Charles Schwab 2008 Annual Report Download - page 16

THE CHARLES SCHWAB CORPORATION
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helps create services that are scalable and consistent. This combination helps the Company address a wide range of client
needs – from tools and information for self-directed or active investors, to advice services, to retirement and equity-based
incentive plans, to support services for independent IAs – while enabling each client to easily utilize some or all of these
capabilities according to each client’s unique circumstances.
The Company’s competition in serving individual investors includes a wide range of brokerage, wealth management, asset
management firms, banks, and trust companies. In serving these investors and competing for a growing percentage of the
investable wealth in the U.S., the Company offers a multi-channel service delivery model which includes branch, telephonic,
and online capabilities. Under this model, the Company can offer personalized service at competitive prices while giving
clients the choice of where, when, and how they do business with the Company. Schwab’s branches and regional telephone
service centers are staffed with trained and experienced financial consultants (FCs) focused on building and sustaining client
relationships. The Company offers the ability to meet client investing needs through a single ongoing point of contact, even as
those needs change over time. In particular, management believes that the Company’s ability to provide those clients seeking
help, guidance, or advice with an integrated, individually tailored solution – ranging from occasional consultations to an
ongoing relationship with a Schwab FC or an IA – is a competitive strength compared to the more fragmented offerings of
other firms.
The Company’s online and telephonic channels provide quick and efficient access to an extensive array of information,
research, tools, trade execution, and administrative services, which clients can access according to their needs. For example,
as clients trade more actively, they can use these channels to access highly competitive pricing, expert tools, and extensive
service capabilities – including experienced, knowledgeable teams of trading specialists and integrated product offerings.
Individuals investing for retirement through 401(k) plans can take advantage of the Company’s bundled offering of multiple
investment choices, education, and third-party advice. Management also believes the Company is able to compete with the
wide variety of financial services firms striving to attract individual client relationships by complementing these capabilities
with the extensive array of investment, banking, and lending products and services described in the following section.
In the IA arena, the Company competes with institutional custodians, traditional and discount brokers, banks, and trust
companies. Management believes that its Advisor Services segment can maintain its market leadership position primarily
through the efforts of its expanded sales and support teams, which are dedicated to helping IAs grow, compete, and succeed
in serving their clients. In addition to focusing on superior service, Advisor Services competes by utilizing technology to
provide IAs with a highly-developed, scalable platform for administering their clients’ assets easily and efficiently. Advisor
Services sponsors a variety of national, regional, and local events designed to help IAs identify and implement better ways to
grow and manage their practices efficiently.
Another important aspect of the Company’s ability to compete is its ongoing focus on efficiency and productivity, as lower
costs give the Company greater flexibility in its approach to pricing and investing for growth. Management believes that this
flexibility remains important in light of the current competitive environment, in which a number of competitors offer reduced
online trading commission rates and account fees, as well as lower expense ratios on certain classes of mutual funds.
Additionally, the Company’s nationwide marketing effort is an important competitive tool because it reinforces the attributes
of the Schwab brand.
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 – various asset management 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;
separately managed accounts; designated brokerage accounts; equity incentive plan accounts; and margin loans, as
well as access to fixed income securities and equity and debt offerings;
 Banking – first mortgages, home equity lines of credit, pledged-asset loans, certificates of deposit, demand deposit
accounts, high-yield investor checking accounts linked to brokerage accounts, and credit cards;
 Trust – trust custody services, personal trust reporting services, and administrative trustee services; and