Charles Schwab is a publicly traded brokerage and financial services company that lets individuals and businesses buy and sell stocks, bonds, mutual funds, and other investments

Charles Schwab Corporation is the parent company of Charles Schwab, Inc., the brokerage firm most people know by name. The corporation itself does not hold customer accounts — the subsidiary does. When you open a Schwab account, you are dealing with Charles Schwab, Inc., but the profits and decisions flow up to Charles Schwab Corporation, which is listed on the New York Stock Exchange under the ticker symbol SCHW.

The company was founded in 1971 by Charles R. Schwab as a discount brokerage. For decades it operated independently. In 2019, Charles Schwab Corporation acquired TD Ameritrade, one of its largest competitors, and in 2020 it acquired Ameritrade's parent company, TD Ameritrade Holding Corporation. This made Schwab the largest retail brokerage in the United States by account count.

Key Takeaways

  • Charles Schwab Corporation owns Charles Schwab, Inc., the brokerage where you open an account to trade stocks and bonds.
  • The company is publicly traded, meaning you can buy shares of it yourself through any brokerage, including Schwab.
  • Schwab makes money primarily through spreads on stock trades, interest earned on customer cash balances, and advisory fees for managed accounts.
  • The company acquired TD Ameritrade in 2019 and 2020, consolidating two of the largest retail brokerages under one parent company.

How Schwab makes money

Charles Schwab does not charge per-trade commissions on stocks and ETFs the way brokerages did in the 1980s and 1990s. Instead, it generates revenue through several channels. When you hold cash in a Schwab account, the company earns interest on that cash and keeps a portion of it. When you buy or sell a stock, Schwab earns a small spread — the difference between the bid price and the ask price — though this is typically invisible to you.

For customers who use Schwab's advisory services — where a financial advisor manages your portfolio — the company charges a percentage of assets under management, usually between 0.25% and 1.5% per year depending on the service level. Schwab also earns fees from margin accounts, where customers borrow money to buy securities, and from options trading. Mutual fund companies pay Schwab for shelf space and customer access, similar to how grocery stores charge for premium shelf placement.

Who owns Charles Schwab Corporation

Charles Schwab Corporation is owned by its shareholders. The largest shareholders are typically institutional investors — pension funds, mutual funds, and investment firms that hold millions of shares. As of recent years, the company's founder Charles R. Schwab and his family have retained a significant stake, though they no longer control the company outright.

You can own shares of Charles Schwab Corporation yourself. Because it trades publicly on the New York Stock Exchange, anyone with a brokerage account can purchase SCHW stock. Owning shares makes you a partial owner of the company, though your voting power depends on how many shares you hold relative to other shareholders.

What services Schwab offers beyond basic trading

Charles Schwab, Inc. offers more than just a platform to buy and sell stocks. The company provides retirement accounts (IRAs, SEP-IRAs, Solo 401(k)s), checking and savings accounts with debit cards, margin lending, options trading, and futures trading. Schwab also offers robo-advisory services through its Schwab Intelligent Portfolios product, where an algorithm builds and rebalances a portfolio based on your goals and risk tolerance.

For customers with larger account balances, Schwab offers access to financial advisors who can provide personalized guidance. The company also provides research tools, educational content, and market data through its platform. Many of these services are included with a basic brokerage account at no additional cost, while others charge fees based on the service or account type.

The difference between the corporation and the brokerage

The distinction between Charles Schwab Corporation and Charles Schwab, Inc. matters mainly for legal and financial reporting purposes. When Schwab announces earnings or stock performance, it is reporting on the corporation. When you log into your account and see your holdings, you are using the brokerage subsidiary. The corporation owns the brokerage, sets strategy, and manages acquisitions. The brokerage handles day-to-day customer service and trading operations.

This structure is common among large financial services companies. It allows the parent corporation to own multiple subsidiaries — in Schwab's case, Charles Schwab, Inc. and the integrated TD Ameritrade operations — and manage them as a single enterprise while keeping their regulatory licenses and customer accounts separate.

Regulatory oversight of Schwab

Charles Schwab, Inc. is regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). These agencies set rules about how the brokerage can operate, what disclosures it must make to customers, and how it must handle customer funds. The SEC requires brokerages to keep customer securities and cash in segregated accounts, meaning Schwab cannot use your money or securities for its own business operations.

Charles Schwab Corporation, as the parent company, is also subject to SEC oversight as a publicly traded company. It must file quarterly and annual financial reports, disclose material risks, and hold shareholder meetings. This transparency is one reason large institutional investors and individual shareholders can feel reasonably confident about the company's financial health and operations.

Frequently Asked Questions

Is Charles Schwab a bank?

Charles Schwab is primarily a brokerage, but it does offer banking services through Charles Schwab Bank, a subsidiary. You can hold a checking account, savings account, and debit card through Schwab, but the company's main business is securities trading and investment management, not traditional banking.

Can I buy Charles Schwab stock through my Schwab account?

Yes. You can purchase shares of Charles Schwab Corporation (ticker SCHW) through any brokerage account, including a Schwab account. There is no commission on stock trades, so buying Schwab stock through Schwab costs the same as buying it anywhere else.

What happened to TD Ameritrade after Schwab bought it?

TD Ameritrade was acquired by Charles Schwab in 2019 and 2020. The company has been gradually integrating TD Ameritrade's operations and customer accounts into the Schwab platform. Existing TD Ameritrade customers retain their accounts, but new customers are directed to open Schwab accounts instead.

Does Schwab use my cash to make money?

Yes, in a limited way. When you hold uninvested cash in a Schwab account, the company deposits that cash into banks and earns interest on it. Schwab keeps a portion of that interest and may pass some back to you depending on your account type and cash balance. You can also earn interest through Schwab's cash management products.