Charles Schwab Case Essay -- essays research papers

Charles Schwab, a Stanford MBA, founded Charles Schwab & Company in 1971 in California. The company quickly established itself as an innovator. A define moment came with the 1975 May Day, when Schwab took advantage of the new opportunities deregulation offered. Schwab would not provide advice on which securities to buy and when to sell as the full-service brokerage firms did. Instead, it gave self-directed investors low-cost main course to securities transactions. From the late 80s to the early 90s, before the commercial use of the Internet, Schwab used technology to increase efficiency and quality and expand its services. Schwabs innovations harnessed technology to the solving of business problem. As Schwabs President and co-CEO David Pottruck put it, we are a technology company in the brokerage business. Schwab introduced TeleBroker, a fully automated call in system that allowed customers to retrieve real-time stock quotes and place orders. Schwab also leveraged its back-office operations with SchwabLink, a service to provide fee-based financial advisors with back-office custodial services and the capability for RIAs to cab into Schwabs computers to trade. The RIA market became an important source of r level offue for Schwab. By 2000, Schwab had 5,900 affiliated RIAs, who controlled about 30% of Schwabs assets, up from zero in 1987. Merrill Lynch viewed these RIAs as a virtual sales force for Schwab We dont compete with the discounters. We do compete with Schwab. They have essentially built a Merrill Lynch by proxy. Schwab introduced the Mutual Fund OneSource program in 1992, enabling customers to purchase no-load rough-cut funds without paying commissions. The vast majority of OneSource assets were in non-Schwab funds, except the SchwabFunds money market, the solitary(prenominal) money market fund offered to OneSource customers. Funds were ranked and presented to Schwab customers based on objective characteristics (e.g., sector, investment style, or m anagement fees) and performance. Customers could use their Schwab account to buy or sell more than 1,100 mutual funds from about 200 third-party fund families without paying any fees, and the transactions were integrated into their Schwab account statements and reports. Schwab serviced these accounts, aggregating all OneSource trades into a undivided daily transaction that was communicated electronically to the pa... ...s value proposition. Schwab customers could trade through Schwabs branch offices, through representatives at call centers, via automated telephone services, all over the Internet, and over wireless devices. Schwab sought to take advantage of synergies between the Internet and its traditional channels. For example, Schwab planned to hold over 13,600 online investing seminars in 2000 in its branches for those not well-heeled with Internet technology. Looking at the market share in Figure. 1 below, Schwab was the leader in 1999. However, in todays world competition has gotten even more competitive. Fidelity and head have become household names in todays market. Fidelity with their proven customer service, range of mutual funds, stocks, and Retirement plans is well balanced diversified credible firm with a proven track record. Vanguard is one of the newer but fast growing firms. Vanguard trademark is for low commission and expense ratios fees. Vanguard has the lowest fees in the industry and makes a big difference if one is a long-term investor. In conclusion, Fidelity and Vanguard are the tier 1 firms in the industry with Vanguard having the potential to be 1 in the near future.