Charles Schwab CEO Walter Bettinger, 61, is a proponent of long-term vision. Just look at the financial powerhouse’s growth in market value, from $18 billion in 2008 to $180 billion now, as proof.
But last year, he found his company in the middle of the meme stock craze, which started in early 2021 as traders on Reddit’s WallStreetBets and other social media platforms sought to bid up Grapevine-based video game retailer GameStop’s stock, followed by other picks.
Charles Schwab and TD Ameritrade saw trading volume surge to about 9 million average daily trades in February 2021, up from just over 3 million in the same period the previous year, according to Barron’s.
It was “an interesting time,” as Bettinger looks back on it now.
“It was a period of realizing the impact that social media can have,” he said.
The surge helped the company achieve historic records in 2021, including 7.3 million new brokerage customers to expand its portfolio to over 33 million accounts and $558.2 billion in core net new client assets.
Schwab, which closed its $22 billion purchase of TD Ameritrade in 2020, moved its headquarters from San Francisco to Westlake as part of the deal. That allowed the combined company to start its story on neutral ground, said Bettinger, who lives in Ohio. He was in North Texas this week for the company’s annual volunteer program.
Between its Westlake headquarters and its Southlake office, Schwab has about 5,600 employees in North Texas and about 1,800 open positions.
“We like the area and we like the talent,” Bettinger said.
Schwab originally wanted 6,000 workers at its Westlake campus. With the post-pandemic push to keep positions remote, has that changed?
I think we will eventually have meaningfully more than the 6,000 total. With our work location flex program, our employees have a lot of different choices. They can either opt for 90 work location flex days a year, which works out to about two days a week if you take out vacations and holidays, or they can request more. About 50% of our individuals across the country are going to be in the office less than those 90 days, and then about 30% of our people will be fully remote. So we’re still very excited about the new campus we have here in Westlake, and I have to say this, it’s very alive today with our return to office beginning just yesterday.
We’ve been working from home since the pandemic began and have had a lot of success with a record year last year with over $550 billion in net new assets brought to Schwab. We were able to very successfully operate with a remote structure.
Will you keep the Southlake office?
We haven’t made any decisions on that. But again, with 5,600 people here and 1,800 open jobs, right now we’re not discussing any reduction in our real estate footprint. In fact, if we were to have all 33,000 of our employees come into the office on any given day right now, we’d be in the parking lot and in parking garages.
You’re big on financial firms keeping up with new technology and Schwab’s headquarters previously was in the tech hub of San Francisco. What drew you to Westlake?
We’re a national company. And headquarters probably doesn’t mean the same that it meant many, many years ago. But one of the great things about moving our headquarters to Westlake as part of the combination with TD Ameritrade is it allowed us to start this new chapter as this combined company in a new place. So we didn’t make our headquarters in Omaha where TD Ameritrade was and we didn’t make it San Francisco where Schwab was. Instead, we made it Westlake, which is the location in the country where there were more employees from both organizations close by than anywhere else. It’s also very centrally located and has a fantastic business climate.
Looking back, what do you think of the timing of the TD Ameritrade merger that happened right before a surge in trading?
Well, that’s a perspective that’s relatively short-term. And we try to do things in a very long-term way at Schwab. We think in years and decades. So I mean, did it turn out that there was a lot of trading early in 2021? Sure it did. But if it had been a quarter in which trading was at a record low, it wouldn’t have changed our perception that the combination creates a real powerhouse to be able to better serve clients and we would have been just as excited about the transaction as we are today.
How is trading in 2022?
Trade volumes have remained relatively strong, but what we have seen is a bit of a decline in investor sentiment, which is understandable as the markets have retreated a bit this year and there is concern about a recession. And obviously, the war in Ukraine has given people pause.
With your focus on long-term growth, what did you think of the meme stock craze?
It was definitely an interesting time. I think one of the things that we all learned is that social media has a power in the investing world that many of us probably recognized that it had in other areas of life but not in investing and trading. We did not shut down trading in any of the securities that were attracting a lot of attention. Unlike some of our competitors, we remained open for trading in all of those securities. I don’t sit in judgment of the decisions people made in any way. There are a lot of different ways to invest. You can invest long term. You can buy and hold. You can trade actively. Many of them can result in success over time. We don’t sit in judgment of the decisions people made, but we do try to always take lessons away from experiences that we’ve never seen before.
In your annual letter, you mentioned that there were times last year when you experienced high call volume. How did you address this?
We have hired a lot of employees over the course of the last year, and call volumes have moderated from the really extraordinary peaks of the first quarter of last year. In fairness, if you look back at what went on during some of that meme stock craze, it was effectively impossible for anyone in our industry to be able to answer the phones as quickly as you would like. The example I’ve given would be if 100,000 people showed up outside your local grocery store all at one time, right before the store was scheduled to open on a given day. There’s literally nothing you can do. The store isn’t built for 100,000. You couldn’t build a big enough store to accommodate 100,000 people at once. Those kinds of environments are rare. Today, we’re back to more normal call volumes and able to answer calls very, very quickly.
Lastly, any thoughts on Elon Musk buying Twitter?
I really don’t. I have a lot of areas to pay attention to at Schwab.