HOW TO ADD AN IMAGE TO Growth, trust and loyalty in a · hina UAE orea en a oland rkey n sia d a co Japan na g ds y ce . a e a bia a ca l y U.S. 16 markets with Typical Changes in

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Growth, trust and loyalty in a hyper-distracted world Lisa K. Hunt February 22, 2018

Charles Schwab & Co., Inc. (Schwab), Member SIPC offers brokerage services and

products. The information provided here is for general informational purposes only

and should not be considered an individualized recommendation or personalized

investment advice.

Charles Schwab Confidential 2

Charles Schwab Confidential 3

A Connected, Noisy and Social Media-Driven World

Hours per day spent

consuming content

11+ hours

More connected than

ever…

Number of connected devices a consumer owns1

3.64

24 hours

…And bombarded with noise

every day

> 800 TV channels +

>500M digital properties +

500 hours of video/minute

uploaded to YouTube

Human attention span has

shortened to 8 seconds

number of social media

accounts held

5.5

Note: (1) Electronic devices include TV, radio and smartphones

Source: Digital Consumers Own 3.64 devices, Global Web Index, 2016; Americans Use Electronic Media 11+ Hours a Day, Statista, 2015; You have a Shorter Attention Span Than a Goldfish, Time, 2015; Marketing: 96 Amazing Social Media Statistics and Facts for 2016, Brandwatch, 2016

“The average person scrolls through 300 feet, or one Statue of Liberty, of mobile content every day.”

– Facebook's Andrew Keller

September 2017

The World of Marketing and Communications is Changing

Polarization Audiences have strong, often opposing

views on an array of topics, which significantly impacts how communications are received and organizations are viewed.

Convergence How people consume news and

information has become more distributed, mobile, omni-channel, rapid, and peer

driven. Trust in sources is low.

Expectations Expectations of corporations are changing,

based on the shifting – increasing – demands of the various stakeholder audiences they rely on to succeed.

Macro Trends Affecting Communications…

[Y VALUE] 24 23 20 19 17 13 12 10 9 9 8 7 7 5 3 3

[VALUE] [VALUE] -3 -10 -10 [VALUE] [VALUE]

-17 -17 -21

-37

Ch

ina

UA

E

S. K

ore

a

Sw

ed

en

Ma

lay

sia

Po

lan

d

Tu

rke

y

Sp

ain

Ru

ss

ia

Ire

lan

d

Ind

on

esia

Me

xic

o

Jap

an

Arg

en

tin

a

Ho

ng

Ko

ng

Th

e N

eth

erl

an

ds

Ge

rma

ny

Fra

nc

e

U.K

.

Ca

na

da

Sin

ga

po

re

Au

str

alia

Co

lom

bia

Ind

ia

S. A

fric

a

Bra

zil

Ita

ly

U.S

.

16 markets with

Typical Changes in Trust

Source: 2018 Edelman Trust Barometer. Trust Volatility Measure. The net year-over-year (2017-2018) percentage point change across

the four institutions (TRU_INS). General population, 28-market global total. For more details on how the Trust Volatility Measure was

calculated, please refer to the Technical Appendix.

5

Aggregate percentage point change in trust in the four institutions, and change

from 2017 to 2018

The Polarization of Trust

6 markets with extreme

Trust Gains

6 markets with extreme

Trust Losses

Source: 2018 Edelman Trust Barometer. TRU_INS. Below is a list of institutions. For each one, please indicate how much you trust that

institution to do what is right using a nine-point scale, where one means that you “do not trust them at all” and nine means that you “trust them

a great deal.” (Top 4 Box, Trust) Informed Public and General Population, U.S. The Trust Index is an average of a market's trust in the

institutions of government, business, media and NGOs. Informed Public and General Population, U.S.

6

Trust Crash in U.S.

Business Media NGOs Government

-9 -10 -14 -5

-22 -20 -30 -22

2018 2017

43 TRUST

INDEX

45 TRUST

INDEX

9-point decrease

Fell from 8th to 18th place

General Population

23-point decrease

Fell from 6th to last place

Informed Public

Y-to-Y Change − + 0

Change from 2017 to 2018

43

30 31 32 32 32 33 33 34 35 35 39 40 42 42 43 43 43 44 45 47 48 49

52 55 56

61

68 71

Glo

ba

l 2

8

Turk

ey

Au

str

alia

Ja

pa

n

Sw

ede

n

U.K

.

Fra

nce

Ire

land

Po

land

Ru

ssia

S. A

fric

a

Arg

en

tin

a

S. K

ore

a

Ge

rma

ny

U.S

.

Bra

zil

Co

lom

bia

Ho

ng

Ko

ng

Sp

ain

Ita

ly

Ma

laysia

Me

xic

o

Ca

na

da

Sin

ga

po

re

The

Ne

therla

nd

s

UA

E

India

Indo

ne

sia

Ch

ina

Source: 2018 Edelman Trust Barometer. TRU_INS. [MEDIA IN GENERAL] Below is a list of institutions. For each one, please

indicate how much you trust that institution to do what is right using a nine-point scale where one means that you “do not trust

them at all” and nine means that you “trust them a great deal.“ (Top 4 Box, Trust) General population, 28-market global total.

7

Percent trust in media, and change from 2017 to 2018

Media Now Least Trusted Institution Trust Neutral Distrust

Distrusted in 22 of 28 of markets

l l l l l l l l l l l l l l l l l l l l l l l l l l l l l 0 +5 -1 0 -1 0 0 +4 +3 +4 -4 -1 0 0 -5 -5 -2 +1 0 -3 +5 +1 +4 -2 +1 +12 -5 +1 +6

Y-to-Y Change − + 0

Source: 2018 Edelman Trust Barometer. TRU_INS. Below is a list of institutions. For each one, please indicate how much you

trust that institution to do what is right using a nine-point scale, where one means that you “do not trust them at all” and nine

means that you “trust them a great deal.” (Top 4 Box, Trust) S11. For whom did you vote for in the last Presidential election?

General population, U.S., among Trump (n=373) and Clinton (n=502) voters. 8

Percent trust in each institution, Trump vs. Clinton voters

U.S. Trust in Media Diverges Along Voting Lines

47

57

35 27

54 47

35

61

Business Media NGOs Government

difference in

trust in the

media

34pt

Trump

Voters

Clinton

Voters

22-point

decline since

the election

63 61

54 50 50

47 46 44

41 39

35

Source: 2018 Edelman Trust Barometer. CRE_PPL. Below is a list of people. In general, when forming an opinion of a company,

if you heard information about a company from each person, how credible would the information be—extremely credible, very

credible, somewhat credible, or not credible at all? (Top 2 Box, Very/Extremely Credible), question asked of half of the sample.

General population, 28-market global total.

9

Percent who rate each spokesperson as very/extremely credible,

and change from 2017 to 2018

An Opportunity for Brands

+3 +1 -6 +4 +1 -1 +3 +7 +6 +12 +6

“Everyone is entitled to his own opinion but not his own facts.” – Senator Patrick Moynihan

Person like

yourself

at all-time low

− Y-to-Y

Change

+ 0

Tech

nic

al

exp

ert

Acad

em

ic e

xp

ert

A p

ers

on

lik

e

yo

urs

elf

Fin

an

cia

l

ind

ustr

y a

naly

st

Su

ccessfu

l

en

trep

ren

eu

r

Em

plo

yee

NG

O

rep

resen

tati

ve

CE

O

Bo

ard

of

dir

ec

tors

Jo

urn

alist

Go

vern

men

t

off

icia

l/re

gu

lato

r

Source: 2018 Edelman Trust Barometer. CEO_AGR. Thinking about CEOs, how strongly do you agree or disagree with the

following statements? (Top 4 Box, Agree), question asked of half of the sample. CEO_EXP. Below is a list of potential

expectations that you might have for a company CEO. Thinking about CEOs in general, whether they are global CEOs or a CEO

who oversees a particular country, how would you characterize each using the following three-point scale? (Most important

responsibility, code 3), question asked of half of the sample. General population, 28-market global total. 10

Percent who agree and percent who say each is one of the most

important expectations they have for a CEO

Business is Expected to Lead

Percent who say that CEOs

should take the lead on

change rather than waiting

for

government to impose it

60

64

68

69

For CEOs, building trust is job one

64%

Their company is trusted

Their products and services are high quality

Business decisions reflect company values

Profits and stock price increase

Leading a trusted brand experience

Information classification here

Macro Trends Affecting Communications…

Building trust in a changing, distracted world

01 Actions matter –

words matter less

02 We do not control

the message

What does this mean?

Consumers will watch what you do versus listen to what you say

• Communications implications…

• Show, don’t tell

• Use proof to back up statements

• Share more

• Use experiences to connect


It is not what we say about ourselves but what others say about us that matters most

Communications implications…

• Third-party influencers have an outsized impact on audience perceptions

• Communications with inherent “share-ability” will go farther

• Public commitments to ‘doing the right thing’ are critical

03 Brand loyalty is

more transient

than ever


You are only as good as your last innovation


• Consider potential to differentiate or demonstrate innovation

• Innovative:

• Messages/language

• Channels/Content

• Experiences

05 Content is king

06 Data and

technology are

critical


Brands used to buy media. Brands are now the media.


- Focus on audiences, what drives them

- Use insights to shape content

- Optimize content for multiple channels


Importance of data and technology cannot be overstated.


- Use data to guide communications activities

- Employ channels that reflect current audience usage, preferences

- Prepare for downside of tech (i.e., cyber)

04 Values matter


Consumers want to know not just what you do but what you believe


- Show values in action:

- Connect on emotions, not just facts (head and heart)

- Build relationships

Building trust in a changing, distracted world

Charles Schwab Investment Management

Communicate wisely: Use what you know

Place and time for meeting

Use of technology

Information sources

Deliver information based on client preferences

Baby Boomers Millennials

Hard

copies

Less

technology

More face-to-face contact

Digital More

technology

Social media

15 © 2017 J.D. Power. All Rights Reserved.

How Do Millennials Consumers Differ?

Value focused

Digital oriented

Referral driven

Problem prone

20% 12%

Millennials All FS Investors

Commissions and Fees Impact on FSI Overall

Satisfaction

21% 11% Digital and Mobile Offerings

a Top 3 Driver of FSI Firm Selection

Average Number of Positive Firm Referrals Made Over Previous 12

months

6.2 3.2

19% 8% Experienced at Least One

Problem in the Past 12 Months

Sources: 2017 J.D. Power Full Service Investor Satisfaction Study ; 2016 J.D. Power Millennial Study


Expanding Channels Of FA Communication

819

841

848

856

866 867 81%

50%

27%

14% 14%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

800

810

820

830

840

850

860

870

880

FSI Average Phone Email In Person Text Online (e.g., chat,

social media,

website, etc.)

OSAT Contacted by FA

Emerging channels like text, chat and social media are still relatively infrequently used by

FAs, but clients getting contacted through those channels are significantly more satisfied.

FSIs Contacted in Past 12 Months by Advisor

Source: 2017 J.D. Power Full Service Investor Satisfaction Study


Mobile usage continues to grow and breadth of functionality usage increases among

users, driving up satisfaction with the channel.

21%

36%

9% 12%

2014 2017

Millennials All other investors

28%

49%

50%

62%

64%

69%

77%

87%

20%

39%

52%

48%

76%

76%

69%

79%

0% 50% 100%

Ask a question (not a

problem/complaint)

Withdraw from your investment

account

Research investment options

Deposit to your investment

account

Execute a trade

Verify a trade

Review portfolio performance

Review investment account

balance

Mobile Functionality Usage among SDIs

822

842

817

839

2014 2017

Millennials All other investors

Mobile Usage among SDIs

Satisfaction with Mobile Channel among SDIs

Mobile Interaction Beyond Trading

Source: 2017 J.D. Power Self-Directed Investor Satisfaction Study

2014

2017

Confidential for internal purposes only Charles Schwab Q1 2017

SNAP One-Year Growth At A Glance

Confidential for internal purposes only Charles Schwab Q1 2017

Engagement Grows As SNAP Participant Activity Increases

Executive Engagement… Celebrating branch openings…

… to promote

our presence in

the community

… which

increases

program

enthusiasm

Confidential for internal purposes only Charles Schwab

Participants are promoting and building their Brand on social media with personal, self-authored content

Engaging in their own voice …

… and increasing

engagement

with their

networks

Confidential for internal purposes only Charles Schwab

Participants are promoting and building their Brand on social media with personal, self-authored content

Sharing their great work in their community …

… and promoting

important events


Connecting in new ways through team engagement




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HOW TO ADD AN IMAGE TO Growth, trust and loyalty in a · hina UAE orea en a oland rkey n sia d a co Japan na g ds y ce . a e a bia a ca l y U.S. 16 markets with Typical Changes in