said it intends to provide a new range of investing services in an effort to win more business from high-net-worth individuals.
Schwab, which is already the biggest online broker in terms of client assets, said it is targeting investors with assets in the range of $100,000 to $1 million who are seeking more advice than other online brokers provide but don't want to pay for the services of a traditional broker. "There is a glaring blind spot in that group," said CEO David Pottruck.
This segment of the investing population represents about 22 million households with about $6 trillion in assets, Schwab said. The company's chief marketing officer, Jodi Bilner, said that even without alternatives or encouragement, roughly 10% of those 22 million households are switching to new providers at any one time. "Our services are squarely aimed at meeting that unmet investor need," she said.
Schwab, which has seen many of its cost-conscious customers flee to lower-cost rivals in recent quarters, will now offer two types of services to individuals who manage their accounts independently, four types of broker-assisted services and two types of services for active traders. The latter offering is seen as an attempt to compete with
, which is the largest broker in terms of client trading. Ameritrade has also signaled its desire to attract more affluent clients.
The company said it will embark on a multimillion-dollar advertising and marketing campaign to promote the new services. The firm expects to increase advertising and market-development spending in the first quarter by 50% over fourth quarter 2003 levels, in part to promote Schwab Personal Choice services.
Analysts have said they expect expenses at Schwab, including higher marketing costs, to hinder its earnings growth relative to its peers this year. Meanwhile, the stock continues to trade at a premium to competitors Ameritrade and
Still, the company has seen a big surge in stock trading recently, as retail investors have returned to the market. Pottruck told
Tuesday that stock trading in January rose 32% from December, when the company reported average daily revenue trades of 168,400. Schwab derives a good portion of its revenue from commissions on stock trades. Shares fell 1%, or 13 cents, to $12.29 in afternoon trade.