Charles Schwab (Charles Schwab)( Founder and CEO of Charles Schwab & Co.)
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Biography Charles Schwab (Charles Schwab)
Considering the activities of various companies, we inevitably talk about their position on the stock exchange. Exchange in such cases appears as a matter of course background, created to sustain firm. So today - a story of a stockbroker and about what he is creating this very environment of enterprises.
. About Charles Schwab, founder and CEO of Charles Schwab & Co., Said that he brought the stock market to the masses.
. Unknown, . I planned Schwab repeated "change image" of the company since the early days of its existence, . or passion for change was awakened in him only in recent years, . but then, . how talented he carries these metamorphoses, . explains why, . which his brokerage firm was named the magazine Forbes "Company of the Year,
. Charles Schwab (left) and David pottrak from the very beginning a very warm attitude to all sorts of technical novelties.
Today, Charles Schwab Corporation, started his career as an ordinary discount broker, * provides a wide range of financial services to private investors, independent investment managers and other institutions. Through its broker-dealer company serves about 6 million active customer accounts in the United States and in several other countries. It has been established network of more than 300 missions, offices, call centers, automated telephone systems and Internet-structures.
. After 4 years after graduating from Stanford University Schwab and his two partners have released a newspaper called Investment Indicator, on the problems of investing
. Subscribe it cost 84 dollars a year. In 1971, Schwab took from his uncle's 100 thousand. dollars to start the work of its first brokerage office - First Commander Corp.
. Three years later, when the U.S. Commission on Securities and Exchange Commission today announced a trial period to change the rules for brokerage, Schwab took the opportunity and offered his services as a discount broker
. In 1974, he hoped to earn a coming disappointment of investors in the firm to provide full range of services, such as Merrill Lynch, Smith Barney and PaineWebber. For his company to charge lower fees for participating in an auction, and brokers, Schwab received salary and bonuses - so everyone was happy and there was no reason for a conflict of interest.
. In the 1980's Schwab major breakthroughs: created OneSource mutual fund supermarket, . which made mutual funds, . not charge a fee on the sale of shares to investors, . accessible to the masses, first in the industry provided the opportunity daily round the clock ordering and receipt of quotations began to practice seminars and publications, . teach people the basic Exchange, conducted a marketing campaign to promote self-management investments.,
. From the first days of the company has been an energetic supporter of the use of information technology
. In 1979, Schwab laid out more than 500 thousand. dollars to establish the processing of information. In 1984, the company could carry out on-line auction with software called Equalizer (later - StreetSmart based on Windows), and this despite the fact that customers were interested in electronic trading, there were units. In 1986 debuted Schwabline - terminal for loading the necessary information about the market and its printouts.
In 1995, Charles Schwab once expressed confidence in the brokerage house will soon move to the Internet. In the same year, co-founder David Pottraku caught evidence that the number of PCs sold in the U.S. surpassed the number of TVs sold. Pottrak concluded that trading with a capacity of computers had all chances to become a key focus of business. David bought a PC all vice-presidents Schwab and taught myself to print, to be able to use existing in the company email system. He took a username Electric.Dave and became well-known fact that from time to time carried out a mass mailing encouraging letters to staff. The attack on the network began. Manufacturer Schwab did not waste any time before the majority of competitors came in online, and this was beneficial to all different.
The first chapter of the history of Schwab's entry into the world of electronic commerce has been written in late 1995. Then the CIO Don Lepori received from one of its subordinate research groups several letters. Scientists have suggested that she read the pilot version of communication software for computer systems Schwab.
Lepori appointed engineers to meet and come to her immediately, along with Charles Schwab. To show the developers have chosen a very simple application for stock trading web. After demonstrating the technology all the scientists were included in the group to develop software for conducting online bidding. The group's work was kept secret from competitors firms are gradually it has grown to 30 people and was established as a separate unit - e.Schwab.
In mid-1996 system e.Schwab was fully prepared to work. Its launch has not received wide publicity: publicly about it only reported at the annual meeting of shareholders of the company.
Despite this "English parish, the new service was immediately recognized as successful. For the first 2 weeks of the project was opened on 10 thousand accounts - such was the annual plan of the company! By the end of 1997, the number of all accounts - at e.Schwab and customary Schwab - rose to 1.2 million. The volume of online assets increased by 94% - up to 81 billion. dollars - roughly 10 times greater than those of competitors, the E-Trade. Schwab's Guide was prepared to celebrate.
But customers do not exhibit as elation. They had their own requirements: remove e.Schwab (so as to manage the account in this system was not easy: one free call per month and further communication by e-mail), . abolish the dual system of payment (one hundred to e.Schwab and Schwab varies), . introducing a single rate - 29, . $ 95 per transaction,
. As received from transactions accounted for almost half of the fee income Schwab, the transition to a single, to the same low, the cost of the transaction threatened to decline in Schwab's annual income to 125 million
. U.S.. And in general it was difficult to predict the consequences of this for the company's prosperity. But Schwab and Pottraka had no choice, and they decided to take this step.
As a result, January 15, 1998 Schwab was willing to meet with a "bright future". Although initially taken by radical measures, as expected, led to a decrease in income and the depreciation of the shares of the company, by the fourth quarter of this year, the situation calmed down and the revenue began to increase again.
. In August 1999, the volume of assets in client accounts at Schwab has exceeded a trillion dollars.
. Veterans Schwab could not understand why the background of the long-awaited growth in the income of the company its leadership refuses to advertise, and generally as something to focus on reducing the cost of services - up to 29.95 dollars per transaction
. In fact, during this time, Charles Schwab realized that the Internet is the most effective and attractive to business due to its extensive capabilities in providing services. Yes, price is important for active traders, among the first to use the Internet for bidding. But in the heart of the market where he earns money Schwab, key concepts are not speed, low cost and originality, and simplicity, reliability and features - descriptiveness
. Movement to the masses in the new stage
. In mid-1990's Internet has seemed to many innovation
. So when, in 1995, Schwab launched the first site and began providing brokerage services online, it was like a pointless adventure. But today it is known that she herself is fully justified. During the period from 1996 to 1998 the number of accounts Schwab has grown from 600 thousand to 2,2 million, and online assets grew from $ 42 billion. to $ 174 billion.
January 10 Schwab signed a partnership agreement with another player with experience - Steve Case, executive director of America Online. The companies have signed long-term contract, under which Schwab will provide its content and services through AOL. And although the client base of small brokerage firm will not name - Schwab today boasts 7.4 million. accounts and client assets of $ 961 billion. dollars, the deal allows it to distribute their services are among the 25 million users of AOL.
What happened in the kingdom
It is clear that, after full adjustment Internals twice, Schwab was able to decide on further changes. At the first stage of the Schwab was a discount broker in pure. After 17 years the company has been a most collector's assets, thanks to its success draft OneSourse, which attracted investors, mutual funds to work at Schwab.
In the "third stage" Schwab is Internet company. Started 5 years ago. Today 85% of trading takes place online, in other words, about one in five online bargain in the industry is at Schwab. Despite the youth of their online trends, the company successfully survived the collapse of Internet companies in 2000. Then E-Trade shares fell by 75% compared with the highest level of the firm, and Schwab - only 37%.
In the "fourth stage" Schwab more than ever the degree becomes a brokerage firm that provides a full range of services. Concluded last year a deal with U. S. Trust and some other recent steps paved the way companies in the business of providing consulting and many other services, . which is a notable deviation for the firm, . long and diligently to disassociate himself from the "shameful exchange trivialities.,
. David Pottrak, sharing with Charles Schwab, executive director, confidently proves the necessity of the current changes in the company
. Since the viability of Schwab clients is constantly growing, doing business becomes more complex. Consequently, customers are beginning to feel the need to help the boards. If the firm will not help them, they'll find another.
In fairness it should be noted that David Pottrak not inferior to Charles Schwab in character: it is active, energetic and active, he knows how to implement a very big idea "Chuck". At least Pottrak least known on Wall Street personality. Having worked in the field of financial services for nearly 30 years, Pottrak is the right hand of Charles Schwab in solving everyday problems. He even looks like a man born for the big battles: build a fighter, a broken nose - the consequences of studies on the mathematics faculty at the University of Pennsylvania. But in the case Pottraka appearance is definitely misleading: this man talks about management strategies at the level of high quality specialist and said with feeling soft voice.
. Why Schwab is restructuring its economy, . which all parameters can be considered as an ideal vehicle for pribyliN To date, the assets Schwab, . involved in retail trading, . trillions of dollars - is three times more, . than five years ago! At least, . recent shocks to the market his company daily had an affair with 500 million,
. dollars only new assets and opened about 6 thousand new accounts. According to Salomon Smith Barney (the largest marketer of investment), Schwab net income for 2000 was 758 million dollars in the amount of annual net income of 5.9 billion. dollars.
Shareholders have been generously rewarded. After a difficult moment in 1987 when under the threat of non-margin of $ 15 million. dollars from one speculator from Hong Kong, which could entail the loss of the company's position in business, Schwab shares rose by 22 000%. Hard and purposeful Charles Schwab has received all of their money, which threatened to disappear forever. Now his 20-percent share in Schwab is estimated at 7.5 billion. dollars.
Given the inclusion in the list of his consulting services, the company is in a critical situation. For many years, Schwab has laid particular emphasis on the fact that its brokers are working for wages, not commissions, and not try to sell to customers any additional services. Anyone who tried to break this rule, would have been dismissed. Now, Schwab and Pottrak promote other theory. They want to rely in its business to the guaranteed sources of income such as fees for cash management, rather than the possible profit from the manipulation of clients' money. The desire for this and encouraged to take a decision to purchase U. S. Trust (at the time of the transaction, David Pottrak itself is a client USTrust), as well as the trustee to begin the examination and examination of planning. New services deduce Schwab to another market - control states.
It is now clear that he suddenly worried Charles Schwab. To the extent that Schwab as clients get older and richer, they want someone was planning how to control their condition, and individually to provide banking services. Schwab could not do it and as a result lost many of the most affluent customers and departed with a decent profit. It should be noted that the deal between the companies has been concluded in time: it is expected that in the next four years the number of Americans whose personal assets have ranged from 1 to 5 million dollars, will increase by 40%.
. In early 1990 Schwab did not advise their clients
. For the answer to any question regarding the shares of employees of Schwab clients to send advertisements to the Standard & Poor, which could be cut out and send the firm as an order or to stock quotes in the Morning Star. Then, in 1993, Schwab took the first step by releasing "Mutual Fund Select List" - a summary of the 75 funds recommended by Schwab. Synopsis were based on data about the risks, expenses and fund strategy.
If clients needed further assistance, Schwab forward them to the public 425 investment advisers. These advisers are independent financial planners, held in Schwab test of objectivity, which agreed to pay Schwab set "fee" for clients. It is clear that Schwab, in general, shared money, who could get myself.
Changes rang out in the last year, when Schwab offered a service "portfolio consultation" in all fields. For $ 400, investors can obtain authoritative analysis of its portfolio from a broker, giving advice on the purchase or sale of shares and funds. Most recently introduced a new service "signature" for the accounts of not less than 1 million. U.S.. Users of this service are all - from research reports to access the dedicated brokers.
. In an effort to provide customers a full range of brokerage services, Schwab wants to be different from its rivals in the face, for example, Marrill Lynch and Morgan Stanley in scope
. In addition, Pottrak said that if "all firms providing similar services for 2% of managed assets, Schwab should do it for 1%."
. Having achieved success in the United States, Charles Schwab is working to properly represent their interests in Europe and Asia
. However, in Europe Schwab waiting difficulty. With the increasing interest in the market of individual investments Schwab finds numerous competitors in the face of European banks, which actively take up the provision of online services
. Present case for technology
. We have already mentioned that Schwab has always sought to maximize automated workflow
. Thanks to his efforts the company was early enough to use Internet technology and to apply for the introduction of trading wireless devices, etc.
His long-term "zanudstvo" came to fruition. Every day at Schwab calls to 600 thousand clients, requiring an answer to a question about bidding, forgot the password and pr. But only about 100 thousand of them are handled by people costs $ 11 each, while the automated calls and connections through the network cost a few cents. According to analyst Guy Motskovski from Salomon Smoth Barney, Schwab spends 42% of net income on compensation and bonuses, while Merrill Lynch - about 55%.
. By automating the bidding and execution of daily tasks, Schwab wants to make technology work for the good advice
. Since about 60% of the time working with a client advisor spends on the collection and collation of information on its accounts, Schwab believes it is necessary to facilitate the work on this site. He plans to install the web tools that after entering certain data will enable clients to perform all routine work of collecting information and apply to the Councilor has zazaklyucheniem.
. Schwab Web site sends visitors to the "ground" the company offices for a personal consultation, while web-studio teach clients how to work online
. According to one of the company, wherever Schwab neither opened a new office, web-traffic from the area increases dramatically. Secret - the company created an inextricable link between the offices on Park Avenue and virtual channels.
. Fly in the Ointment
. Already during the preparation rooms were known news about Charles Schwab & Co: Company asked some of its employees in the next two months to take unpaid breaks on Fridays
. Thus, some of the 26 thousand. employees will not get to work on 2, 16 February and 2 March. These actions are an attempt to reduce the costs of the company, and at the same time avoid a full-scale staff reductions.
The need for significant cost reduction is dictated by the high competition in this business. To some extent this action is a response to the statement of the company Ameritrade, the strongest competitor Charles Schwab, to reduce 9% of the state. Also earlier this month, Charles Schwab announced 27-percent drop in profits compared with its projections.