Charles Schwab 2013 Annual Report Download - page 13

THE CHARLES SCHWAB CORPORATION
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Business Strategy and Competitive Environment
The Company’s stated purpose is to champion every client’s goals with passion and integrity, believing the best long-term
strategy is one that puts clients first. Because investing plays a fundamental role in building financial security, the Company
strives to deliver a better investing experience for its clients – individual investors and the people and institutions who serve
them – by disrupting longstanding industry practices on their behalf and providing superior service. The Company aims to
offer a broad range of products and solutions to choose from, including relevant and actionable advice, with a focus on
transparency and convenience. In addition, management works to leverage Company scale and resources, as well as expense
discipline, to help keep costs low and ensure that client solutions are both affordable and responsive to needs.
The Company’s competition in serving individual investors includes a wide range of brokerage, wealth management, and
asset management firms, as well as 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
online, mobile, telephonic, and branch 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 or limited offerings of other firms.
The Company’s online, mobile, 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, clients that trade more actively 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, investment
advisory firms, 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 competitive environment, in which a number of competitors offer reduced online
trading commission rates and low expense ratios on certain classes of mutual funds and exchange-traded 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 – an array of full-feature brokerage accounts; 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;