Company Overview

Schwab revolutionized the brokerage industry in 1974 with its discount brokerage service, and it continued to add innovation through the dot-com era, becoming one of the first brick-and-mortar companies to offer online trading. When the stock market downturn came, Schwab was hit hard, and it had to make several rounds of layoffs to bring operating expenses in line with revenue. Schwab started offering “Signature” and private client services to high-net-worth customers, as it tries to replace the trading commissions lost when day traders returned to their day jobs. It bought wealth manager U.S. Trust and also owns CyberTrader, a tech-rich online broker that targets serious, active traders. Attempts to diversify its revenue beyond its retail core proved mostly unsuccessful. In 2004, less than a year after buying investment bank boutique Soundview Technology Group, Schwab sold its institutional units. That venture, combined with lackluster revenue, prompted Schwab’s board to boot CEO David Pottruck and bring back founder Charles Schwab. The firm, with some difficulty, has tried to carve out a spot between the no-frills discount brokers and the full-service firms. It’s opened investor branches and has rolled out an in-house equity selection service, even as it continues to cut rates on trades. In 2003, it launched a bank, and now offers consumer banking products like mortgages and credit cards.