Word: pottruck
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Dates: during 2000-2009
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More than ever, investors of modest means who are looking for financial advice will have to go it alone. That's the lesson behind last week's sacking of CEO David Pottruck at discount brokerage Charles Schwab. Since taking the sole helm at Schwab 14 months ago, Pottruck has been unable to make the firm's middle-market strategy pay. And with onetime everyman firms like Dean Witter gone and Merrill Lynch refocused on the rich, it's not clear that anyone will step up with a full plate of services for ordinary folks...
With founder and eponym Charles Schwab replacing Pottruck, many expect the firm to focus on the discount brokerage business, which accounts for 70% of its pretax income. But Schwab could make a decisive assault on the full-service brokerage industry or even be put up for sale. What's clear from the firm's troubles--it lost 44,000 accounts in the second quarter, when profits fell 10%--is that the middle market is a tough racket. Don't look for anyone to rush into this void...