more

structural rather than cyclical and believes engagement levels can be sustained through

different market regimes, even as underlying volatility ebbs and flows.