Charles Schwab 2011 Annual Report Download - page 31

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THE CHARLES SCHWAB CORPORATION
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Products and Services
The Company offers a broad range of products to address individuals’ varying investment and financial needs. Examples of
these product offerings include:
Brokerage – an array of brokerage accounts including some with check-writing features, debit card, and billpay;
individual retirement accounts; retirement plans for small to large businesses; 529 college savings accounts;
designated brokerage accounts; equity incentive plan accounts; and margin loans, as well as access to fixed income
securities, equity and debt offerings, options, and futures;
Banking – checking accounts linked to brokerage accounts, savings accounts, certificates of deposit, demand deposit
accounts, first mortgages, home equity lines of credit (HELOCs), and personal loans collateralized by securities;
Trust – trust custody services, personal trust reporting services, and administrative trustee services;
Advice solutions– separately managed accounts, customized personal advice for tailored portfolios, and specialized
planning and full-time portfolio management;
Mutual funds – third-party mutual funds through Mutual Fund Marketplace, including no-load mutual funds through
the Mutual Fund OneSource service, proprietary mutual funds from two fund families – Schwab Funds and Laudus
Funds, other third-party mutual funds, and mutual fund trading and clearing services to broker-dealers; and
Exchange-traded funds (ETFs) – third-party and proprietary ETFs, as well as separately managed portfolios of ETFs.
These products, and the Company’s full array of investing services, are made available through its two segments – Investor
Services and Institutional Services.
Investor Services
Through the Investor Services segment, the Company provides retail brokerage and banking services to individual investors.
The Company offers research, analytic tools, performance reports, market analysis, and educational material to all clients.
Clients looking for more guidance have access to online portfolio planning tools, professional advice from Schwab’s portfolio
consultants who can help develop an investment strategy and carry out investment and portfolio management decisions, as
well as a range of fully delegated managed solutions that provide ongoing portfolio management.
Schwab strives to demystify investing by educating and assisting clients in the development of investment plans. Educational
tools include workshops, interactive courses, and online information about investing. Additionally, Schwab provides various
internet-based research and analysis tools that are designed to help clients achieve better investment outcomes. As an example
of such tools, Schwab Equity Ratings is a quantitative model-based stock rating system that provides all clients with ratings
on approximately 3,000 stocks, assigning each equity a single grade: A, B, C, D, or F. Stocks are rated based on specific
factors relating to fundamentals, valuation, momentum, and risk and ranked so that the number of ‘buy consideration’ ratings
– As and Bs – equals the number of ‘sell consideration’ ratings – Ds and Fs. In 2011, the Company launched Schwab Equity
Ratings InternationalTM, an international ranking methodology covering approximately 4,000 stocks in 28 foreign equity
markets.
Clients may need specific investment recommendations, either from time to time or on an ongoing basis. The Company
provides clients seeking advice with customized solutions. The Company’s approach to advice is based on long-term
investment strategies and guidance on portfolio diversification and asset allocation. This approach is designed to be offered
consistently across all of Schwab’s delivery channels.
Schwab Private ClientTM features a personal advice relationship with a designated portfolio consultant, supported by a team of
investment professionals who provide individualized service, a customized investment strategy developed in collaboration
with the client, and ongoing guidance and execution.
For clients seeking a relationship in which investment decisions are fully delegated to a financial professional, the Company
offers several alternatives. The Company provides investors access to professional investment management in a diversified
account that is invested exclusively in either mutual funds or ETFs through the Schwab Managed PortfolioTM and
WindhavenTM programs. The Company also refers investors who want to utilize a specific third-party money manager to
direct a portion of their investment assets to the Schwab Managed Account program. In addition, clients who want the