Charles Schwab, which reported its Q3'26 earnings late last week, made a number of comments on sweeps, AI and cash sorting. During their Fall Business Update, President & CEO Rick Wurster says, "Notably, clients are actively and intentionally conducting their day-to-day financial lives with us month in and month out, moving nearly $4 trillion in cash every month to invest, trade, pay bills, hold collateral against positions they hold and otherwise execute the day-to-day cash transactions that make up their financial lives. We're adding new product solutions and capabilities to help our clients consolidate more of their financial lives at Schwab.... A subset of traders are already using AI to support their trading goals, connecting their LLMs to Schwab via our APIs and our MCP server. As an interesting aside, this group actually holds more cash than other active traders because they are focused on finding their next great investment."
CFO Michael Verdeschi tells analysts, "Asset management and administration fees increased 14% versus the prior year to a record $1.9 billion due to a combination of equity market appreciation, strong organic growth and continued client adoption of Schwab's wealth and asset management solutions. Trading revenue totaled $1.2 billion, up 16% versus 3Q '25 as client engagement across our industry-leading retail trading platform remained robust, with daily average trades of $10.7 million. Bank deposit account fees were up 40% year-over-year due to continued improvement in the net yield."
He continues, "Transactional sweep cash balances finished the quarter at $492.8 billion, up $7.1 billion quarter-over-quarter, reflecting an increase in the long/short strategy and organic growth, partially offset by clients reinvesting in markets given improving sentiment. Given the growth of our secured lending programs, we utilize our diverse funding sources to support this client activity. As we look forward, we expect to see continued cash build through net new assets and the normal seasonal inflow through year-end."
During the Q&A, Wurster responds on the topic of AI, "So we don't allow them to move money because we think there's too much risk there to the client and to the firm. We do have clients that are trading through LLMs and APIs, as I described earlier. That is growing. It's doubled in about the last 6 months. As I shared earlier, that higher level of engagement actually leads to more cash held by those clients. I know one of the fears in the market about us is that as AI takes off it will impact cash levels. We're actually seeing the opposite impact that the more people use AI, the more cash they hold because they're more active in buying stocks."
Verdeschi answers a question on cash, saying, "Let's unpack cash a bit. So what we saw in the third quarter with client sentiment improving more consistently through the third quarter, we saw cash go back into the market. And part of that was fueled by the activity in IPOs as well. If you go back to the first half of the year, normally, you see cash go back into the market in that first quarter. But in the first quarter, you tend to see cash remain on the sidelines. That was a function of geopolitical dynamics. Second quarter, even with tax payments you ended up the year-to-date through June, pretty flattish in cash."
He continues, "What you then saw is a good amount going into the market in 3Q due to that pickup in sentiment, and IPO activity. Taking a step back, we do continue to see organic cash build. But again, that quarter-to-quarter you're going to see dynamics of seasonality. You're going to see sentiment play a role. And of course, as we head into the fourth quarter, we'll have that seasonal pickup that tends to be the mid-November onwards. So we feel good about cash. When we look at cash on balance sheet and money market funds as a percentage of total client assets, it's consistent. So we feel good about where we're heading into the fourth quarter."
Verdeschi answers another question on "the cash outlook amid higher rates," "So in terms of cash, just to be clear, even with those higher rates, this is not cash sorting in any way. Keep in mind, those short-term rates, it's just this time last year, where we were at those similar rates. And we know that our clients are pretty well allocated in terms of their allocations between what they keep on balance sheet versus money funds. And so what we're seeing here, again, is cash going back into the market, given that pickup in sentiment. And regarding the outlook for rates, again, as we've said, we've been back at these rate levels just this time last year."
He states, "We expect to continue to pick up cash organically.... And we will see that seasonal inflow in the fourth quarter that we're expecting as well. Over time, as the rate market continues to evolve, we do expect that to be a favorable environment for us overall for our financials. And we know that because clients have been allocating their cash already from here, the increase in rates is not going to have that much more of an impact simply because you're not moving rates from 1% or 2% anymore. You're already at rates, which has meant clients have allocated the way they had wished to allocate. So from here, again, a favorable environment for us for our financials. We maintain a lot of flexibility around our different funding programs. We built these wholesale programs exactly for the reason to give us flexibility to meet the dynamic needs of clients."
Wurster responds to a question on "monetizing transactional cash," saying, "As it relates to cash, it doesn't impact how we're thinking about cash. I like our cash strategy. It's very simple. When a client comes in, until they tell us what they want to do with their cash, we keep it liquid, and we keep it in the most secure spot available. And that aligns with the interest of our traders, and we make it very easy and transparent how much cash you're sitting on and what other ways they could -- what other ways they could invest that cash. And that strategy has worked. I think it will continue to work. And at the same time, we'll innovate around how we help clients make those decisions. And I'm sure AI will be a helpful part of that."
In related news, BlackRock also hosted its Q3 2026 Earnings Call early last week. CFO Martin Small comments, "Finally, our cash management platform generated $31 billion of net inflows in the third quarter. These results include fundings into customized liquidity solutions, demand for government funds and continued growth from Circle.... Clients are also capturing income opportunities at the short end of the curve. Cash net inflows of $31 billion included several scaled mandates from clients consolidating fragmented liquidity programs into more customized solutions with BlackRock."
Finally, Wells Fargo also briefly touched on cash in its Q3'26 Call. During the Q&A, an analyst asks, "[There are] a whole host of AI-related questions sort of floating around investor psyches these days. But maybe I was hoping you could touch on just this idea that AI agents eventually make it just a lot easier to kind of identify and move around idle cash toward higher-yielding alternatives. Just -- maybe at a top level how you're thinking about the possibility that technology as it improves just sort of reduces deposit inertia over time and kind of what it means for value behavior for large low-cost deposit bases like yours and others in the industry?"
CEO Charles Scharf replies, "Listen, I think we'd say what like many other people have said, which is high-rate alternatives exist today, they've existed for a long time. If you want to move to a high rate, you can just go online and do it yourself in no time. And so ... that's not something new. The idea that consumers are going to give the power to an agent to act on their behalf unilaterally and move money around to institutions that they don't know, they don't understand ... I think it's a long ways away. There's no question that agents will become a part of the way people interact. We have them. We're building them ourselves. But the idea that, that's going to contribute to mass movement to higher rate alternatives, I think, is completely overdone, especially for the time period we can see."
He adds, "And just a reminder, people keep money with us for a lot of reasons beyond just maximizing that last value they get in terms of savings. They keep money because of -- with the primary payments account. They've got money coming in and going out all the time. We have wholesale customers that understand every last basis point and they want to pay us for certain services.... And the opportunity for us is to use agents to better serve our customers and let them get access to the things that we can do for them."
