Charles Schwab 2015 Annual Report Download - page 5

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LETTER FROM THE CHIEF EXECUTIVE OFFICER
To My Fellow Stockholders
Each year it is an honor to sit down and craft a
letter to share my thoughts on Schwab with
you, our valued stockholders. I strive to write
this letter with a minimum of jargon, corporate
speak and trendy business buzzwords. It
isn’t written to compete with the latest best-
seller on business strategy or how to be a better leader
in changing times; it is written with the goal of simply
discussing the current state of our company and the future
we face together. The litmus test for this letter is: “Does
it read as if I were corresponding with a business partner
who has been out of touch for the past year?” As always,
my hope is that you will share with me your feedback on
whether this goal has been achieved.
This year’s letter takes on a special meaning to me because
in late 2015, we saw an initial move upward in short-term
interest rates by the Federal Reserve. It is difcult to
overstate the impact that even modest increases in the
federal funds rate will have on our company. After seven
long years of ZIRP–or the “zero interest rate policy”
implemented by the Federal Reserve–light may be starting
to appear at the end of the tunnel. And the timing is perfect
for our company to shine.
But more on that later. Let’s rst talk a bit about 2015.
When I evaluate the year that just ended, three key themes
come to mind:
1. 2015 was a year when our efforts as a challenger to the
investment services industry gained strong momentum;
2. The end of 2015 marked a potential inection point as
the Open Market Committee of the Federal Reserve took
a rst small step toward a more normalized interest rate
policy; and
3. Our future growth trajectory is exhilarating.
Let’s dive into each of these in some degree of detail.
Challenging the status quo
Over 40 years ago, Chuck Schwab founded our company
as a challenger to the status quo and to the traditional
manner in which investment and brokerage rms operated.
When most rms charged retail investors stock trade
commissions in the hundreds of dollars, Chuck charged
about 70 bucks. When investors looked for more efcient
means to track their stock holdings, Chuck was one of
the rst to offer technology-driven access to information
that saved investors’ calls to their brokers or a trip to the
local branch ofce. And when mutual funds became a key
solution for Main Street investors, Chuck revolutionized the
industry by creating a one-stop place to buy and sell mutual
funds from multiple fund companies–with no sales load.
Today, despite what you might hear in the press about
“Silicon Valley disruptors” and “ntech,” Schwab remains
the consummate challenger in the investment industry.
Each day we ask ourselves a question consistent with our
“Through Clients’ Eyes” strategy: “How can we use our
deep knowledge of investing to help our clients be better
investors, to deliver services to clients at a lower cost, and
to ultimately help them achieve better outcomes and take
ownership of their nancial futures?”
There are few things we enjoy more than doing for clients
exactly what we would want if we were the client. And it
works for clients and stockholders alike! In just over 40
years, Schwab has become the largest publicly traded
investment services rm, as measured by client assets,
in the United States–surpassing Bank of America Merrill
Lynch in 2015–proof positive that investors will reward a
company that challenges convention on their behalf. And
stockholders have been rewarded with a compound annual
return of 18% from the day our company went public in
1987 through the end of 2015.