Charles Schwab Corporation

The Charles Schwab Corporation[5] is an American multinational financial services company founded and based in San Francisco, California. Headquartered in the SOMA District, San Francisco, Charles Schwab is the 14th largest banking institution in the United States with over US$3.3 trillion in client assets (as of 2019). It is the third largest asset manager in the world, behind BlackRock and Vanguard. The firm is known for its electronic trading platforms, investor education, and discount brokerage services, particularly reduced and free trading commission charges.

The Charles Schwab Corporation
Public company
S&P 500 Index component
IndustryFinancial services
Founded1971; 49 years ago (1971) (as Charles Schwab & Co., Inc.)
FounderCharles R. Schwab
HeadquartersSan Francisco, California, U.S.
Number of locations
345 branches
Key people
  • Charles R. Schwab
  • (Chairman)
  • Walter W. Bettinger II
  • (President & CEO)
ServicesCommercial banking
Stock brokerage
Wealth management
Electronic trading platform
RevenueIncrease US$10.132 billion (2018)[1]
Increase US$4.562 billion (2018)[1]
Increase US$3.329 billion (2018)[1]
AUMDecrease US$3.25 trillion (2018)[1]
Total assetsIncrease US$296.482 billion (2018)[1]
Total equityIncrease US$20.670 billion (2018)[1]
OwnerCharles R. Schwab (10.4%)[2]
Number of employees
~19,500 (December 2018)[1]
Footnotes / references
Schwab Institutional Reporting: 2018[3][4]

Founded as Charles Schwab & Co. in 1971 by its namesake Charles Schwab, the broker-dealer capitalized on the financial deregulation of the 1970s to pioneer discount sales of equity securities. After a flagship opening in Sacramento, 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 $55 million. Three years later, the profitability of the bank's no-charge mutual funds prompted the founder to buy his company back for $280 million. In line with the Digital Revolution, Charles Schwab offered online trading in 1994 which allowed them to drop and even eliminate account fees by 2005, and introduce commission-free funds by 2011.

Charles Schwab offers commercial banking, stock brokerage, and wealth management advisory services to both retail and institutional clients. Despite their online presence, the company also has a large network of physical branches mostly in metropolitan financial centers. Their total national footprint includes 345 branches, primarily in the United States and Britain. It is known for its corporate marketing programs, especially their electric blue nameplate, television commercials, and slogans. In 2020, the bank announced their intention to move to Westlake, Texas in conjunction with their large-scale mergers with and acquisitions of TD Ameritrade (for $26 billion) and the brokerage and investment businesses of USAA (for $1.8 billion). [6]


A Charles Schwab location in Princeton, New Jersey.

In 1963, Charles R. Schwab and two other partners launched Investment Indicator, an investment newsletter.[7] 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.[8]

In 1975, the U.S. Securities and Exchange Commission allowed for negotiated commission rates and Schwab set up a stockbrokerage. 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 (which was short for Brokerage Execution and Transaction Analysis), enabling Schwab to become the first discount broker to bring automation inhouse. 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 $55 million. In 1984, the company launched 140 no-load mutual funds. In 1987, management, including Charles R. Schwab, bought the company from Bank of America for $280 million.[9] In 1991, the company acquired Mayer & Schweitzer, a market making firm, allowing Schwab to execute its customers' orders without sending them to an exchange.[10] In 1997, it was fined $200,000 for failing to arrange the best trades for its customers.[11] The unit was renamed Schwab Capital Markets in 2000.[12] In 1993, the company opened an office in London.[citation needed]

In 1995, the company acquired The Hampton Company, founded by Walter W. Bettinger, who became CEO of Schwab in 2008.[13] In 1996, Web trading goes live. Customers can trade listed and OTC stocks, or check balances and the status of orders on the website.[14] In 1998, dissatisfied by the 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.[15] In 2000, Schwab purchased U.S. Trust for $2.73 billion.[16] 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.[17] On November 20, 2006, Schwab announced an agreement to sell U.S. Trust to Bank of America for $3.3 billion in cash.[18] The deal closed in the second quarter of 2007.

In January 2004, Schwab acquired SoundView Technology Group for $345 million to add equity research capabilities.[19][20] 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 $113 million, 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.[21] 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.[22] Investors in the Schwab YieldPlus Fund, including Charles Schwab himself, lost $1.1 billion.[23] Schwab closed the YieldPlus funds in 2011.[24] In April 2007, the company acquired The 401(k) Company.[25] 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 in a statement that he would "continue to serve as a very active chairman".[21] In 2011, the company acquired OptionsXpress.[26] The company also acquired Compliance11, Inc., a provider of compliance software.[27] In 2012, it expanded again by acquiring ThomasPartners, an asset management firm.[28] On July 26, 2019, the company announced it would acquire USAA’s investment management accounts for $1.8 billion in cash.[29]The deal with USAA closed on May 26, 2020.[30]

On November 25, 2019, the company announced its intent to acquire TD Ameritrade for approximately $26 billion in stock.[31] The company also stated they intend to move their headquarters to Westlake, Texas. They stated that "a small percentage of roles may move from San Francisco to Westlake over time", adding "the vast majority of San Francisco-based roles, however, are not anticipated to be impacted by this decision." On February 24, 2020, the company announced it would acquire Wasmer, Schroeder & Company in an all cash purchase.[32]


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.[33] A blog post in The Wall Street Journal described the ads as effective because they included a single memorable phrase.[34] 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.[35] The company launched an advertising campaign by CP+B with the slogan Own Your Tomorrow that same year.[36] In March 2015, Adweek reported on marketing material created by CP+B for Schwab's Intelligent Portfolio service.[37]

Schwab Charitable FundEdit

The Schwab Charitable Fund is a donor advised fund which preserves the anonymity of donors by not disclosing individual donor names. Professionally managed accounts are only available through independent investment advisors working with Schwab Advisor Services, a business segment of The Charles Schwab Corporation. It accepts contributions of real estate, private equity or other non-cash assets via a charitable intermediary, with proceeds of the donation transferred to a donor-advised account upon liquidation. This intermediary considers donations on a case-by-case basis, with a typical requirement that assets be valued at $250,000 or more.[38]

See alsoEdit


  1. ^ a b c d e f g "The Charles Schwab Corporation Annual Report (Form 10-K)". U.S. Securities and Exchange Commission. February 2019.
  2. ^ 2020 Proxy statement
  3. ^ "US SEC: Form 10-K The Charles Schwab Corporation". U.S. Securities and Exchange Commission.
  4. ^ "Charles Schwab". Fortune.
  5. ^ "2020 Proxy Statement" (PDF). The Charles Schwab Corporation. May 26, 2020. Retrieved June 27, 2020.
  6. ^ Schwab press release
  7. ^ Waggoner, John (April 11, 2013). "Icons: Schwab still roots for the small investor". USA Today.
  8. ^ Kador, John (2002). Charles Schwab: How One Company Beat Wall Street and Reinvented the Brokerage Industry. John Wiley & Sons. ISBN 978-0471434313.[page needed]
  9. ^ Fisher, Lawrence M. (February 3, 1987). "Bank America Is Selling Schwab Unit to Founder". The New York Times.
  10. ^ "Company News; Charles Schwab In an Acquisition". The New York Times. June 6, 1991.
  11. ^ "Schwab Unit Agrees to Pay $200,000 Fine". The New York Times. Bloomberg L.P. October 22, 1997.
  12. ^ "Schwab and TD Waterhouse Join Forces to Build New UK Market Making Firm" (PDF) (Press release). Toronto-Dominion Bank. January 31, 2001.
  13. ^ "Charles Schwab acquired The Hampton Co., a defined benefit and defined". Pensions & Investments Online. November 9, 1995.
  14. ^ "Company history". September 9, 2019.
  15. ^ "The Artless Website:". American Institute of Graphic Arts. January 25, 2006.
  16. ^ McGeehan, Patrick (January 14, 2000). "Schwab to Pay $2.73 Billion For U.S. Trust". The New York Times.
  17. ^ Brick, Michael (July 14, 2001). "U.S. Trust Is Fined $10 Million in Bank Secrecy-Law Case". The New York Times.
  18. ^ Lipton, Josh (November 20, 2006). "Bank of America To Buy U.S. Trust". Forbes.
  19. ^ "Schwab Completes Acquisition of SoundView Technology Group" (Press release). Charles Schwab Corporation. January 16, 2004 – via Business Wire.
  20. ^ "Schwab To Buy Soundview For $321 Million". The New York Times. Bloomberg News. November 20, 2003.
  21. ^ a b "Charles Schwab steps down as CEO of his brokerage". Los Angeles Times. July 22, 2008.
  22. ^ Deng, Geng; McCann, Craig; O'Neal, Edward (2010). "Charles Schwab YieldPlus Risk" (PDF). Securities Litigation & Consulting Group.
  23. ^ Norris, Floyd (January 14, 2011). "At Schwab, Unkept Promise To Investors". The New York Times.
  24. ^ Pender, Kathleen (June 24, 2011). "Schwab shuttering beleaguered YieldPlus funds". San Francisco Chronicle.
  25. ^ "Schwab Completes Acquisition of The 401(k) Company" (Press release). Charles Schwab Corp. April 2, 2007 – via Business Wire.
  26. ^ "Schwab Completes Acquisition of optionsXpress" (Press release). Charles Schwab Corp. August 31, 2011 – via Business Wire.
  27. ^ "Schwab Completes Acquisition of Compliance11, Inc" (Press release). Charles Schwab Corp. November 16, 2011 – via Business Wire.
  28. ^ "Schwab Announces Agreement to Acquire Thomas Partners" (Press release). Charles Schwab Corp. October 15, 2012 – via Business Wire.
  29. ^ Cullen, Terri (2019-07-26). "Charles Schwab to buy USAA assets in $1.8 billion deal". CNBC. Retrieved 2019-11-25.
  30. ^ Santana, Steven (26 May 2020). "Schwab completes purchase of USAA Investment Management". San Antonio Business Journal. Retrieved 3 September 2020.
  31. ^ "Acquisition Information Center".
  32. ^ "Charles Schwab Corporation Enhances Fixed Income Capabilities with the Purchase of Wasmer, Schroeder & Company, LLC". 2020-02-24.
  33. ^ Stevenson, Seth (December 5, 2005). "Money Toons: The distinctive animated ads from Charles Schwab". Slate.
  34. ^ Higgins, Michelle Perry (August 6, 2014). "Why 'Talk to Chuck' Was a Great Ad". The Wall Street Journal.
  35. ^ Beltrone, Gabriel (February 7, 2013). "Charles Schwab Completes Creative Search: Crispin outstrips Fallon for lead role". AdWeek.
  36. ^ "Charles Schwab Launches New Campaign Celebrating the Spirit of Engagement" (Press release). Charles Schwab Corp. June 12, 2013 – via Business Wire.
  37. ^ Gianatasio, David (March 12, 2015). "Ad of the Day: Meet Charles Schwab's New Intelligent, Nonhuman Pitchman: CP+B builds embodiment of the company's robo-adviser". AdWeek.
  38. ^ "Schwab Charitable Facilitates More Than $1.5 Billion in Grants in Fiscal Year 2017" (Press release). Charles Schwab Corp. July 10, 2017 – via Business Wire.

Further readingEdit

  • Cronin, Mary J. Banking and Finance on the Internet (John Wiley & Sons, 1998). online
  • Ingham, John N., and Lynne B. Feldman. Contemporary American business leaders: a biographical dictionary (Greenwood, 1990). pp 566–71.
  • Kador, John. Charles Schwab: How one company beat Wall Street and reinvented the brokerage industry (John Wiley & Sons, 2002).excerpt
  • Silver, A. David. Entrepreneurial Megabucks: The 100 Greatest Entrepreneurs of the Last 25 Years (1985).
  • Willis, Rod. "Charles Schwab: High-Tech Horatio Alger?" Management Review (Sept. 1986) 75#9 pp. 17–20.

External linksEdit