Charles R. Schwab
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Charles Robert Schwab Sr. (born July 29, 1937) is an American investor and financial executive. He is the founder and chairman of the Charles Schwab Corporation. He pioneered discount sales of equity securities starting in 1975. His company became by far the largest discount securities dealer in the United States. He semi-retired from the company in 2008 when he stepped down as CEO, but he remains chairman and is the largest
shareholder A shareholder (in the United States often referred to as stockholder) of a corporation is an individual or legal entity (such as another corporation, a body politic, a trust or partnership) that is registered by the corporation as the legal own ...
to this day. As of May 2021, his
net worth Net worth is the value of all the non-financial and financial assets owned by an individual or institution minus the value of all its outstanding liabilities. Since financial assets minus outstanding liabilities equal net financial assets, net ...
is estimated by ''
Forbes ''Forbes'' () is an American business magazine owned by Integrated Whale Media Investments and the Forbes family. Published eight times a year, it features articles on finance, industry, investing, and marketing topics. ''Forbes'' also re ...
'' to be $10.6 billion, making him the 210th richest person in the world.


Early life and education

Schwab was born in
Sacramento, California ) , image_map = Sacramento County California Incorporated and Unincorporated areas Sacramento Highlighted.svg , mapsize = 250x200px , map_caption = Location within Sacramento C ...
, the son of Terrie and Lloyd Schwab. He attended Santa Barbara High School in
Santa Barbara, California Santa Barbara ( es, Santa Bárbara, meaning "Saint Barbara") is a coastal city in Santa Barbara County, California, of which it is also the county seat. Situated on a south-facing section of coastline, the longest such section on the West Coas ...
, and was captain of the golf team. He attended pre-college school at Holy Rosary Academy in Woodland, California. Schwab graduated from
Stanford University Stanford University, officially Leland Stanford Junior University, is a private research university in Stanford, California. The campus occupies , among the largest in the United States, and enrolls over 17,000 students. Stanford is consider ...
in 1959 with a
Bachelor of Arts Bachelor of arts (BA or AB; from the Latin ', ', or ') is a bachelor's degree awarded for an undergraduate program in the arts, or, in some cases, other disciplines. A Bachelor of Arts degree course is generally completed in three or four years ...
in
Economics Economics () is the social science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. Economics focuses on the behaviour and intera ...
. In 1961, he graduated from
Stanford Graduate School of Business The Stanford Graduate School of Business (also known as Stanford GSB) is the graduate business school of Stanford University, a private research university in Stanford, California. For several years it has been the most selective business schoo ...
with a
Master of Business Administration A Master of Business Administration (MBA; also Master's in Business Administration) is a postgraduate degree focused on business administration. The core courses in an MBA program cover various areas of business administration such as accounti ...
. He is a knight of the
Sigma Nu Sigma Nu () is an undergraduate Fraternities and sororities in North America, college fraternity founded at the Virginia Military Institute on January 1, 1869. The fraternity was founded by James Frank Hopkins, Greenfield Quarles and James McIlva ...
fraternity.


Investment career

In 1963, Schwab and three other partners launched ''Investment Indicator'', an investment newsletter. At its height, the newsletter had 3,000 subscribers, each paying $84 a year to subscribe. In April 1971, the firm incorporated in California as First Commander Corporation, a wholly owned subsidiary of Commander Industries, Inc., to offer traditional brokerage services and publish the Schwab investment newsletter. In November of that year, Schwab and four others purchased all the stock from Commander Industries, Inc. In 1972, Schwab himself bought all the stock from what was once Commander Industries.


Charles Schwab & Co.

In 1973, First Commander changed its name to Charles Schwab & Co., Inc. A decisive turning point came in 1975, when the U.S.
Securities and Exchange Commission The U.S. Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street Crash of 1929. The primary purpose of the SEC is to enforce the law against market ...
deregulated the securities industry through the
Securities Acts Amendments of 1975 The Securities Acts Amendments of 1975 is an act of Congress. It was passed as a United States Public Law () on June 4, 1975, and amended the Securities Act of 1933 ( ''et seq.'') and the Securities Exchange Act of 1934 ( ''et seq.''). The Securiti ...
, allowing companies like Schwab to charge any fees they wanted. Schwab had long complained that the established firms showed little concern for the needs of their customers. In those times securities were not bought by consumers, they were sold by salesmen, who made higher commissions and profits by selling riskier securities regardless of possible disadvantages to the consumers. Schwab set up a series of radically different policies. First, charges to consumers were cut in half. Second, salesmen were (and still are today) paid hourly salaries, rather than commissions on the total sale price. It set up a toll-free number to take orders nationwide and later set up 24/7 telephone system that would allow customers to place orders from anywhere, at any time. Established firms were outraged by these innovations, and tried to block Schwab's expansion.


Expansion

In September 1975, Schwab opened its first branch in
Sacramento, California ) , image_map = Sacramento County California Incorporated and Unincorporated areas Sacramento Highlighted.svg , mapsize = 250x200px , map_caption = Location within Sacramento C ...
. It expanded across the state and cut its expenses by putting a heavy emphasis on automation. In 1981, Bank of America offered Schwab $53 million in stock for his 37 percent ownership. He sold, but remained as president of a semi-autonomous unit. At this point the unit had annual sales of $41 million, 600 employees, and 220,000 customers through 40 branches. Expansion was rapid, reaching 1.6 million customers in 1986, with sales of $308 million. Bank of America, however, had its own separate severe problems, and its stock plunged. The SEC investigated Schwab on the possibility he was selling stock to take advantage of insider information; he denied it, and no charges were filed. Tensions between the Schwab unit and Bank of America escalated until 1987, when the deal was cut for Schwab to buy back the brokerage company for $230 million. Schwab took the firm public. In 1988, however, the company was forced to rebate $2 million to customers whose funds had been illegally used. In 1977, Schwab began offering seminars to clients. By 1978, the company had 45,000 client accounts total, and the number grew to 84,000 in 1979. In 1980 Schwab established the industry's first 24-hour quotation service, and the total of client accounts grew to 147,000. In 1981 Schwab became a member of the
NYSE The New York Stock Exchange (NYSE, nicknamed "The Big Board") is an American stock exchange in the Financial District, Manhattan, Financial District of Lower Manhattan in New York City. It is by far the List of stock exchanges, world's largest s ...
, and the total of client accounts grew to 222,000. In 1982, Schwab became the first firm to offer 24/7 order entry and quote service. It opened its first international office in Hong Kong, and the number of client accounts totaled 374,000. By 1995 the company was by far the largest discount broker, with revenue of $1.4 billion and $200 billion in total assets managed. By 1996 there were 3.6 million active accounts. David S. Pottruck, who had spent the majority of his 20 years at the brokerage as Schwab's right-hand man, shared the CEO title with Schwab from 1998 to 2003. In May 2003, Schwab stepped down, and gave Pottruck sole control as CEO. Just a year later, on July 24, 2004, the company's board fired Pottruck, replacing him with Schwab. News of Pottruck's removal came as the firm had announced that overall profit had dropped 10 percent, to $113 million, for the second quarter, driven largely by a 26 percent decline in revenue from customer stock trading. After coming back into control, Schwab conceded that the company had "lost touch with our heritage", and quickly refocused the business on providing financial advice to individual investors. He also rolled back Pottruck's fee hikes. The company rebounded, and earnings began to turn around in 2005, as did the stock. Schwab always stressed cutting-edge technology, and pioneered computerization to replace paperwork. The emergence of the World Wide Web in the mid-1990s posed a new threat with new startups trying to exploit their software. Schwab responded in 1996 by becoming the first major financial services firm to sell online listed and over-the-counter stocks, as well as mutual funds and bonds. The startups charged $36 a trade, and Schwab charged $39 per Internet trade, compared to $160 charged by traditional brokerages using the old technology. In 1984, the firm innovated with the Mutual Funds Marketplace, which gave customers a choice of 140 no-load funds. It expanded to 500 no-load funds by 1992. In 2000, Schwab introduced mobile/wireless trading with its PocketBroker mobile app that functioned on RIM (BlackBerry), Palm, Windows CE, and WAP-enabled phones, with deployments in the US, UK, and Hong Kong. Schwab also introduced Charles Schwab Bank, N.A., a federally chartered intrastate retail bank headquartered in Reno, Nevada. The application for the bank was approved in February 2003 by the Office of the Comptroller of the Currency.


Personal life

Schwab has been married twice. He has three children from his first marriage to Susan Cotter:Charles Schwab: How One Company Beat Wall Street and Reinvented the Brokerage Industry
John Kador December 2002
Charles Jr. (known as "Sandy"), Carrie, and Virginia. Charles and Susan Schwab later divorced; she is not to be confused with Susan Carol Schwab, an American politician who served under President
George W. Bush George Walker Bush (born July 6, 1946) is an American politician who served as the 43rd president of the United States from 2001 to 2009. A member of the Republican Party, Bush family, and son of the 41st president George H. W. Bush, he ...
as
United States Trade Representative The Office of the United States Trade Representative (USTR) is an agency of the Federal government of the United States, United States federal government responsible for developing and promoting Trade policy of the United States, American trade ...
. This particular Susan Carol Schwab is of no relation to the family of Charles R. Schwab. Schwab subsequently remarried, to Helen (O'Neill) Schwab,Charles Schwab website: "About Schwab: Charles R. Schwab - Chairman of the Board"
retrieved November 25, 2013
with whom he has two children: Michael and Helen. His daughter Carrie is married to author
Gary Pomerantz Gary M. Pomerantz (born November 17, 1960) is an American journalist and author who lectures in the graduate program in journalism at Stanford University. His books include ''Where Peachtree Meets Sweet Auburn'' (1996 ''New York Times'' Notabl ...
. She is president of the Charles and Helen Schwab Foundation and also served as a council member on President Obama's Advisory Council on Financial Capability.Practical Money Skills: "Speaker Bios - Carrie Schwab-Pomerantz"
; retrieved November 25, 2013
His son Charles Jr., who played
quarterback The quarterback (commonly abbreviated "QB"), colloquially known as the "signal caller", is a position in gridiron football. Quarterbacks are members of the offensive platoon and mostly line up directly behind the offensive line. In modern Ame ...
at
Northwestern University Northwestern University is a private research university in Evanston, Illinois. Founded in 1851, Northwestern is the oldest chartered university in Illinois and is ranked among the most prestigious academic institutions in the world. Charte ...
, is the father of four children: Haley, Samantha, Sydney, and Charlie. Schwab sits on the Board of Trustees of the San Francisco Museum of Modern Art, and is a Chair Emeritus. A practicing
Roman Catholic Roman or Romans most often refers to: *Rome, the capital city of Italy *Ancient Rome, Roman civilization from 8th century BC to 5th century AD *Roman people, the people of ancient Rome *'' Epistle to the Romans'', shortened to ''Romans'', a lette ...
, Schwab and his wife Helen live in
Atherton, California Atherton () is an List of municipalities in California, incorporated town in San Mateo County, California, San Mateo County, California, United States. Its population was 7,188 as of 2020. Atherton is known for its wealth; in 1990 and 2019, Athe ...
, and are involved in philanthropy. Schwab is
dyslexic Dyslexia, also known until the 1960s as word blindness, is a disorder characterized by reading below the expected level for one's age. Different people are affected to different degrees. Problems may include difficulties in spelling words, r ...
, but was unaware of it until the age of 40, when he learned one of his sons is also dyslexic. The Charles and Helen Schwab Foundation, whose primary focus is "to ensure that each student reaches his or her full potential", supports research and programs related to learning disabilities, including dyslexia.


Political and economic views

Schwab is an active Republican who has donated heavily to the party (including the National Republican Senatorial Committee and the National Congressional Committee). In July 2017, Schwab donated the maximum legal individual amount of $101,700 to the Republican National Committee's legal defense fund that partially paid for the legal defense of President
Donald Trump Donald John Trump (born June 14, 1946) is an American politician, media personality, and businessman who served as the 45th president of the United States from 2017 to 2021. Trump graduated from the Wharton School of the University of Pe ...
in the Special Counsel investigation of possible coordination between the Trump campaign and Russia. Schwab was listed in a 2019 ''Washington Post'' article as one of the largest
PAC Pac or PAC may refer to: Military * Rapid Deployment Force (Malaysia), an armed forces unit * Patriot Advanced Capability, of the MIM-104 Patriot missile * Civil Defense Patrols (''Patrullas de Autodefensa Civil''), Guatemalan militia and paramili ...
contributors in the US, donating $12.5 million to general conservative political activities, with $2 million explicitly donated to Donald Trump. In 2019, it was revealed that Schwab had donated nearly $9 million to a dark money group that opposed
Barack Obama Barack Hussein Obama II ( ; born August 4, 1961) is an American politician who served as the 44th president of the United States from 2009 to 2017. A member of the Democratic Party, Obama was the first African-American president of the U ...
in the
2012 election This national electoral calendar for 2012 lists the national/ federal elections held in 2012 in all sovereign states and their dependent territories. By-elections are excluded, though national referendums are included. January *3–4 January: ...
. Schwab opposes a
wealth tax A wealth tax (also called a capital tax or equity tax) is a tax on an entity's holdings of assets. This includes the total value of personal assets, including cash, bank deposits, real estate, assets in insurance and pension plans, ownershi ...
.


Wealth

, Schwab was worth $8.2 billion, according to ''
Forbes ''Forbes'' () is an American business magazine owned by Integrated Whale Media Investments and the Forbes family. Published eight times a year, it features articles on finance, industry, investing, and marketing topics. ''Forbes'' also re ...
''. The Charles and Helen Schwab Foundation was formed in 1987. In 2013, it reported assets of $270 million and made $13 million in grants. He serves as its chairman; his wife is the president.


Awards and honors

* 1989: Golden Plate Award of the American Academy of Achievement * 1997: "King of Online Brokers" by ''Forbes'' magazine * 2016: Financial Innovation Award, The Museum of American Finance


References


Further reading

* Cronin, Mary J. ''Banking and Finance on the Internet'' (John Wiley & Sons, 1998)
online
* Ingham, John N., and Lynne B. Feldman. ''Contemporary American business leaders: a biographical dictionary'' (Greenwood, 1990). pp 566–71. * Kador, John. ''Charles Schwab: How one company beat Wall Street and reinvented the brokerage industry'' (John Wiley & Sons, 2002)
excerpt
* Silver, A. David. ''Entrepreneurial Megabucks: The 100 Greatest Entrepreneurs of the Last 25 Years'' (1985). * Willis, Rod. "Charles Schwab: High-Tech Horatio Alger?" ''Management Review'' (Sept. 1986) 75#9 pp 17–20


External links


Charles Schwab
€”official biography, Charles Schwab Corp.
Charles and Helen Schwab Foundation
{{DEFAULTSORT:Schwab, Charles R. 1937 births Living people American chairpersons of corporations American people of German descent People from Piedmont, California People from Woodland, California Businesspeople from Sacramento, California Stanford University alumni Stanford Graduate School of Business alumni American financial businesspeople American billionaires American philanthropists People from Atherton, California Stanford University trustees Catholics from California American company founders California Republicans People with dyslexia