The importance of technology and the move to zero commissions were among the main themes discussed by Schwab chairman and founder Charles Schwab during a keynote session at the Schwab Impact conference at the San Diego Convention Center on Tuesday.
“I hated commissions,” Schwab said while reflecting back on the history of his firm, adding: “I hated them then. I hate them today. And we took ‘em away.”
Returning to the theme, he joked that he’s been out promoting his book “Invested” in recent weeks and there are “no commissions involved.”
Commenting on zero commissions earlier in the same keynote, Walt Bettinger, Schwab CEO and president, said the move to zero commissions announced by Schwab a few weeks ago was the “culmination of, I would say, at least 20 years of planning.” He added: “This was a day that we had been planning for and preparing for, knowing that it would come. Not exactly sure when. But the day would come, and we would only take that step when we were at a point that there would be no tradeoffs.”
And “the idea that we would make this move and, in any way, impact the quality of service or experience is almost foolish,” Bettinger went on to say. “To give up a couple of percent of revenue and imply that there would be any impact of the experience … is absolutely not going to happen,” he argued. The zero commission move was “planned for, built for, prepared for and now implemented — and now we look forward to reaping the benefits of all of that together.”
The firm announced Oct. 1 that, as of Oct. 7, all Schwab clients would be able to buy and sell stocks, exchange-traded funds and options listed in the U.S. or Canada commission-free so long as the trades were done online or via mobile app. In the process, Schwab’s already low $4.95 commission for such trades was eliminated. Schwab Chief Financial Officer Peter Crawford explained in a separate statement at the time that since Schwab cut commissions in 2017, new firms have been “trying to enter” the market charging “zero or low equity commissions” and Schwab did not “want to fall into the trap” of waiting “too long to respond.”
On the tech front, Schwab recalled during his keynote: “I got really comfortable with technology” early on and, although “I’m not a technologist myself,” Schwab “really believed in” it. He added: “I adopted very early on all the innovations that were coming along,” and that’s enabled the firm to create a lot of efficiency over the years, he noted.