Vice Chairman at Schwab to Depart
Discount brokerage Charles Schwab Corp. said Monday that a top executive is stepping down as the company continues to struggle to find a formula for restoring growth.
Customers could begin to see more price increases for services, and fees for services that had been free, Schwab executives have suggested recently.
Schwab said Vice Chairman John Philip Coghlan, the executive in charge of its struggling individual investor division, would depart after a brief transition period, ending a 17-year career at the firm.
“John is interested in finding a new role as a corporate CEO and believes the time is right to pursue that goal,” said David S. Pottruck, Schwab’s co-chief executive. Coghlan wasn’t available for comment.
The change comes a few days before Pottruck will become Schwab’s sole CEO. Chairman Charles R. Schwab is surrendering the co-CEO title at the company’s annual shareholders meeting Friday.
Coghlan, 52, had been president of Schwab’s individual investor division since July. He became an executive vice president at the company 11 years ago.
Pottruck faces a major challenge reviving the nation’s largest discount brokerage, analysts say. Schwab has been hit hard as many investors have abandoned stocks after three losing years.
At a meeting last week with analysts in New York, Pottruck indicated a frustration with customers who open accounts to get access to free market information on the firm’s Web site, and then go to rival brokers that charge lower commissions to make trades.
“We don’t require any commitment of trading from them,” Pottruck said of those clients. “We have to think about that.”
Schwab “could be re-pricing a significant portion of their free products,” said Todd Halky, an analyst at Putnam Lovell NBF. “It remains to be seen how this will be received by their current client base; it has potential for competitors to come in and target those Schwab customers.”
Schwab also may seek more money from some of its partners. In the last three months the brokerage has negotiated price increases from most mutual fund companies that sell their products through the broker, a spokesman said. Schwab doesn’t charge fees to investors who buy the funds using its OneSource service.
With Coghlan’s departure, most of his responsibilities will be shifted into a new division covering client sales and services, as well as Schwab’s recently opened bank, the company said.
The division will be run by William L. Atwell, who is currently Schwab’s executive vice president of its institutional, international and banking group.
Schwab shares rose 4 cents to $9.17 on the New York Stock Exchange on Monday.
