Charles Schwab Competition
Now Viewing Charles Schwab's competition in: Securities Brokers (primary)
Call Preparation Questions
Customers, Marketing, Pricing, Competition
How much of the company's business comes from individual versus institutional customers? - Many brokerages specialize in one segment or the other.
Does the company target specific consumers, such as discount customers, day-traders, or high net worth individuals? - Technology allows companies to serve non-traditional customers because of lower operating costs.
What have been the major factors in clients selecting the company? - Factors could include aggressive pricing, industry expertise, access to capital, and previous success with similar clients.
Does the brokerage sponsor key events to market its services? - Many brokerages sponsor sporting (golf, tennis); arts; and charity events and use the sponsorships to entertain key clients.
To what extent have the company's brokerage fees changed in recent years? - Brokerage fees have fallen sharply in the past decade.
Competitive Landscape
Demand is driven by the returns of securities markets relative to alternative investments. The profitability of individual companies depends on efficient operations and good marketing. Large companies have economies of scale in operations and high name recognition. Small companies can compete effectively by offering better customer service.
Business Challenges
CRITICAL ISSUES
Exposure to Economic Conditions - Industry profitability depends on transaction volume and the size of customer accounts, both of which can rapidly change. In recent years, a high proportion of transaction volume came from hedge funds, which can quickly shift into other investments if conditions change. Financial assets of US households and nonprofit organizations, including domestic hedge funds, declined in value by more than 15 percent during 2008.
Competition from Bank Products - Investing in bank products, such as money market accounts and CDs, appeals to customers as an alternate to securities because of guaranteed returns and federal insurance. During the last recession, consumer deposit accounts grew 30 percent despite falling interest rates. In recent years, consumers held almost as much money in deposit accounts as in stocks. Higher interest rates encourage investment in bank products.
Industries Where Charles Schwab Competes
- Financial Services
- Securities Brokers & Traders
- Retail Brokerages(primary)
- Institutional Brokerages
- Asset Management
- Mutual Fund Management
- Securities Brokers & Traders
