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History A titan in the world of discount brokerages, Charles Schwab was founded as First Commander in the late 1960s by Charles Schwab, a young Stanford graduate. The inexperienced Schwab neglected to file the appropriate documents with the Securities Exchange Commission (SEC), however, and was forced out of the market in 1970. Undaunted, Schwab returned the following year with his papers in order and founded his eponymous company as a full-service brokerage house. Schwab made its name as the discount brokerage for investors that mistrusted commission-based brokerages. When the SEC outlawed fixed brokers' commissions in 1975, most houses raised commissions drastically, but Schwab, which has always portrayed itself as an unconventional financial services firm, cut its commissions and gained a huge market share in the process. Schwab sold the company to BankAmerica in 1983 to raise capital, but he bought it back in 1987 and went public. King of the Net Schwab has been an extremely hot firm in recent years. In 1998, its revenues rose 20 percent, while its net income shot up 30 percent. Customers invest about $500 billion through Schwab. Part of the reason the firm has grown is its alliances with investment banks J.P. Morgan, Credit Suisse First Boston (CSFB) and Hambrecht & Quist, an initiative begun in 1997. Through these partnerships, the firm offers its clients access to initial public offerings. In 1998, CSFB also began using Schwab to sell debt offerings it underwrites. But the major reason for Schwab's rapid ascension is its dominance of online trading. According to The New York Times, the firms' computing center in Phoenix handles about a third of all Internet trading. And the firm is moving quickly toward offering full brokerage services online, dispensing advice and research through its web site. Schwab is also exploring more creative uses of the Internet, such as e-mailing clients with news based on their investment preferences. The firm has gained the lead in online brokering by finding the middle path between discount brokers like E*Trade and full-service firms like Merrill Lynch. In January 2000, Schwab announced the acquisition of private banker and investment manager U.S. Trust. The marriage of the low-cost brokerage house with a bank that caters to wealthy private clients might seem incongruous, but Schwab is hoping to be able to stay with clients every step of the way - from beginning investing to wealth accumulation and maintenance. The two companies will maintain separate brand identities, but will share processes and services across business lines. While the U.S. trust deal brought in stable, long-term investors, Schwab also made moves to attract day-traders, the smaller but more active traders that generate profits for online firms. In February 2000, Schwab purchased CyBerCorp, an Austin, Tex.-based electronic trading firm that specializes in day-traders. Schwab paid about $488 million for CyBerCorp, one of the top ten online firms in terms of trades. On the same day as the CyBerCorp purchase, Schwab announced it was cutting commissions for their most active traders. Day-traders making more than 30 equity trades in any quarter pay reduced rates, from $29.95 to $14.95 per trade. (Most CyBerCorp clients qualify for the Schwab discounts.) Both moves ? the reduced prices and the purchase ? were seen as attempts to recapture the online trading market Schwab once dominated. "We've lost online share," Schwab co-CEO David Pottruck conceded after the CyBerCorp deal.
Schwab hosts a separate web site for undergraduate and MBA recruiting, located at www.schwabcollege.com. The site includes a list of the firm's recruiting schedule, as well as links to descriptions of open job positions. For the firm's headquarters, the firm "shows up at most Bay Area job fairs, and stage a few of their own from time to time." For MBAs, the firm offers a 13-month Management Associate Program (MAP) that includes an initial classroom training program, followed by a series of three-month rotations. Undergrads are hired primarily in Jersey City, Denver, Orlando, Phoenix, Indinapolis and San Francisco. Applicants can submit resumes electronically through the site's online resume submission form, by regular mail, or by fax. Insiders say the company performs a background check which they run past the FBI before hiring a candidate. However, insiders also call interviews "informal, to get an impression of the person beyond the resume."
Great diversity "It is a very eclectic group of people," says one insider about the company. "Schwab prides itself on its diversity and having employees that appreciate how much that enhances a company's performance. There is no old boys network here." Says an employee at the company's headquarters: "There's no 'locker room' talk even in private about one race or another. They take harrassment very seriously. No one cares if you're straight or gay, and people are pretty liberal and PC." Continues that contact: "If you're going to run afoul of the corporate culture at Schwab, it's most likely going to be in the opposite direction. I think if you made a remark hostile to sex, race, sexual preference or religion, you'd probably get nuked." Schwab has won national renown for making its workplace friendly to gays and lesbians; it was among the first in the industry to extend equal benefits to their partners. Minorities and women have also fared well at Schwab when it comes to career opportunities. "Many minorities and women are in senior positions and therefore diversity is not an issue," says one insider. Says another: "Some of the women in my department have discussed a glass ceiling, but they are talking about the top 10 positions in the company being disproportionately males. Up to and including the VP level, I'm not aware that there is any disparity." Women in army boots Schwab is pretty liberal for a financial services firm when it comes to dress code, too. While dress is generally described as "business casual," at the company's headquarters, dress varies by department. Reports one insider: "If you have customer contact you have to be presentable, but it's not terrbily rigid. I've seen guys that wear dresses, women wearing army boots, body piercings, little cowboy outfits." However, "the VPs and ambitious dress better." Good perks Pay at Schwab is considered average, but insiders agree that the benefits the firm kicks in push compensation into quite healthy levels. "Starting salaries won't knock your socks off, but the company match on money put into one's 401(k) is generous. It won't seem like all that big a deal at first, but they keep giving us special grants of stock, which splits all the time, and quarterly bonuses, and lots of little extras and perks along the way." Another insider reports that "pay will always be low to start off with until you get your professional Series 7 license to trade securities." However, says that contact, "the perks are great. It really adds up to a lot of unrealized salary when you have such great health benefits, 401(k) plan and stock options." One contact reports receiving about $10k in benefits annually. Says another: "This week there's a guy down in the warehouse who's retiring after only 15 years with the company with about $2.5 million in his 401(k). Not exactly Microsoft millionaires, but this is a pretty low-ranking guy who just did his job a good long while." For those with heart, Schwab offers nice benefits. "They're quite generous in doing 100 to 200 percent company matches to charitable contributions," reports one insider. "They encourage employees to donate to whatever individual causes they are for, and in some cases donate more than money, like building materials. The longer you stay at Schwab the more you see opportunities to turn your connection to the company into an increased opportunity to particpate in more charitable stuff." Some rough periods For the most part, working at Schwab means a normal 40-hour week (or maybe a bit more), insiders report. However, this can change during heavy periods. "It is not a job for everybody," reports one Schwab employee. "Financial markets can get very turbulent and we can get very busy. But with hard work comes rewards." Says another contact: "There are a damn lot of demanding privileged people. If you're in any sort of support role you'll find yourself dealing with people who want everything right away with no concept of what goes into what they're asking for, and if you tell them they can't have it, they're quick to escalate on you." Schwab officially offers comp time for these heavy periods, under which "in theory, you take other time off if you have to work a lot of extra hours." However, says one contact, "I don't see that happen a lot."
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Asset Management;Computer Software;Discount Brokerage Services;Investment Consulting;Retirement Accounts;Telebrokerage Services
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