Schwab Gains on Retail Trading, Eyes Long-Short Strategy Growth
Charles Schwab reported earnings that topped estimates on Tuesday, driven by retail investor trading. Firm leaders also said a small percentage of revenue is driven by a tax-advantaged long-short investment strategy popular with advisors, even as they noted continued demand for the offering.
As a result of that investor trading splurge, Schwab reported a record $11.9 million daily average revenue on trades in the second quarter, a 57% increase from a year earlier. Trading revenue also rose, climbing 28% to $1.2 billion. That activity helped drive year-over-year revenue growth of $7.07 billion, up 21% quarter-over-quarter, according to Chief Financial Officer Mike Verdeschi.
Schwab also benefited from SpaceX’s massive initial public offering in June, which created one of the busiest days on record for the firm, according to CEO Rick Wurster.
Schwab also reported an 89% jump in net new client asset gains in its advisor division compared to the second quarter of 2025. Compared with last quarter, net new client assets actually fell 7%. Schwab attributed that drop to a seasonal tax effect.
On the earnings call, Wurster focused on the overall growth for the advisor services division, saying “we see consistently strong growth in net flows to both our Schwab Advisor Network and flagship proprietary wealth offer, Schwab Wealth Advisory. We’re continuing to invest heavily in our Schwab Wealth Advisory offer, including in our tax, trust and estate capabilities, to make sure we can meet the needs of retail clients that want more help and guidance in their lives, and it is working.”
Later on the call, CFO Verdeschi said the Westlake, Texas-based firm expects growth in its independent RIA business area to drive net new asset growth by more than 5%, which he said was about 6% or more in the last four quarters.
“I think the capabilities we have are becoming even more and more challenging to match,” he said.
Verdeschi and Wurster also responded to analyst questions about the firm’s strategy regarding offering long-short investment strategies to RIAs and their clients. Earlier this year, Schwab put margin restrictions on the strategy for RIAs, drawing pushback from some, as it has become a popular tax strategy for use with high-net-worth clients.
Verdeschi said Schwab does expect “continued demand” from RIAs to use the strategy and will continue to support it. He added, however, that it’s a “very small percentage of our economics. It’s roughly 1% of our revenue.”
Wurster said he also expects continued demand, but the market for the strategy has moved past the “surge” that occurred when Schwab was the only provider offering it.
“I think we’re past that, and now in more of a stable growth environment,” he said, adding that he does see it as being an important strategy among advisors in the coming years.
“I think it’s a strategy that makes a lot of sense for clients, particularly those that have sold a business or have a large and concentrated position that they want to diversify out of, being able to generate and harvest losses against that while still largely tracking an index is quite a powerful strategy,” he said. “Over the coming five or 10 years, I expect this strategy will get bigger than it is today, and we want to find a way to support our clients.”
Schwab’s stock was down slightly in afternoon trading.
