December 5, 2023

Charles Schwab Corp. is the largest publicly traded brokerage firm in the United States, with $7.5 trillion in client assets, a leading provider of financial advisory services, a top exchange-traded fund asset manager and one of the largest banks.

“It’s fair to describe Charles Schwab as a financial services supermarket,” Michael Wong, Morningstar’s head of equity research and financial services for North America, told CNBC. “Anything you want, you can find on Charles Schwab’s platform.”

For decades, Charles Schwab helped usher in a revolution in low-cost investing while surviving market crashes and fierce competition—even when the game moved up to zero commissions in 2019.

“Essentially, it’s a scale business. The bigger you are from an expense standpoint, the more efficient you are,” Alex Fitch, a portfolio manager at the Oakmark Select Fund and the Oakmark Equity and Income Fund, told CNBC. “It lets you cut prices.”

All aspects of Charles Schwab’s business compete with many traditional full-service brokers and investment bankers, including Fidelity, Edward Jones, Interactive Brokers, Stifel, JPMorgan, Morgan Stanley and UBS. And, it has to compete in the fintech market with the likes of Robinhood, Ally Financial and SoFi.

The melee reached a tipping point in 2019, when Charles Schwab announced it was cutting commissions on stock, ETF and options trades to zero, matching the fees Robinhood offered when it entered the market in 2014.

Soon, other firms followed suit and cut fees, hurting TD Ameritrade’s business so much that Schwab eventually bought it less than two months later in a $26 billion all-stock deal.

Charles Schwab, one of the companies that has benefited from a rise in retail investment during the coronavirus pandemic, is now facing the fallout from an aggressive rate hike by the Federal Reserve.

That’s because Charles Schwab’s massive banking business generates income from clearing accounts, meaning the firm uses money left over in investors’ portfolios and reinvests it in securities such as government bonds to help make a profit.

Charles Schwab told CNBC it was unable to participate in the documentary.

look at video Learn more about how Charles Schwab is fighting the changing financial services market, from fees to fintech, and reaping the rewards without the risk.