SAN FRANCISCO, July 22 (Reuters) - Charles Schwab can claim victory over critics who had dismissed his idea to allow small investors direct access to Wall Street.
Schwab is stepping down as chief executive of the discount brokerage he launched in the early 1970s in defiance of the then conventional wisdom and practice on Wall Street.
He started what would become Charles Schwab Corp SCHW.O, with a $100,000 family loan and turned it into a titan now worth about $25 billion. Billionaire Schwab himself was ranked the 57th richest American by Forbes last year.
Schwab, now 70, revolutionized the brokerage industry by giving small investors access to Wall Street without having to go through brokers. Instead, investors would make their own calls and Schwab would execute the orders.
A dyslexic, the California native struggled through English classes as an undergraduate at Stanford University, but excelled in economics, according to an article in Stanford Magazine.
“To sit down with a blank piece of paper and write was the most traumatic thing that had ever faced me in life,” he said in the 1999 interview.
“But I’ve always felt that I had very strong conceptual capabilities. I could imagine things much faster than some other people who were stuck thinking sequentially. That helped me in solving complicated business problems. I could visualize how things would look at the end of the tunnel,” he said.
Over time discount brokerages have armed small investors with most of the information that Wall Street analysts once kept to themselves to make their recommendations.
“That access, bringing information to investors, absolutely helped shape Wall Street,” said Katrina Becker, a spokeswoman for rival discount brokerage Omaha, Nebraska-based TD Ameritrade Holding Corp (AMTD.O).
“He helped make investing more available for a typical family,” she said.
As the Internet took off, Schwab moved online, providing small investors speedy trades and low brokerage fees.
But when the dot-com bubble burst, hard times hit the brokerage. Schwab, who had cut back on his responsibilities, returned as sole CEO in 2004.
Company officials are confident Schwab’s decision to step down as chief executive will not upset plans to ride out an admittedly difficult time for financial services companies, a spokesman for the company said. Schwab will remain at the company as chairman.
Schwab in a statement said he plans to continue as a “very active” chairman in partnership with new Chief Executive Walter Bettinger II.
“Management and Mr. Schwab and the board believe the strategy is solid,” said Greg Gable, a spokesman for the brokerage. (Editing by Carol Bishopric)