Charles Schwab & Co.

The Basic Schwab Story

Should a picture of the founder and Co-CEO of the company that bears his name be used on this page instead of a company logo? In the case of Schwab (the company) it is not inappropriate. Used as the major spokesman for the company in both TV and print media, Schwab (the man) is the most identifiable person within the company. This was by design because many people like to know who they are dealing with when they invest their money. Since Schwab does not assign clients to specific brokers, the advertisements aimed to help people feel like they were dealing with Charles Schwab himself when transacting a trade through the company.

When formed in 1974, Charles Schwab & Co. created the discount brokerage industry. An early decision by Schwab management was that they would build the business on an information technology base. This meant that no products would be offered that were not based and supported by information systems. The four IS executives during the history of Schwab have all considered members of the senior management team and reported very high within the organization. Dawn Lepore as the current IS Vice President and CIO reports to David Pottruck as the President and Cheif Operating Officer. Schwab continues to be one of the better organizations in the use of information systems to compete.

Charles Schwab and the Discounter Segment of the Brokerage Industry

• Charles Schwab Corporate and Financial Information including its 1998 and 1997Annual Report
  
• San Francisco Business Times (a local source for Schwab news)
  
• Merrill Lynch Web Page (Full Service Broker)
  
• Paine Webber Web Page (Full Service Broker)
  
• Morgan Stanley Dean Witter Web Page (Full Service Broker)
  
• Quick & Reilly Web Page (Discounter)
  
• Fidelity Investments Web Page (Discounter)
  
• Olde Discount Corporation Web Page (Deep Discounter)
  
• TD Waterhouse Securities, Inc. Web Page (Deep Discounter)
  
• Bort, Julie, "Have Computer Will Trade," Computerworld, June 24, 1996, pp. 127-128.
• Himelstein, Linda, "This Virtual Broker has Real Competition," Business Week, July 22, 1996, pp. 91-92.
• Mitchell, Russell, "The Schwab Revolution," Business Week, December 19, 1994, pp. 88-98.
• Strengths and Weaknesses of Charles Schwab
  
• Shifting Competition in the Brokerage Industry
  
• Schwab Turns Its Entire Work Force into Shareholders
  
• Schwab Bullish on Outside Talent
  
• David Pottruck: Why We Are Giving Investment Advice
  
• Business Week EBiz article featuring David Pottruck
  
• Schwab’s David Pottruck on Rising to the Challenge
  
• Charles Schwab and David Pottruck: Schwab's E-Gambit
  
• The Other Visionary: David Pottruck
  
• E-Commerce: Schwab Stays Focused
  
• Schwab Chief Only Willing to Take Banking Service So Far
  

Brokerage Industry Topics and Organizations

• New York Stock Exchange Web Page
  
• American Depository Receipts
  
• Comprehensive Listing of ADRs
  
• World Stock Exchanges
  
• Securities Exchange Commission
  

Charles Schwab and Information Systems

• J.D. Power And Associates Ranks Schwab Highest In Investor Satisfaction With Online Trading
  
• Schwab Puts It All Online
  
• Schwab Outage: IT Wakeup Call
  
• On-Line Trading at Schwab
  
• Schwab is Doubling Call Center
  
• Schwab is First Firm to Offer Trading on the Internet
  
• Schwab Leaps Forward in Sales Automation
  
• Cyber-Trading Proves Profitable for Charles Schwab
  
• Internet Pioneers are the Real Stars at Securities Industry Convention
  

Key People within Charles Schwab

• Charles Schwab, Chairman of the Board and Co-CEO
• David Pottruck, Co-CEO
• Dawn Lepore, CIO
• Janice Rudenauer, Vice President, Database and Relationship Marketing

Tips on Doing an Analysis Paper on Charles Schwab

• Be sure to define the industry as the securities brokerage industry and then break it into segments that include full service, discounters and deep discounters. A case can also be made for the new on-line brokers as a fourth category.
• Recognize that Schwab started its business based on a strategy of emphasizing low brokerage fees. Its early TV advertising stressed saving clients money based on low brokerage fees. This is not its current strategy. Schwab emphasizes best possible service and an increasingly wider range of products.
• At one time the ability to confirm trades while the client was still on the telephone was a unique capability for Schwab. This is no longer the case. They currently feel that their ability to handle mutual funds with its information systems capabilities is a unique strength of its services. More recently, Schwab has emphasized its E-Schwab approach and the importance (dominance) of the Internet.
• Since its products are always IT-based, product brochurs can help to better understand the role of IS within Schwab.
• Do not under estimate the challeges that Schwab faces from the full service brokers like Merrill Lynch that are offering volume discounts to its larger customers and the pricing pressures from the deep discountes and brokers that operate exclusively on-line like E*Trade.
• State of the Industry: Brokers from Wall Street to Montgomery Street were rejoicing over the third consecutive year that the Dow Jones industrial average gained more than 20 percent -- the first such three-year streak in its 101-year history. The rising market not only fueled the wealth of shareholders but enticed venture capitalists to pour record amounts of money into promising startups.
• Potential Threats?: The nation's major banks spent 1997 acquiring investment banks to create one-stop shopping for their corporate clients. In San Francisco, BankAmerica Corp. purchased Robertson Stephens & Co. and NationsBank Corp. combined with Montgomery Securities Inc. Led by new CEO Dan Case, San Francisco-based Hambrecht & Quist was said to be in buyout talks with Merrill Lynch & Co. and other possible suitors. Elsewhere, Morgan Stanley completed its acquisiton of Dean Witter.

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