Founded as Charles Schwab & Co. in 1971 by its namesake Charles R. Schwab Sr., the company capitalized on the financial deregulation of the 1970s to pioneer discount sales of equity securities. After a flagship opening in Sacramento, California, the bank expanded into Seattle before the 1980s economic expansion financed the bank's investments in technology, automation, and digital record keeping. The first to offer round-clock order entry and quotation, it was purchased by Bank of America in 1983 for $55million. Three years later, the profitability of the bank's no-charge mutual funds prompted the founder to buy his company back for $280million.[7]
In 1963, Charles R. Schwab and two other partners launched Investment Indicator, an investment newsletter.[8] 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, Schwab and four others purchased all the stock from Commander Industries, Inc., and in 1972, Schwab bought all the stock from what was once Commander Industries. In 1973, the company name changed to Charles Schwab & Co., Inc.[9]
In 1975, the U.S. Securities and Exchange Commission allowed negotiated commission rates and Schwab set up a stock brokerage. In September 1975, Schwab opened its first branch in Sacramento, CA, and started offering discount brokerage services. 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 1979, Schwab risked $500,000 on a back-office settlement system called BETA (short for Brokerage Execution and Transaction Analysis), enabling Schwab to become the first discount broker to bring automation in house. 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.
In 1983, Stephen McLin purchased the company for Bank of America for $55million. In 1984, the company launched 140 no-load mutual funds. In 1987, management, including Charles R. Schwab, bought the company back from Bank of America for $280million.[10] In 1991, the company acquired Mayer & Schweitzer, a market making firm, allowing Schwab to execute its customers' orders without sending them to an exchange.[11] In 1997, it was fined $200,000 for failing to arrange the best trades for its customers.[12] The unit was renamed Schwab Capital Markets in 2000.[13] In 1993, the company opened an office in London.[14]
In 1995, the company acquired The Hampton Company, founded by Walter W. Bettinger, who became CEO of Schwab in 2008.[15] In 1996, Web trading went live, letting customers trade listed and OTC stocks, or check balances and the status of orders on the schwab.com website.[14] In 1998, dissatisfied by in-house results, the company hired interactive firm Razorfish to redesign the website. Years later the website would be entered in the Cooper-Hewitt Museum's inaugural National Design Triennial.[16] In 2000, Schwab purchased U.S. Trust for $2.73billion.[17] In 2001, less than a year after the acquisition of U.S. Trust, the U.S. Trust subsidiary was fined $10million in a bank secrecy law case. It was ordered to pay $5million to the New York State Banking Department and $5million to the Federal Reserve Board.[18] On November 20, 2006, Schwab announced an agreement to sell U.S. Trust to Bank of America for $3.3billion in cash.[19] The deal closed in the second quarter of 2007.
In January 2004, Schwab acquired SoundView Technology Group for $345million to add equity research capabilities.[20][21] David S. Pottruck, who had spent the majority of his 20 years at the brokerage as Charles R. 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. On July 24, 2004, the company's board fired Pottruck, replacing him with its founder and namesake. News of Pottruck's removal came as the firm had announced that overall profit had dropped 10%, to $113million, for the second quarter, driven largely by a 26% 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.[22] The company's net transfer assets, or assets that come from other firms, quadrupled from 2004 to 2008. Schwab's YieldPlus fund drew controversy during the 2007 financial crisis because of its -31.7% return.[23] Investors in the Schwab YieldPlus Fund, including Charles Schwab himself, lost $1.1billion.[24] Schwab closed the YieldPlus funds in 2011.[25] In April 2007, the company acquired The 401(k) Company.[26]
On July 22, 2008, Walter W. Bettinger, the previous chief operating officer, was named chief executive, succeeding the company's namesake. Charles R. Schwab remained executive chairman of the company and said that he would "continue to serve as a very active chairman".[22]
In 2011, the company acquired OptionsXpress.[27] The company also acquired Compliance11, Inc., a provider of compliance software.[28] In 2012, it acquired ThomasPartners, an asset management firm.[29]
On July 1, 2020, the company acquired Wasmer, Schroeder & Company, an independent investment manager of fixed income in separately managed accounts with $10.7billion in assets under management.[30]
On May 26, 2020, the company acquired USAA's investment management accounts for $1.8billion in cash.[31][32]
In June 2020, the company began allowing investors to purchase fractional shares.[33]
Effective on January 1, 2021, the company moved its headquarters from San Francisco, California to Westlake, Texas.[37]
Senior leadership
Chairman: Charles R. Schwab (since 1971)
Chief Executive: Walter W. Bettinger II (since 2008)
List of former chief executives
Charles R. Schwab (1971–1998)
Charles R. Schwab and David S. Pottruck (1998–2003); co-CEO's
David S. Pottruck (2003–2004)
Charles R. Schwab (2004–2008); second term
Marketing
In 2004, Charles Schwab chose Havas Worldwide (then called Euro RSCG) as its full-service advertising agency. The company launched a series of television ads featuring the slogan Talk to Chuck by Euro RSCG and directed/animated by Bob Sabiston's Flat Black Films in 2005. "Talk to Chuck" campaign appeared in print media, online, billboards, and branch offices.[38] A blog post in The Wall Street Journal described the ads as effective because they included a single memorable phrase.[39] In February 2013, Schwab hired Crispin Porter + Bogusky (CP+B) as its lead creative agency with Havas Worldwide remaining to create ads for ActiveTrader and optionsXpress.[40] The company launched an advertising campaign by CP+B with the slogan Own Your Tomorrow that same year.[41] In March 2015, Adweek reported on marketing material created by CP+B for Schwab's Intelligent Portfolio service.[42]
Controversies
Failure to disclose robo-advisor fees and allocations
In June 2022, the U.S. Securities and Exchange Commission ordered the company to pay $187million to settle its charges for failing to disclose fund allocations and fees for its robo-advisor clients. It was determined that between March 2015 to November 2018, Charles Schwab misled customers and prospective investors by allowing them to believe that its robo-advisor service had no hidden fees, and it did not inform the clients about the cash drag on their investments. The SEC stated that the company has made money from cash allocations in the robo-advisor portfolios by sweeping cash to its affiliated bank, loaning it out, and keeping the difference between the interest it earned on the loans and what it paid in interest to the robo-advisor clients.[43]
State Street Corporation, is a global financial services and bank holding company headquartered at One Congress Street in Boston with operations worldwide. It is the second-oldest continually operating United States bank; its predecessor, Union Bank, was founded in 1792. State Street is ranked 14th on the list of largest banks in the United States by assets. It is one of the largest asset management companies in the world with US$3.7 trillion under management and US$40.0 trillion under custody and administration in 2023. It is the largest custodian bank in the world, providing securities services and it is considered a systemically important bank by the Financial Stability Board. Along with BlackRock and Vanguard, State Street is considered to be one of the Big Three index fund managers that dominate corporate America.
Toronto-Dominion Bank, doing business as TD Bank Group, is a Canadian multinational banking and financial services corporation headquartered in Toronto, Ontario. The bank was created on February 1, 1955, through the merger of the Bank of Toronto and The Dominion Bank, which were founded in 1855 and 1869, respectively. It is one of two Big Five banks of Canada founded in Toronto, the other being the Canadian Imperial Bank of Commerce.
TD Waterhouse Canada Inc. is a Canadian financial services corporation headquartered in Toronto, Ontario. It is a wholly owned subsidiary of Toronto-Dominion Bank. The company does business through several divisions, namely TD Direct Investing, TD Wealth Financial Planning, and TD Wealth Private Investment Advice. The TD Waterhouse brand was also formerly used for TD's American and British brokerages.
CIBC Capital Markets is the investment banking subsidiary of the Canadian Imperial Bank of Commerce. The firm operates as an investment bank both in Canadian and global equity and debt capital markets. The firm provides a variety of financial services including equity and debt capital market products, mergers and acquisitions, global markets, merchant banking, and other investment banking advisory services.
Charles Robert Schwab Sr. is an American investor and financial executive. He is the founder and chairman of the Charles Schwab Corporation. He pioneered discount sales of equity securities starting in 1975. His company became by far the largest discount securities dealer in the United States. He semi-retired from the company in 2008 when he stepped down as CEO, but he remains chairman and is the largest shareholder.
E-Trade Financial Corporation, a subsidiary of Morgan Stanley, offers an electronic trading platform to trade financial assets. The company receives revenue from interest income on margin balances, commissions for order execution, payment for order flow, and management services.
Thinkorswim is an electronic trading platform owned by Charles Schwab Corporation used to trade financial assets. It is geared for self-directed stock, options and futures traders.
Ameriprise Financial, Inc. is a diversified financial services company and bank holding company incorporated in Delaware and headquartered in Minneapolis, Minnesota. It provides financial planning products and services, including wealth management, asset management, insurance, annuities, and estate planning.
TD Cowen, is an American multinational investment bank and financial services division of TD Securities that operates through two business segments: a broker-dealer and an investment management division.
Scottrade was a stockbroker and electronic trading platform that operated via mobile, on the web, and at branches. In September 2017, the company was acquired by TD Ameritrade and TD Bank Group, and all Scottrade brokerage accounts were automatically transitioned and converted to TD Ameritrade accounts; the checking and savings accounts that were offered through Scottrade Bank were folded into TD Bank, N.A., the American subsidiary of TD Bank Group.
TD Ameritrade is a stockbroker that offers an electronic trading platform for the trade of financial assets including common stocks, preferred stocks, futures contracts, exchange-traded funds, forex, options, mutual funds, fixed income investments, margin lending, and cash management services. The company receives revenue from interest income on margin balances, commissions for order execution, and payment for order flow.
Joseph Hugh Moglia is an American businessman and former football coach. He was head football coach at Coastal Carolina University from 2012 to 2016 and again in 2018 after spending the 2017 season on medical leave. During his tenure, the Coastal Carolina Chanticleers transitioned from the NCAA Division I Football Championship Subdivision (FCS) to the NCAA Division I Football Bowl Subdivision (FBS). In six seasons, Coastal Carolina compiled a record of 56–22.
Eaton Vance Corp. is an American investment management firm based in Boston, Massachusetts. It is one of the oldest investment companies in the United States, with a history dating back to 1924. Through five primary investment affiliates, Eaton Vance provides investment products to individuals, institutions and financial professionals in the US, including wealth management, defined contribution investment only and sub-advisory services. In 2005 it opened an office in London. In March 2021, Morgan Stanley completed its acquisition of Eaton Vance, a deal announced in October 2020. With the addition of Eaton Vance, Morgan Stanley now had $5.4 trillion of client assets across its Wealth Management and Investment Management segments.
Stifel Financial Corp. is an American multinational independent investment bank and financial services company created under the Stifel name in July 1983 and listed on the New York Stock Exchange on November 24, 1986. Its predecessor company was founded in 1890 as the Altheimer and Rawlings Investment Company and is headquartered in downtown St. Louis, Missouri.
Bank of America Private Bank was founded in 1853 as the United States Trust Company of New York. It operated independently until 2000, when it was acquired by Charles Schwab, and Co. and subsequently sold to, and became a subsidiary of, Bank of America in 2007. Bank of America Private Bank provides investment management, wealth structuring, and credit and lending services to clients.
Conning is a global investment management firm serving the insurance industry. Conning supports institutional investors, including pension plans, with investment and asset management products, risk modeling software, and industry research. Founded in 1912, Conning has offices in Boston, Cologne, Hartford, Hong Kong, London, New York and Tokyo.
Merrill Edge is an electronic trading platform and investment advisory service that provides self-directed and guided investment options for individuals and businesses. It is a subsidiary of Bank of America and was launched in 2010 after the merger between Merrill Lynch and Bank of America. Merrill Edge offers a wide range of investment products, including stocks, bonds, exchange-traded funds (ETFs), margin lending, mutual funds, and options.
Wealthfront Inc. is an automated investment service firm based in Palo Alto, California, founded by Andy Rachleff and Dan Carroll in 2008. As of November 2023, Wealthfront had $50 billion AUM across 700,000 accounts.
Wealthsimple Inc. is a Canadian online investment management service. The firm was founded in September 2014 by Michael Katchen, Brett Huneycutt, Som Seif, and Rudy Adler and is based in Toronto. As of March 31, 2024, the firm holds over C$38.7 billion in assets under management. It is primarily owned by Power Corporation indirectly at 56.6% through investments made through their holdings in Power Financial, IGM Financial and Portag3.
CI Financial is a Canadian investment management company based in Toronto, Ontario. It offers investment management and wealth management services targeted to high net worth retail investors, as well as brokerage and trading services to portfolio managers and institutional investors.
This page is based on this Wikipedia article Text is available under the CC BY-SA 4.0 license; additional terms may apply. Images, videos and audio are available under their respective licenses.
US$18.84 billion (2023)
US$8.517 trillion (2023)
