Proud...But Most of All, Grateful

Proud, but most of all, grateful. That statement summarizes the sentiment at the core of my letter to stockholders in our company’s newly published Annual Report. This year I’m also sharing The Charles Schwab Corporation 2017 Annual Report directly with you, our followers on LinkedIn, and welcome you to take a look to learn more about our business, and the values and beliefs that drive how we operate our company.

This marks the 10th year I’ve had the honor of writing the letter that opens the report, and our gratitude for the trust that our stockholders, clients and employees have placed in us is why I begin this year’s letter with two simple words – Thank You. That trust fueled records in virtually every key area of our company’s performance in 2017 – a source, of course, of significant pride among Schwabbies. At the same time, none of us ever forget that our success relies directly on earning and maintaining the trust of those we serve. Among the principles guiding how we operate our company, first and foremost is our belief that trust is everything – earned over time and lost in an instant. 

Key to earning that trust, we believe, is ensuring investors never have to compromise on quality, service, security or satisfaction in exchange for price – which is why the past year at Schwab can best be summed up with one phrase: no trade-offs. We believe the fastest-emerging trend among all consumers is their unwillingness to accept trade-offs, whether that be in how they purchase household goods or financial services. At Schwab, we have focused relentlessly on eliminating trade-offs for investors for years. For example, who would have thought that a company like Schwab that began its life over 40 years ago as a no-frills discount broker would be recognized by J.D. Power as “Highest in Investor Satisfaction with Full Service Brokerage Firms” for three years in a row – 2016, 2017 and (just announced this week) 2018?* That is no trade-offs!

And yes, the concept of no trade-offs also extended to our stockholders in 2017– who benefited from our elimination of trade-offs because it fueled so much additional success. In 2017 we returned the equivalent of nearly 5% of our revenue to our clients in the form of price cuts, yet still grew revenue by 15% and earnings per share by 23%, and recorded a profit margin in excess of 42%. That is no trade-offs!

Our commitment to no trade-offs is rooted in our “Through Clients’ Eyes” strategy. Every day we ask ourselves how we can use our intimate knowledge of investing, saving and the markets to better serve our clients, to offer them better value and to serve them the way we would want to be served. This approach comes to life in our “Virtuous Cycle” (pictured above). Treating clients as we would want to be treated has fueled our tremendous growth in recent years. That growth has helped us build scale and grow profits, and, importantly it has also allowed us to share the benefits of that increasing scale with our clients in the form of great service, expanding investing solutions and lower pricing.

You can read my full Letter to Stockholders and our complete Annual Report including our 10-K and Proxy Statement here.

* Charles Schwab received the highest numerical score in the J.D. Power 2016-2018 Full Service Investor Satisfaction Study. The 2018 study was based on 4,419 total responses from 18 firms measuring opinions of investors who used full-service investment institutions, surveyed November-December 2017. Your experiences may vary. Visit jdpower.com.

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