Schwab Canada to Hire Staff, Open Offices Across the Country
Toronto, July 5 (Bloomberg) -- Charles Schwab Canada Co. plans to hire as
many as 40 people by year's end to fill four new offices, as part of its
campaign to win business from rival Toronto-Dominion Bank.
Schwab Canada, a unit of Charles Schwab Corp., the world's biggest
discount brokerage, recently signed leases for 100,000 square feet of
street-level space in Montreal, Vancouver, Richmond, British Columbia, and
Markham, Ontario, north of Toronto. The company will also combine its three
Toronto offices into one head-office location at the upscale Queen's Quay
Terminal on the city's waterfront. ''The biggest challenge we have is making
sure we have the right DNA structure in place,'' said Paul Bates, Schwab
Canada's president and chief executive.
Bates is now well positioned to shake TD Bank's grip on the Canadian
discount brokerage market after selling his discounter, Priority Brokerage
Inc., and full-service firm, Porthmeor Securities Inc., to San Francisco-based
Schwab in February and forming one company, Schwab Canada. He's moved
quickly since then to build staff and an infrastructure to take advantage of the
growth in online trading and compete with entrenched discount brokers.
Schwab Canada currently has 70 employees, almost tripling its staff in five
months.
Online trading rose to 55 percent of Schwab Canada's orders from 10 percent
a year ago, Bates said. Even with the popularity of Web-based trading,
customers like knowing there's a branch to walk into whenever they have
queries, he said.
No Second Chance
The share of the discount brokerage and online trading business in Canada
held by TD Bank, Canada's fifth-largest by assets, fell to 50 percent last year
from 80 percent five years ago because of the emergence of other
bank-owned discount brokerages and E*Trade Canada.
E*Trade Group Inc. is the world's second-largest discount broker and it
licensed the use of its name to Versus Technologies Inc., which runs E-Trade
Canada.
Bates is a veteran of the discount brokerage industry, who built First
Marathon Inc. discount brokerage business. When it was sold to TD Bank in
1993, he stayed for a year to run TD Green Line, now part of TD Waterhouse,
which went public last month. When his two-year non-compete agreement
with Green Line expired, he started Priority Brokerage to complement its
full-service business. ''Our market share's gone from microscopic to small,
but it's getting better every day,'' Bates said.
Schwab Canada targets what it calls ''mid-tier'' customers, with minimum
account balances of C$20,000 (US$13,650) required. ''We decided to do that
right out of the gates,'' Bates said. ''We wanted to provide a discernible
different level of service. You can only do that for a client that gives you
enough revenue to justify it.''
Schwab Canada also has a unique compensation structure. Brokers aren't
paid commissions, rather they are paid base salaries plus bonuses tied to
the growth of assets under management as well as customer feedback. Each
customer is asked to answer a questionnaire and ''unless the client tells us
their adviser is doing a good job, they don't get the second part of their
bonus,'' Bates said.
He said Schwab Canada also wants to evolve into an alternative trading
system, or electronic stock trading network, and is already building up its
trading desk in anticipation of securities regulators opening up the market.
ATSs enable institutional investors, such as mutual and pension fund
managers, to buy and sell stock anonymously at cut-rate commissions. ''I
really see it as part of our future,'' Bates said, adding the only place he
intends to go after Schwab is ''the beach.''
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PS- Keith, if you think this type of news are --OT--, just tell me, i wouldn't want to pollute the thread.
MArc |
