Thats the energy we know you have. My name is george and im the Program Director of the Commonwealth Club on behalf of all of us i want to welcome you and you for coming down to tonights terrific program with Charles Schwab in conversation with adam. We are very appreciative to have you all here. How many of you are members of the Commonwealth Club . Thank you. If not, this is a great time to join. Theres all kinds of terrific programs coming up, a great building and there is a gentle man at the back of the rim will be happy to answer any questions you may have about joining the club so please see him on your way out. Thank you. Please take a moment to turn off your cell phones and any devices that might make noise during the program and while you do tha that with me tell you aba couple upcoming programs. October 31, halloween afternoon, fox news anchor greg bear will be with us. November 12 there is no comment and thats just so you all know. November 12 National Review editor rich lowry will be our guest in november 12 in the evening until cavalli, legendary 40 niner jerry rice will be with us. And on november 15, friday 15thy november 15 at noon, actress Marilou Henner who many may remember from the series taxi will talk about why she has a very unique conditions that allows her to remember everything in her life. Very interesting program. The Commonwealth Club program has great travel programs we encourage you to also ask the staff about those. For example the city where you can take an expedition to think of and it to get to new zealand. There are question cards on the seat before going to be collected during the program and brought to the distinguished moderator. Please write your questions early and often and make sure they are questions and make them as legible as you can and we will get to as many as we can. We also want to remind you sign copies of the book is available outside of the room after the program. Without any further ado, please give a warm welcome to Charles Schwab and adam. [applause] im going to hit the gavel for a moment before i get i just want to reiterate i do discriminate in favor of legible questions. So you have been warned. This is one of my favorite parts of giving the event. Welcome to tonights meeting. Im the executive editor of fortune and or moderator for tonights program. This program is part of the Commonwealth Club ethics and accountability series underwritten by the Family Foundation with Additional Support from the Bernard Foundation for our good literary programs. I am now very pleased to introduce tonights guest founder, former ceo and chairman of the Charles Schwab corporation and author of the new book invested changing forever the way americans invest. One of the worlds most influential financial executives with as of 2019 nearly 3. 6 trillion assets managed by Charles Schwab co. He founded the Brokerage Firm in 1971 with a 100,000dollar loan and has since grown into a Financial Services juggernaut. The memoir invested lays out his passion to change the way we invest and the hard work, ingenuity and entrepreneurship that propelled his vision into one of the leading Financial Service firms in the world. From economics at stanford university, to guiding his company through decades of Economic Transformation and flown to beijing she recounts the defining moments of his life while providing unique insight into the evolutionary dynamics of entrepreneurial companies. Today we are pleased to be able to have a conversation about the howto of the Financial Management and his advice on obtaining a fulfilling career and life. Please join me in welcoming Charles Schwab. [applause] a lot of my fans out here. Thank you. A pleasure. I was thinking you might want to quit while you are ahead. Lets start at the beginning, not the beginning of your life which we can come back to, but the beginning of your lifes work. 1975 you have an entrepreneurial moment would you tell a gripping about it is described in the book lacks may 11975 and the congress made a decision to make sure that the commissions were all negotiable before they were fixed for over 200 years and certain levels where the fixed rate plus all the way through and on that day they liberated the whole thing is democratized in many respects the ability to invest any way you want to, pay any price we lowered the price substantially and others raised their prices a little bit like merrill lynch. They created a huge gap for us to enter into with low prices and hopefully great service. We start with four people because we knew the change was going to occur for today we have 20,000 employees. One of the common themes of entrepreneurialism and you write about this you identify it as an entrepreneur the things you see and act on are what separate you from everyone else. So for example the congress did wasnt a secret, it was the opposite of a secret. Everybody in the industry knew about it. So can you reflect a little bit about why what we now look back on as obvious and what enabled you to create your business why you were able to act on it and others didnt. We were not the only firm that entered into that area of discounted commission. There were a few others, most of which were new york. We happened to be in San Francisco. I had fo have four employees ani thought this was a great idea to go into this business. So this was a couple of years before the 75 chain but i had decided customers wanted a better deal than being sold High Commission products, being sold stories along the way where some were true but most of them were just hyper stories and there was a way to create a commission or compensation for this. So, i wanted to have a place for people to invest. I worked as a financial analyst for the next ten years or so and many brokers came to our firm and i was just at a Little Company at the time and just got to know the brokers and thought this is a bad business. So we decided ten years later the first thing i did is said i dont want any salesman in the company, no salesman will ever call you. We compensated our employees by selling upon the success and if we were really successful, we got a nice bonus so everyone was focused on Customer Service because they want to have the new customers grow and prosper and that is how wev how we were different thethey weredifferentn different to get the same model for the next 40 years. This is a profound point you made early in the book you come back to repeatedly. You decided your company wasnt going to sell. You were going to market and we will talk about the marketing because you also identify yourself as a marketer personally. Your book has a lot of nice details about you, about your early life and you are a californian through and through. Tell everybody a little bit about where you grew up and how it was part of your story. Its interesting, my grandmother was born in San Francisco in the 1880s. My father was born in San Francisco in the 1950s, 1950 exactly. I was born in sacramento so basically grown up here and spent my whole life here in california and such and went to school here etc. So im really a local guy. So in many respects San Francisco ended up being for me i could do things that it wouldnt ever in new york city so many people didnt realize i started the company here, but the company here in San Francisco and never had all of the negative things the new york brokers have and maintained so that was beneficial. The other part was the fact that technology and innovation was clearly happening in Silicon Valley and San Francisco etc. So i had a doc that a lot of those great things in the introduction to the company because much more efficient through those years and even before the internet we were applying all of the best technology, so that was really beneficial. Luckily i was here i and the thd thing was we were able to market at 1 00 new york time, still focused on new york. We had all afternoon to clean up the time because there were so much paperwork. Paperwork wasnt technology. We have extra time to make sure the back office was cleaned all the way through and a couple times they were not, but for the most part we were able to have a clean back office. You describe im going to touch on three things that were important in your life to you and one is that when you got out of college, and you have a whole lot of jobs. You did a whole bunch of things. One of them was selling insurance. I dont know if it is right to say you didnt like it, it didnt work. I had a number of jobs and i think it is important to encourage people to get jobs. I thought i got to learn something about the Insurance Industry because i was focused on being in the Financial Services world. So i wanted to work at a bank the year before and been see about insurance. I was a complete failure at that. And finally after about six weeks, they encouraged me to quit. They said youre skeptical about most insurance products, period. It was the failed content that was extraordinarily expensive when you analyze how they are constructed and i decided quickly that it was the 20 year endowment. That was the stupidest thing to ever do because i was always interested in investing and i thought putting your money on Something Like this takes most of the returns out or goes to the insurance company, so that was an early learning. Another early passion of yours was playing for the High School Team in santa barbara. I loved it. Other than enjoying it, why is it such a big deal . I loved basketball. It turned out i wasnt tall enough. There was nothing i could do about that. I played junior basketball and all of a sudden as a sophomore, junior these other guys were 6foot two, three, four, and i decided that maybe it was an area that i should focus on because even at 564557. I wanted to copy and that is the reason i went for golf. Many people will notice that i suppose some will not, that chuck is dyslexic. For four years you thought that you were stupid. Somehow or another i couldnt read as fast as some of my friends in school and it upset me a lot. My comprehension wasnt as good as ours and so i had to read things a couple times to really understand what was going on. To me it was a sort of handicap but i never talked about it as the kind of thing would never speak to anybody about. There was a lot of stigma attached. I discovered when i youngest son had the same exact issues that i have in school when he was seven or eight, to condemn to be reviewed by a psychologist and so forth to see what his issue was with reading and they came back and said your son has dyslexic issues into this, that and the other. It was a great revelation to me to find out that his problems with identical to mine and explained everything. But the word dyslexia, science was really undeveloped when i was young and showing how the brain functions is different in that area when you deal with words and conversion of words. It turns out for me its a lot of the issues i had early on. From that point forward, my wife and i decided to develop a charity thing for other parents who have kids with learning issues like that. We have many families come. You are normal in every other respect you just have a processing problem that you have to identify and so hooked on tapes is a great way to read books. One of the things i admired it is both accessible to the average reader could go deep into all the Major Business events of the career. It is a story about a company, there were four employees here in San Francisco including the 20,000 about 40 years and all the standard sounds. We were very large shareholders of the bank of america and we finally got ourselves back after a struggle. That was 1987. So the story about that was interesting. You will love reading about that. Fortunately we were able to buy our company back in 1987 and start anew in our growth pattern which is sort of a fun story to go back and review. A lot of the stories are fun and interesting. You mentioned a few minutes ago about how and why technology has always been important. Wilwill you go all the way backd playing why technology was first important and why you were so persistent about spending big money on it even when you didnt necessarily have big money. It was sort of the first transaction i talked about. Beginning the Software Problem as we were getting more and more volume, more and more paperwork involved with stuff otherwise we would go deep in or thrive. Thank god we worked hard during the whole time to come i cut ane were able to come out the other end. It didnt come about until 1985 or 86 so using the efficient system we talk about a little bit, but i dont want to bore you with that information. Anyway, the Software Cost 500,000 at that time and the company was worth 500,000. So that was a big decision, let me tell you. You mentioned a moment ago, it was a young company, you are growing quickly. Why did you sell bank of america in the first place . They thought they were going to lend us some money. They sort of suggested that. And they thought this was a pretty Good Business may be lethal by the company and diversify. They flashed a couple of big numbers at me and having come from zero money myself, 55 million was a lot of money and i think it was maybe 40 of the company which was a lot of money with me till you in 1981. So we decide to do that, to make the transaction because i was faced with as we grew and grew we needed more money to grow, you need fat in the capital and i was turned down by many venture capitalists along the way. They did not want to find out further so i had a tough time raising money. The b of a thing was attractive at that time, my age in the development of the company. But soon over the next three or four years it became clear that we were under the wrong umbrella and had to work her way out of there. Not only that but they ran into huge problems. Yes they rented a huge problems they lent money to the shipping guys and it went down the tubes in argentina they had all kinds of south america, on and on. So they had to sell the big building in downtown San Francisco, they sold a couple other subsidiaries and i said so less. [laughter] so i convinced them to celeste and thats another interesting story, they said we will sell you to the highest bidder. That is terrific. But you know very well i am not for sale. You can still accompany and im going to start a Similar Company across the street and it was a real threat because i was going to do. And it was a little bit upset because we read the deal and their stock was like 24 a share in the next four years and went all the way down to nine. So i was not a happy guy for many reasons, that was my total net worth, my wife is in the corner, she is star shy. [laughter] they can sell Charles Schwab but they could not sell Charles Schwab. [laughter] i had a provision that that was not for sale. And have a serendipitous that i use my name and face by that time in the advertising so i was getting people identifying the company with me and i dont know who they will sell it to and the namesake goes down the street about a block and opens up several competing companies. We came to terms and they were happy that they got five or six times with the payment compensation. That was a good return for them. I want to come back to leaving b of a in a moment, but before that you mentioned that the company was identified with you and you were in the advertising and your name was on the door, remember correctly, that was not 100 your idea, can you talk about that. That was an interesting moment in time, the guy who is on advertising executive at the time the same as richard cruiser, a wonderful guy, this is a 1977 where we had a great article in the examiner. The San Francisco examiner, a big picture of me in the pictures in the book and am leaning over this thing, this machine, a quick machine and they had a nice article about how we were doing and growing et cetera. So said to me, why dont we use that picture of you in the ad because before we had ads that saved 75 under transaction cost like a 1 inch, one column by 3 inches and then two columns and we could barely afford advertising at the time but we grew and grew, i think we could afford and out about that size. So they said lets put your picture in the and i said are you kidding me, what do you think my friends will say, you egomaniac. What will my wife say, are you kidding me put your name and face out there. In the guise of the post office thats where they have their names and faces. Anyway i said how about this, well try it once. So the results were ten times what they normally were in the advertising thing. So we convinced everybody i was not that much of an egomaniac house pretty bash off the time and we did it, it worked and we figured that was the way we were going to operate hereafter. Thatll happen. Questions are coming in on the floor and im going to go for my scripting go to the questions im going to read three similar to each other. What advice would you give to a 16yearold just starting investments in figuring out his future path, the second question, three pieces of advice can i take back to my High School Students and lastly, my son is graduating from college this year, what advice would you give him as a guest started with investments. I gu