Discount equity securities trading changed permanently in 1975 when Charles R. Schwab pioneered a model that stripped away traditional commission-based brokerage practices. By shifting sales staff to hourly wages and offering toll-free order placement, he fundamentally altered how individual investors interacted with the market, eventually building the largest discount securities dealer in the United States.
Early Development and Academic Training
Born in Sacramento in 1937, Charles Schwab spent his youth in Woodland before moving to Santa Barbara at age 12. His early work history included varied labor roles as a railroad switchman, oil field roustabout, and caddie. He completed his undergraduate studies in Economics at Stanford University in 1959, followed by a Master of Business Administration from the Stanford Graduate School of Business in 1961.
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In 1963, Schwab launched an investment newsletter called Investment Indicator, which eventually gained 3,000 subscribers. By 1971, his firm incorporated as First Commander Corporation. Following a full buyout of the company from Commander Industries in 1972, the business was renamed Charles Schwab & Co., Inc. in 1973. The 1975 Securities Acts Amendments allowed for competitive fee structures, providing the regulatory window required to cut consumer charges and remove commission-based incentives for salesmen.
Expansion and Corporate Shifts
The company grew rapidly, opening a Sacramento branch in 1975 and introducing a 24-hour quotation service by 1980. In 1981, Bank of America acquired a 37 percent stake in the business for $53 million, though Schwab eventually repurchased the company in 1987 for $230 million. Later, in 1996, the firm emerged as the first major financial services entity to facilitate online trading for listed stocks and mutual funds. Following a leadership transition to David S. Pottruck and a subsequent decline in profits, Schwab returned to the CEO role in 2004 to refocus on individual investor advice.
Fast facts
- Born: 1937, Sacramento
- Net worth: $13.5 billion (January 2026)
- Education: Stanford University, Stanford Graduate School of Business
- Primary industry: Discount securities brokerage
- Founder: Charles Schwab & Co., Inc.
- First branch: Sacramento, 1975
- Company status: Publicly traded
Questions readers ask
When did Charles Schwab retire from his company?
He stepped down as CEO in 2008 but remains the chairman and largest shareholder.
What innovation did the firm introduce regarding investment funds?
In 1984, the firm launched the Mutual Funds Marketplace, which provided clients with access to 140 no-load funds.
Achievements
- Educated at Stanford University and Stanford Graduate School of Business