Charles Schwab, for example, runs a brokerage almost as a loss leader to have access to $100 billion (you read that right) in client deposits paying an average of 27 basis points (0.27%; you read that right) annually. Net interest revenue is 70% of their topline revenue.
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TDAmeritrade, by contrast, actually earns ~36% of their revenue by selling the thing that everyone thinks they are in business to sell. That is a high number among discount brokerages.
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(In related news, people's intuitions about how e.g. retail banks or SMB-focused banks or commercial banks make money are also generally not that great.)
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Does a summary fit in a tweet?
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A varying mix of net interest income, commissions (from users), payments from banks for cash management, debit card interchange, fees, fees from proprietary asset management products, fees from internalizers (payment for order flow), etc.
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Would love to read this based on your tweets about it. Would $ and an editor help get it done? Better Programming on Medium could give you both. I think $500 is what we can offer.
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Appreciate the offer, but going to pass. Feel obliged to mention: a substantial portion of my body of work is convincing technologists to charge appropriate rates, and mine would start two digits higher if I were hireable. Which kinda blows your model out, but my model not yours
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@patio11: "thinking of writing an essay..." me:pic.twitter.com/4YcvNzFRmmThanks. Twitter will use this to make your timeline better. UndoUndo
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Please do, it’s almost always easier to understand something once you understand how it makes money.
Thanks. Twitter will use this to make your timeline better. UndoUndo
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I'd be very interested in that. Been thinking about it because there's a relatively new discount brokerage here in Europe (DEGIRO) which seems dramatically cheaper than everyone else so I assume there's a novel business model at work.
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