Full Description

The Charles Schwab Corporation (CSC), incorporated in 1986, is a financial holding company. Through its subsidiaries, the Company engages in securities brokerage, banking and related financial services. As of December 31, 2008, CSC provided financial services to individuals and institutional clients through three segments: Investor Services, Advisor Services, and Corporate and Retirement Services. As of December 31, 2008, the Company had $ 1.137 trillion in client assets, 7.4 million active brokerage accounts, 1.4 million corporate retirement plan participants and 447,000 banking accounts. In November 2008, it announced the establishment of a new business unit, Institutional Services, to serve the needs of independent investment advisors (IAs), corporate benefit plan sponsors and third party retirement plan recordkeepers. The unit combines former Schwab Institutional and Schwab Corporate and Retirement Services operations.

The Company offers a range of products to address its clients’ investment and financial needs. These product offerings include brokerage, banking, trust and mutual funds. The brokerage category includes various asset management accounts, including some with check writing features, debit card and billpay; individual retirement accounts; retirement plans for small to large businesses; 529 college savings accounts; separately managed accounts; designated brokerage accounts; equity incentive plan accounts, and margin loans, as well as access to fixed income securities, and equity and debt offerings. The banking category includes first mortgages, home equity lines of credit, pledged-asset loans, certificates of deposit, demand deposit accounts, high-yield investor checking accounts linked to brokerage accounts and credit cards.

The Trust category includes trust custody services, personal trust reporting services and administrative trustee services. The mutual funds category includes third-party mutual funds through Mutual Fund Marketplace, including no-load mutual funds through the Mutual Fund OneSource service, mutual funds from two fund families: Schwab Funds and Laudus Funds, and mutual fund trading and clearing services to broker-dealers.

Investor Services

Through the Investor Services segment, the Company provides retail brokerage and banking services to individual investors. The Company offers research, analytic tools, performance reports, market analysis and educational material to all clients. Clients looking for more guidance have access to online portfolio planning tools, as well as professional advice from Schwab’s portfolio consultants who can help develop an investment strategy and carry out investment and portfolio management decisions.

Educational tools include workshops, interactive courses and online information about investing. In addition, Schwab provides various Internet-based research and analysis tools. Schwab Equity Ratings is a quantitative model-based stock rating system, which provides all clients with ratings on approximately 3,000 stocks, assigning each equity a single grade: A, B, C, D or F. CSC’s approach to advice is based on long-term investment strategies and guidance on portfolio diversification and asset allocation.

CSC’s Schwab Private Client features a personal advice relationship with a designated financial consultant (FC), supported by a team of investment professionals who provide individualized service. For clients seeking a relationship, in which investment decisions are fully delegated to a financial professional, the Company offers several alternatives. The Company provides investors access to professional investment management in a diversified account that is invested in mutual funds through the Schwab Managed Portfolio program. The Company also refers investors who want to utilize a specific third-party money manager to direct a portion of their investment assets to the Schwab Managed Account program. In addition, clients who want the assistance of an independent professional in managing their financial affairs may be referred to IAs in the Schwab Advisor Network. These IAs provide personalized portfolio management, financial planning and wealth management solutions.

The Company offers integrated Web- and software-based trading platforms, which incorporate intelligent order routing technology, real-time market data, options trading, premium stock research and multi-channel access, as well as account and trade management features, risk management tools, decision support tools and dedicated personal support. The Company serves both foreign investors and non-English-speaking United States clients who wish to trade or invest in United States dollar-based securities. The Company has a physical presence in the United Kingdom and Hong Kong. In the United States, the Company serves Chinese, Korean, Spanish and Vietnamese speaking clients through a combination of its branch offices and Web-based and telephonic services.

Advisor Services

Through the Advisor Services segment, Schwab provides custodial, trading, technology, practice management, trust asset and other support services to IAs. Advisor Services offers online cashiering services, as well as Internet-based eDocuments sites for both IAs and their clients that provide multi-year archiving of online statements, trade confirms and tax reports, along with document search capabilities. In addition, Advisor Services offers an array of services to help advisors establish their own independent practices through the Business Start-up Solutions package. This includes access to dedicated service teams and outsourcing of back-office operations, as well as third-party firms who provide assistance with real estate, errors and omissions insurance, and company benefits.

Corporate and Retirement Services

Through the Corporate and Retirement Services segment, the Company provides retirement plan services, plan administrator services, advice services, education, stock plan services and mutual fund clearing services, and supports the availability of Schwab mutual funds on third-party platforms. The Company’s equity compensation product offers plan sponsors full-service recordkeeping for stock plans, including stock options, restricted stock, performance shares and stock appreciation rights. Schwab also offers its mutual funds on third party retirement platforms, allowing plan sponsors outside of the Company’s bundled platform access to the Schwab Managed Retirement Trust Fund family.