Charles Schwab Across 3 Periods Case Studies Examples

Type of paper: Case Study

Topic: Company, Business, Finance, Technology, Strategy, Sound, Model, Investment

Pages: 3

Words: 825

Published: 2020/11/05

Charles Schwab founded his eponymously named company in a 2-room office in San Francisco as a discount brokerage firm with the goal of making investing not just the playing field of wealthy individuals in the know, but to open up the stock market to anyone with the desire to be involved in it. From these origins, the firm has grown to have 2.45 trillion in assets. Its evolution has involved entering different periods of strategy and focus. As technologies such as the Internet emerged, Schwab as a company was able to foresee its importance and reacts. This analysis looks at three different periods of the company’s leadership and business model and looks at the key issues and recommendations from them.

Founding Period

Charles’s Schwab business model became possible only as of May 1, 1975 when congress passed a deregulation of brokerage commissions. This allowed for the model of offering discounted stocks and operating as a company in which brokers did not receive a commission for every trade that they made.
This was a sound business model because it helped mitigate the greed factor that fuels some portfolio managers. Under a model in which the trader makes a cash commission for every trade, which he makes, this incentivizes the trade to move money into different investments. While this can be a good strategy, moving capital from one investment to another out of principle is a losing strategy. Money should stay where it is most likely to achieve its goals. While there is always the prevailing hope that one’s broker is honest, when money and commissions enter an equation, even an honest broker is capable of self-delusion when there is a profit at stake in that mirage.
The strategy was also sound in terms of expanding the existing market rather than competing with it. It allowed them to bring people into the investment world who otherwise might not have considered doing so. As will be seen in the subsequent periods, it also built the company to a positive where it would be able to eventually compete for customers in the higher end investment markets.

90s Internet Period

Schwab’s base of operations in Silicon Valley seems to have played an important part in the company’s innovation strategy when they moved much of how their businesses operated with clients and investors to the Internet. Schwab was already cutting edge by being the first company to offer clients 24/7 access to their accounts through a telephone service (Business Impacts, 2002).
After pioneering the 24x7 multichannel access, Schwab was in a good position to foresee what emerging technologies would make such access more pervasive. Being in Silicon Valley, a place where emerging technologies is all that is spoken of, Schwab, because of it’s existing tradition of autonomous access, then offered a floppy disk software suite that pioneered the system it would eventually develop when the Internet arrived on the scene. As quoted by Pottruck, “At its core, Schwab is really a technology company that happens to be in the financial services business. We have a culture that embraces technology as the core of our business” (Business Impacts, 2002). Tech/financial analysis Brian Ascher thinks that the financial technology revolution is only just getting started (Ascher, 2013). With congress looking at ways in which investing must be regulated due to the emergence of new technologies, Schwab should keep this spirit of innovation front and center. Only recently very large financial firms were poised to collapse due to their use of new technologies on existing investment strategies (an obvious condensing of the many levels that lead to the 2008 recession). Industries which are reactive to current market changes are going to be better poised to deal with the changes that have occurred and those which will occur down the road. Schwab in 2002
Schwab, instead of looking at the existing pie and attempting to design a way to get a piece of it, looks to segments of the population that is being underserved by the financial industry. This was their moving forward strategy in 2002 when the company identified that baby boomers represented “a new, underserved segment of the investment services market” (Business Impacts, 2002). To meet this need Schwab purchased the company U.S. Trust on June 1, 200 in order to cater to high-net-worth individuals. This buy was a very good by in keeping their company paced with growing demographics. The decision was a sound one, as time told.


Schwab should continue its strategy of innovation and targeting underserved demographics. At a time when there is a lot of negative PR in the financial industry, Schwab should maintain its image as an honest company keeping pace with technology and sound acquisition decision-making. The leadership team must look towards the future of technology and infer how it will affect the current financial system. They should continue to structure in such a way that brokers are not motivated by greed, but are instead encourage to make sound decisions.


Charles Schwab Corporation. (n.d.). Retrieved February 9, 2015, from
“Charles Schwab in 2002” 2002 Business Insider
Schwab reflects on firm's history. (n.d.). Retrieved February 9, 2015, from
Why The Financial Technology Revolution Is Only Just Getting Started. (n.d.). Retrieved February 9, 2015, from technology-revolution-is-only-just-get-started/

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"Charles Schwab Across 3 Periods Case Studies Examples," Free Essay Examples -, 05-Nov-2020. [Online]. Available: [Accessed: 27-Jun-2022].
Charles Schwab Across 3 Periods Case Studies Examples. Free Essay Examples - Published Nov 05, 2020. Accessed June 27, 2022.

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