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Charles Schwab


Charles Schwab

"Charles Schwab" redirects here. For people named Charles Schwab, including the founder of this company, see Charles Schwab (disambiguation).

Charles Schwab Corporation
Traded as S&P 500 Component
Founded April 1971 (as First Commander Corporation)[1]
Headquarters San Francisco, California, U.S.
Key people Charles R. Schwab, Founder & Chairman
Walter W. Bettinger, CEO
Revenue Increase US$4.19 billion (FY 2009)[2]
Operating income Increase US$1.28 billion (FY 2009)[2]
Net income Increase US$787 million (FY 2009)[2]
AUM Increase US$1.49 trillion (FY 2009)[3]
Total assets Increase US$75.4 billion (FY 2009)[3]
Total equity Increase US$5.07 billion (FY 2009)[3]
Employees 12,500[4]

The Charles Schwab Corporation is an American brokerage and banking company, based in San Francisco, California. It was founded in 1971 by Charles R. "Chuck" Schwab,[4] as a traditional, brick and mortar brokerage firm and investment newsletter publisher.[1] In 1973, the company name changed from First Commander Corporation to Charles Schwab & Co., Inc.[1] The company started offering discount brokerage on May 1, 1975,[4] and became one of the world's largest discount brokers.[5]

Schwab offers the same services as a traditional brokerage, but with lower commissions and fees.[6] The company serves 7.9 million client brokerage accounts, with $1.65 trillion in assets (as of September 2011), from over 300 offices in the U.S, one office in Puerto Rico, and one branch in London.[7][4] Clients can also access services online and by telephone. In addition to discount brokerage, the company also offers services such as investment research, mutual funds, annuities, bond trading, checking, savings, and mortgages.

In 2009, Chairman Charles R. Schwab received the inaugural Tiburon CEO Summit award for Maintaining a Focus on Consumer Needs.[8]


In 1963, Charles R. "Chuck" Schwab and two other partners launched Investment Indicator, an investment newsletter. At its height, the newsletter had 3,000 subscribers, each paying $84 a year to subscribe. In April 1971, the firm was incorporated in California as First Commander Corporation, a wholly owned subsidiary of Commander Industries, Inc., for traditional, brokerage services and to publish the Schwab investment newsletter. In November of that year, Mr. Schwab and four others purchased all the stock from Commander Industries, Inc., and in 1972, Mr. Schwab bought all the stock from what was once Commander Industries. In 1973, the company name changed to Charles Schwab & Co., Inc.[1] In September 1975, Schwab opened its first branch in Sacramento, CA,[1] and started offering discount brokerage.[4] In 1977, Schwab began offering seminars to clients, and by 1978, Schwab had 45,000 client accounts total, doubling to 84,000 in 1979. In 1980, Schwab established the industry’s first 24-hour quotation service, and the total of client accounts grew to 147,000. In 1981, Schwab became a member of the NYSE, and the total of client accounts grew to 222,000. In 1982, Schwab became the first to offer 24/7 order entry and quote service, its first international office was opened in Hong Kong, and the number of client accounts totaled 374,000.[1]

U.S. Trust

In 2000, Schwab purchased U.S. Trust for $2.73 billion.[9] In 2001, less than a year after the acquisition of U.S. Trust, the U.S. Trust subsidiary was fined $10 million in a bank secrecy law case. It was ordered to pay $5 million to the New York State Banking Department and $5 million to the Federal Reserve Board.[10] On November 20, 2006, Schwab announced an agreement to sell U.S. Trust to Bank of America for $3.3 billion cash.[11] The deal closed in the second quarter of 2007.

SoundView Technology

In November 2003, Schwab announced the $345 million acquisition of SoundView Technology Group. The acquisition was intended to integrate SoundView's equity research content with Charles Schwab's trading execution capabilities, although the equity research business would come under increased regulatory scrutiny in the following years. SoundView had received a 57% premium to its market price before the announcement.[12][13]

Return of Charles R. Schwab

David S. Pottruck, who had spent the majority of his 20 years at the brokerage as Charles R. "Chuck" Schwab's right-hand man, shared the CEO title with the company's founder from 1998 to 2003. In May 2003, Mr. Schwab stepped down, and gave Pottruck sole control as CEO. Just a year later, on July 24, 2004, the company's board fired Pottruck, replacing him with its founder and namesake, Charles R. "Chuck" Schwab. News of Pottruck's removal came as the firm had announced that overall profit had dropped 10 percent, to $113 million, for the second quarter, driven largely by a 26 percent decline in revenue from customer stock trading.

After coming back into control, Mr. Schwab conceded that the company had "lost touch with our heritage", and quickly refocused the business on providing financial advice to individual investors. He also rolled back Pottruck’s fee hikes. The company rebounded, and earnings began to turn around in 2005, as did the stock. The share price was up as high as 151% since Pottruck’s removal, ten times since the return of Charles Schwab.[14] The company’s net transfer assets, or assets that come from other firms, quadrupled from 2004 to 2008. In the fiscal year 2008, the company generated $5.1 billion in revenue and recorded a net income of $1.2 billion. For the first quarter of 2009, Charles Schwab Corp. reported $1.1 billion in revenue and $218 million in net income. Due to the company's relatively low exposure to mortgage backed securities, the company has largely been able to escape the turmoil of the 2007–2010 financial crisis that seriously damaged many competitors.[15]

Walt Bettinger named CEO

On July 22, 2008, Walter W. Bettinger was named chief executive, succeeding the company's namesake.

Bettinger has been the heir apparent since he was named president and chief operating officer in February 2007. Charles R. Schwab remained executive chairman of the company and said in a statement that he would "continue to serve as a very active chairman." Bettinger is a 13-year veteran of Schwab and has held numerous executive posts along the way. He came to the company in 1995 when it acquired the retirement-plan services firm (Hampton Co.) he had founded at age 22. Bettinger, in the company’s statement, seemed to nod to the idea that some Schwab shareholders might worry about another succession going awry. "Chuck and I have worked closely together over the years preparing for this transition," he said, "and we will continue to work closely together in our respective roles as executive chairman and CEO."

"Talk to Chuck" campaign

On December 1, 2004, Euro RSCG New York announced it was chosen by Charles Schwab as its full-service advertising agency.

Starting in 2005, Charles Schwab launched a series of television ads. In a Slate magazine review, Ben Stuart, VP of Brand Strategy and Advertising for Schwab, said the cartoons force the viewer to focus on what he hears. The TV ads were produced by Euro RSCG and directed/animated by Bob Sabiston's Flat Black Films.

"Talk to Chuck" ads are also seen in print media, online, billboards, and visible in branch offices.

Registered investment adviser firms

Schwab's success depends heavily on the success of its independent investment adviser firms. Schwab serves roughly 5,000 independent advisers within its network. Most independent adviser firms are not affiliated with any brokerage firm, are not managed by a brokerage firm, and work independently from the brokerage firm, as adviser firms offer investment services to individuals or businesses. These adviser firms are generally regulated by state/local government or by the federal government and are also governed by the basic principles similar to that of a broker and yet different when rendering objective investment advice. Schwab was the first online discount brokers in the industry and has maintained its simple platform with simple tools for the novice trader.[16]

In 2005, the headline of a newspaper for financial advisers read "Schwab Battles for Wirehouse Assets". The article announced a new strategy of shifting more accounts from the brokerage firms and transitioning more brokers from the "brokerage world" into registered investment advisers.


Competitors in the discount brokerage industry include: E*TRADE, Fidelity Investments, Firstrade, IDealing, Merrill Edge, Place Trade, Scottrade, TD Ameritrade and TradeKing.[17]

Industry Awards and Rankings

Charles Schwab earned five stars and finished third overall in the 2011 Online Broker Review.[18] In 2012, they earned four stars and a fifth place finish.[19] For 2013, Charles Schwab moved back up, earning four stars, a third place finish, and Best Banking Services.[20]

See also

  • Comparison of online brokerages


External links

  • Official site
  • Money Toons The distinctive animated ads from Charles Schwab
  • Talk to Chuck ad site
  • Schwab ads' message goes for a tone of 'candid and real'
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