Last month at Forrester's Finance Forum in New York, I had the opportunity to interview Charles Schwab CEO David Pottruck onstage.

I went in a skeptic: As an observer and customer, I've seen Schwab lose focus since 2000, when the firm was the envy of nearly every other retail financial institution.

But like many in the audience, I came away a believer. See for yourself: Pottruck was clear-eyed and compelling on topics ranging from Schwab's identity crisis to the strategic importance of technology. His confidence in the long-term direction of the company was unshakeable.

Pottruck looked like the right guy to take the torch from Chuck Schwab. Now it's the founder himself who must re-energize the company. What should he do? For our prescriptions, read "As Charles Schwab Falters, CEO Pottruck Falls."

What went wrong at Schwab?

The firm that pioneered discount brokerage and created the no-fee mutual fund marketplace has long been an archetype of customer advocacy, offering products and services that are perceived to be best for its customers, not just the company's bottom line.

But in the past few years, Schwab has lost its identity. It now ranks 27th among 38 firms rated by consumers on customer advocacy, substantially trailing other wealth management firms like Edward Jones, American Express Financial Advisors (AEFA), and Vanguard (see the figure).

What do the leaders do right?

These customer advocacy leaders share a number of traits, which we lay out in our report "What Satisfies Financial Services Customers." They cultivate stable, predictable client bases. They enjoy stable ownership. They're often led by strong visionaries who instill a culture of advocacy. Vanguard Chairman and CEO Jack Brennan, for example, talked at our Finance Forum about how Vanguard walks the walk.

Firms that lead in customer advocacy share one other fundamental advantage: They grow faster than their peers, a point I made in my opening remarks for this year's Forum.

What about the laggards?

At the other end of the customer advocacy rankings are the big money center banks like Citibank, JP Morgan Chase, and Wells Fargo. At the very bottom of these ratings sits ETRADE Financial. So Chairman Mitch Caplan isn't resting easy. He explained to the Forum audience what firms like ETRADE must do to improve.

Got feedback?

We've got lots of fresh research coming in the next few weeks, much of it triggered by client requests. Do you have topics to recommend, data you need, or technologies you want assessed? Drop me a line at billdoyle@forrester.com so we can connect.

In the meantime, enjoy the rest of the summer!


Bill Doyle
Financial Services Research Director

Research Referenced In This Issue As Charles Schwab Falters, CEO Pottruck Falls (35048) Europe's Advice Tools Multiply (34829) European Banks' Top IT Concerns (34834) Image Exchange Market Driven By Check 21 Legislation (34751) Keeping It Private And Confidential (34737) What Satisfies Financial Services Consumers (33981)

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