Capturing the Active Investor Segment: A Case Study of Charles Schwab

by Alexander Camargo,  Isabella Fonseca, September 7, 2011
Case Studies
North America


Although the brokerage industry has recovered from the economic doldrums of 2008-2009, growth in terms of client assets and daily average revenue remains very fragile. Amid an unsteady economic recovery and decreasing commissions, active investors and active traders present a significant opportunity.

A new report, Capturing the Active Investor Segment: A Case Study of Charles Schwab, examines how the Charles Schwab Corporation, a publicly traded financial services provider, has focused on capturing the active investor customer segment. Traditionally, Charles Schwab has gone after this segment by emphasizing its size and breadth of products. Thus, Schwab has focused on capturing assets across different types of banking and brokerage accounts. However, over the past 12 months, Schwab has also taken several steps to improve its offerings for active investors interested in solely online brokerage.

Schwab has taken the following steps to improve its online brokerage offering for active investors:

  • Launching a new flagship trading platform, StreetSmart Edge.
  • Lowering and increasing transparency around commissions.
  • Developing a multichannel strategy and enhancing its mobile offering.
  • Improving platform technology and expertise in derivatives by announcing the acquisition of optionsXpress.

“Although it’s too early to assess the results of Schwab’s launch of StreetSmart Edge and its other initiatives in the online brokerage space, these developments signal to active investors that the firm is serious about meeting its online brokerage needs,” says Alexander Camargo, Analyst with Celent’s Securities & Investments group and coauthor of the report.

Heading into 2012, competition for active investors will be fierce. “The combination of decreased trading activity, flattening assets, and long-term downward pressure on commissions will make competition in the online brokerage market increasingly intense,” says Isabella Fonseca, Research Director at Celent and coauthor of the report. “Firms like Schwab must continue to monitor the market closely to ensure that its online brokerage strategy matches the preferences of these active investors."

The case study focuses on providing an update on trends and challenges in the online brokerage market, as well as a detailed story of Charles Schwab’s retail brokerage strategy. This report will help other financial services firms understand some of factors leading to a comprehensive multichannel strategy to target the active investor market.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
Tel: +1 212 345 1366

Europe (London)
Chris Williams
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary








Organizational Structure



Investor Taxonomy


Trends and Challenges in the Online Brokerage Market



Trends and DARTS and Assets in the Existing Online Brokerage Market



Challenges in the Existing Market


Charles Schwab’s Online Retail Brokerage Strategy



Timeline of Brokerage Services



Products and Services


Targeting Active Investors



StreetSmart Edge Platform



Trading Platform Functionality



Products Per Segment



Multichannel Strategy



Special Offers/Services for Active Investors


Analysis of Active Investor Strategy



Platform Functionality, Tools, and Products



Multichannel Strategy



Special Offers/Services


Overall Assessment of Charles Schwab’s Active Investor Strategy


Looking Forward


Leveraging Celent’s Expertise



Support for Financial Institutions



Support for Vendors


Related Celent Research


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