Charles R. Schwab

"Charles Schwab" redirects here. For other uses, see Charles Schwab (disambiguation).
Charles R. Schwab
Born Charles Robert Schwab, Jr.
(1937-07-29) July 29, 1937
Sacramento, California, U.S.
Residence Atherton, California [1]
Education Stanford University (B.A, M.B.A)
Occupation Businessman/philanthropist
Known for Founder and chairman of the Charles Schwab Corporation
Net worth Decrease $ 5.3 billion (February 2016)[2]
Religion Roman Catholic
Spouse(s) Susan Schwab (divorced in 1970s[3]); 3 children
Helen O'Neill (19??-present); 2 children
Children with Susan Schwab:
--Charles Schwab Jr. (aka "Sandy Schwab")
--Carrie Schwab-Pomerantz
--Virginia Schwab
with Helen Schwab (née O'Neill):
--Michael Schwab
--Helen Schwab. Harry Schwab (aka "Buddy Schwab")
Parent(s) Terrie and Lloyd

Charles Robert Schwab, Jr. (born July 29, 1937) is an American businessman and investor and the founder of the Charles Schwab Corporation. He pioneered discount sales of Wall Street securities starting in 1975. This company became by far the largest discount securities dealer in the United States. He retired as CEO in 2008 but remains chairman and is the largest shareholder.

Early life and education

Schwab was born in Sacramento, California, the son of Terrie and Lloyd Schwab.[4][5] He attended Santa Barbara High School in Santa Barbara, California, and was captain of the golf team.[6] He attended pre-college school at Holy Rosary Academy in Woodland, California.[7] Schwab graduated from Stanford University in 1959 with a B.A. in Economics. In 1961, he graduated from Stanford Graduate School of Business with an MBA.[5] Schwab is a knight of the Sigma Nu fraternity.

Schwab is dyslexic, but was unaware of it until the age of 40, when he learned his son is also dyslexic.[8] The Charles and Helen Schwab Foundation aims to assist children with the disorder.[9]


In 1963, Chuck 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 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..[10]

A decisive turning point came in 1975, when the federal Securities and Exchange Commission deregulated the securities industry. Companies could then charge any fees they wanted. Schwab had long complained that the established firms showed little concern for the needs of their customers. Financial securities were not bought by consumers, they were sold by salesman, who made higher commissions and profits by selling riskier securities regardless of the disadvantages to the consumers. Schwab set up a series of radically different policies. First, the charges to consumers were cut in half. Second, salesmen are and were paid hourly salaries, rather than commissions on the total sale price. Third, Schwab refused to offer any advice to the customer. It also set up a toll-free number to take orders nationwide and later set up 24-7 system that would allow customers to place orders from anywhere at any time.[11] Established firms were outraged, and tried to block Schwab's expansion.[12]

In September 1975, Schwab opened its first branch in Sacramento, California. It expanded across the state and cut its expenses by very 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 Charles 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 dollars to customers whose funds had been illegally used.[13]

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, 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.[10] 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.[14]

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.[15]


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.[16] 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.[17]

In 2014 Schwab denounced the rise from 50,000 to 300,000 per second in the number of trade inquiries from 2007 to 2013. He warned that this high-speed trading is "a growing cancer" that threatens to destroy fairness in markets." He wants these practices either taxed or made illegal.[18]

Personal life

Schwab has been married twice. He has four children from his first marriage to Susan Schwab:[19][20] Charles Jr. (known as "Sandy"), Carrie, and Virginia. Chuck and Susan Schwab later divorced.[20]

Schwab remarried, to Helen O'Neill,[21] with whom he has two children: Michael and Helen.[20][21] His daughter Carrie is married to author Gary Pomerantz[22] She is president of the Charles and Helen Schwab Foundation and also serves as a council member on President Obama's Advisory Council on Financial Capability.[23] His son Sandy, who played quarterback at Northwestern University, is also the father of four children: Haley, Samantha, Sydney, and Charlie.[24][25]

Schwab also serves as the chair on the board of trustees for San Francisco Museum of Modern Art.[26]

A practicing Roman Catholic, he and his wife Helen currently live in Woodside, California, and are involved in philanthropy.[27] He is an avid golfer with a 7.4 handicap, and has membership in San Francisco Golf Club and Cypress Point Club.

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.[28]

Schwab as of October 2016 is worth $6.8 billion according to Forbes. It reports he is an active Republican who has donated heavily to the Party (including the National Republican Senatorial Committee and the National Congressional Committee) and individuals, most recently Jeb Bush.[29]


  1. Berniker, Mark (May 9, 2014). "Atherton mansion madness: Homes of the rich and (tech) famous". CNBC. Retrieved May 10, 2016.
  2. "Charles Schwab Profile". Forbes. February 2016.
  3. Staff, A. O. L. "Charles Schwab's Fatherly Advice: Have a Passion for What You Do -- and Diversify".
  4. "Charles R. Schwab, Chairman". Charles and Helen Schwab Foundation. Retrieved July 20, 2013.
  5. 1 2 "Charles R. Schwab". Retrieved 2010-09-29.
  6. Plitt, Todd (2003-11-10). "Charles Schwab didn't let dyslexia stop him". USA Today. Retrieved 2011-03-25.
  7. "Stanford Magazine - Article".
  8. Plitt, Todd (2003-11-10). "Charles Schwab didn't let dyslexia stop him". USA Today. Retrieved 2008-09-19.
  9. Turner, Rob (2003-11-23). "Executive Life; In Learning Hurdles, Lessons for Success". New York Times. p. 10.
  10. 1 2 "Schwab History". Retrieved 2010-09-29.
  11. Mary J. Cronin, Banking and Finance on the Internet (1998) ch 8
  12. Ingham and Feldman. Contemporary American business leaders p 568.
  13. Ingham and Feldman. Contemporary American business leaders pp 569-70.
  14. Mary J. Cronin. Banking and Finance on the Internet. p. 231.
  15. "Charles Schwab steps down as CEO of his brokerage" Los Angeles Times July 22, 2008
  16. Rod Willis, "Charles Schwab: High-Tech Horatio Alger?" Management Review (Sept. 1986) 75#9 pp 17-20.
  17. Cronin, Banking and Finance on the Internet (1998) p 231.
  18. Charles Schwab, "Flashboys and 'Investor' Outrage," Dollars & Sense (May/June 2014), Issue 312, p 11.
  19. Daily Finance: "Charles Schwab's Fatherly Advice: Have a Passion for What You Do -- and Diversify" Dawn Kawamoto, June 17, 2011
  20. 1 2 3 Charles Schwab: How One Company Beat Wall Street and Reinvented the Brokerage Industry John Kador December 2002
  21. 1 2 Charles Schwab website: "About Schwab: Charles R. Schwab - Chairman of the Board" retrieved November 25, 2013
  22. [ Schwad-Pomerantz bio, Retrieved October 23, 2016
  23. Practical Money Skills: "Speaker Bios - Carrie Schwab-Pomerantz"; retrieved November 25, 2013
  24. Charles Schwab's Guide to Financial Independence, Crown Publishers, New York (1998).
  25. "Hang In There, Wildcats". Sports Illustrated. 1982-10-18. Retrieved 2010-04-28.
  26. "Board of Trustees". SFMOMA. Retrieved 2015-10-22.
  27. Charles Schwab's Guide to Financial Independence (1998)
  28. See its 2013 tax return.
  29. "Charles Schwab Profile". Forbes. February 2016.

Further reading

External links

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