Chuck Schwab on Life & Golf

CHUCK SCHWAB: Golf, in many ways, to me, is a fantastic game. Anyone can play it. You can play for a lifetime—a kind of thing that I think we can all enjoy. There are lots of things about golf I really love that are comparisons to other aspects of life.

MASON REED: I'm Mason Reed, and this is Invested in the Game, an original podcast from Charles Schwab. Each episode we tell the story of remarkable people who have committed their time, resources, and emotional energy into making golf the wonderful—and sometimes maddening—game that it is.

Today's podcast is a special one for us. We have our founder and chairman, Chuck Schwab. Some people may be surprised to know that there's an actual person behind the name of our company. Maybe they missed decades of ads with him or our famous "Talk to Chuck" advertising. 

But sure enough, there is. Chuck—he'd prefer you not call him Charles—is still very active in our business. Like Herb Kelleher from Southwest Airlines and Sam Walton of Walmart, he has become an almost mythological figure in the industry, and also here at our company with our culture and employees. I was thrilled—though not at all surprised—that he was willing to join our golf podcast. 

I've known Chuck for more than a dozen years, and he cares deeply about investors and every part of our company. But he does have a special spot in his heart for marketing and golf, which we discuss regularly with him. Our decades long involvement in golf, and even being able to do a podcast like this, can be traced directly to his interest in the game. He was—and remains—very good at golf. Even when he's on the golf course, people want to walk up and shake his hand and often ask for some investing advice. More important than that is that he's been very generous in giving back to the game so that it can continue to grow for years to come. 

Chuck and I discuss his introduction to the game, his famous optimism, as well as his thoughts on investing. This is a golf podcast, but I wouldn't hear the end of it if I didn't extract some investing wisdom from a legend. Thanks to Chuck for carving out some time, and I hope you enjoy the conversation as much as I did. 

Well, Chuck, it's great to see you and talk to you. This is a golf podcast, and golf is a favorite topic of yours and mine. But I'd be remiss not to ask you a few questions about investing before we jump into golf, if that's OK.

CHUCK SCHWAB: Sure!

MASON: We didn't intend to do this. It's entirely coincidental, but as we're recording this today, it's May 1st, which is the 50th anniversary of the deregulation of trading commissions on Wall Street—the so-called "May Day" event—which, starting this year, is also being branded as National Investing Day. Can you talk about what that moment was like 50 years ago and how it changed things for investors and for our company and for you personally? What did that moment mean?

CHUCK: Well, it was a very exhilarating moment in time. It was a massive change that needed to happen for many, many years. There were many abuses that were caused because of fixed commissions over the years. And actually, there were studies going on several years beforehand. And that's when I actually thought that there would be a change in the laws coming.

And fortunately, I anticipated that a little bit ahead of time. So I started up a sort of an over-the-counter discount brokerage firm a couple years before in '73. And it wasn't until '75—May 1st of '75—that Congress got behind the SEC's mandate to go to negotiated rates, dropping the fixed rates that had been in place for, goodness gracious, 183 years. Hard to believe that that was occurring. 

And so it meant that brokers could charge whatever they wanted to in terms of a fee for the transaction. And some of the larger firms, obviously, charge quite a high number. And then a number of small firms like ourselves were charging lesser numbers. And so May 1, we were able to go across the board, all over-the-counter stocks, all New York Exchange–traded stocks, American Exchange, you name it, we could negotiate whatever rate we wanted to charge the client. And obviously, the lower we got, the more clients we got. And so it was a pretty interesting moment in time. But in some ways, I didn't really understand the full ramifications of what was to come in the future. 

May Day was pretty exciting to me when I saw some of the larger brokerage firms increase their rates on some transactions, and we dropped ours probably at least in half. So it was a big day for me, and I thought, "We're going to have a heck of a business here." I didn't know the extent of what it would be over the years. Many other innovations came along the way which helped us, and we took advantage of, and really were very happy about that we could deliver better and better service to our clients.

MASON: Well, you're talking about a pivot, I guess, where there was a moment that companies had to decide whether they wanted to go higher or lower, and you chose to go lower. And here we are 50 years later. We have somewhere in the neighborhood of 35 million clients here at Charles Schwab and $10 trillion with a T. Did you have any idea that what you started at that moment could possibly become what it is today and have the kind of impact on investors and the investing industry?

CHUCK: Well, I have to be a very honest man, no. Haha. It just kept growing and building and growing and building. And our clientele just grew and grew and grew. So I couldn't be more happy about our growth.

But really, I guess deep down, I feel really comfortable and really proud about the fact that we were able to help so many people really get into the investing thing, do things for themselves, their family, make a long-term commitment to build their portfolio so they'd have a much more comfortable retirement.

MASON: And one of our favorite pastimes here is to read letters from clients telling us what you just said of the impact that this has had on their life and on their families.

CHUCK: I'm always thrilled when I get letters from long-term clients who said, "Boy, you changed my family's life."

MASON: Great. One final question, then we're going to pivot to golf. You've been very consistent through the decades about your optimism and your enthusiasm for investing. And I know that people stop you all the time in a restaurant or on the golf course, and they ask for advice. What's your best advice for people who ask you how to be a successful investor?

CHUCK: Well, it's a lifetime commitment. When you're putting money into equities, stock market, you're putting money into companies, hopefully, that are growing. And that's where the value change happens. If a company grows, it becomes more and more valuable. And that's why you always want to look for companies that are about the future, who continue to come up with great products, great services, and if they grow and get more clients, hopefully the value of that company continues to grow.

One great example has been, we all know, is McDonald's hamburgers. Back in the day when they used to have that sign out in front, "We served one million hamburgers," and all of a sudden now it's in billions and billions and billions. That was a growing company at the time.

MASON: I remember many years ago, they would always change that number on that McDonald's sign. And eventually it got so big, I think they just had to say, "Billions and billions served." They couldn't keep up with the numbers anymore.

CHUCK: They just couldn't get a sign big enough.

MASON: They needed a bigger sign.

So one last point on this, because I love what you're talking about, about the lifetime commitment. It seems like more and more people seem to be looking for shortcuts in lots of parts of life. That could be a quick golf tip, weight loss shortcut, or something. But how do we help young people understand what you just said, that investing is a life journey?

CHUCK: Well, you have to find things that change in value for a good reason. And that's usually, for us humans, it's someone who's developed a new thing—maybe called internet, or maybe called AI. But it's the … value creation is the really most important thing that you want to have in your mind. And that's always thinking, "Is this a service that I would use, what I would stick with for the long term? Yes." Then that would probably lead me to become an investor in that company.

MASON: Fantastic. Thanks for sharing that. And we're going to switch gears now. We're going to talk about golf. I would have been remiss not to ask you about investing because I know everybody listening to this would love to hear a couple of things.

But in terms of golf, you've been playing for a lot of years. How did you initially get introduced to the game of golf?

CHUCK: Well, my father played golf, and my mother also to some degree. I was curious about that as a kid. I was five, six, seven years of age, and they signed me up for a golf lesson for a bunch of kids. And that's where I was first introduced to it. But I really didn't get into it until I was probably 10 or 12 years of age.

MASON: Were you good immediately or what … you played high-quality high school golf and then played in college at Stanford as well. So when did you realize you were good at it?

CHUCK: Well, I never thought I was good at it. It's one of those things in life. I compare a lot of golf aspects to investing, actually, and other parts of life.

Golf, in many ways, to me, as I learned—not at the very beginning, but I certainly have come to the realization—that golf is a fantastic game. Anyone can play it. You can play for a lifetime. So it's a kind of game that I think we can all enjoy and all enjoy for a lifetime. There are lots of things about golf I really love that are comparisons to other aspects of life, which we can talk about.

MASON: You're right. We were just talking about investing for a lifetime, and I think golf is the game of a lifetime as well. So that alone …

CHUCK: Very similar.

MASON: You played with Al Geiberger, who's famously known as "Mr. 59," first ever to shoot that score in a PGA-sanctioned event. What's your lowest score? I don't think it's 59, but it's probably pretty good.

CHUCK: My lowest score, I think, was 66.

MASON: Wow.

CHUCK: One time.

MASON: That's enough.

CHUCK: But I have to say, it was on a par 70 course, though. Most courses are 71 or 72. And 66, I was really proud about it. I did that when I was 18.

MASON: You said before that you're an honest person. You didn't have to mention it was a par 70, but you did. 

CHUCK: I got to tell the truth.

MASON: Haha, got to tell the truth.

Do you think that 18 years old was the time you were playing the best golf of your life, or was there a different age where you thought you playing the best golf? Because some people, you know, physically they may change, but they get golf wisdom, and they know how to get around a golf course better as they get older. When do you think you were playing some of your best golf?

CHUCK: Oh, I think when I was 18, 19, 20, something like that. And then I found out that I had to go to work and work hard. So golf does take some time. But when I reached college age, I got into college and played the first year on the golf team and found out it took so much time that, in order to be competitive, I just had to sort of quit and get back to my studies.

MASON: And focus on school and grades and ultimately getting a job.

CHUCK: All those things to get me through college. And so I was prepared then on to go on to graduate school and then of course develop a career.

MASON: Golf is clearly an important part of our marketing investments these days. Has that been the case since our earliest days, or did that come into play later?

CHUCK: Well, number one, it was, "Could we afford that advertising?" Early on, I could not afford much in the way of any advertising. So the most we could do was these little ads that you'd see in The Wall Street Journal. It'd be one column by three inches. And as we became a little bit more prosperous, we were able to find additional money to put into advertising. And then eventually, we could sponsor some golf events. So that was a nice fit.

And the thought about playing golf with a senior who you really thought was terrific in his younger years—could be an Arnold Palmer, which I was able to do. And many customers that I had at the time could play with Arnold in these senior events. And then we had Freddie Couples and people like that, and some Hale Irwin, Tom Watson, Bernhard Langer, all those were famous names that people had a real joy about playing. And our clients, who were 35 years of age or 40 years of age or 60 years of age, had an opportunity to play with some of these famous players, and that was really a great fit for us. Our clients really enjoyed that relationship.

MASON: You mentioned a little bit earlier some of the reasons you think people love the game of golf, but why do you think our clients like the game of golf so much? It's noted as one of their top interests, top hobbies. What would you think is the reason so many of our clients love the game of golf?

CHUCK: Golf has so many parallels with life. There are rules and regulations. There are boundaries. There are etiquettes that you have … you play with someone, you respect your other golfers. You're quiet when he gets up to hit the ball. You respect him when he is in a shot, whatever it might be. It creates camaraderie, yes. It creates all kinds of different things that are all sort of consistent with basically being a good person, and I encourage that. And that's why I've been a long-time devotee of golf and what it does to you.

I still play a lot of golf even today. Unfortunately, the ball doesn't go as far as it used to go when I was younger, but I still really enjoy it.

MASON: Well, I've seen you play many times in recently, and it still goes straight, even if it's going just a little bit shorter. That's important.

CHUCK: Haha.

MASON: You've probably been able to play in some interesting places around the United States and around the world. What has been one of your favorite places to play golf geographically? Where have you enjoyed going?

CHUCK: Well, I think for all of us golfers, once you get into it, the trip to Scotland is a wonderful and valuable thing—the home of where golf was really created. 

When you go up to Scotland, it's way north. It's a little bit colder, little bit rainier. When you get into some of those sand traps, they're just deep, and it's hard to get out of them. Sometimes you have to go backwards. I mean, this is kind of things … you sort of put the same kind of thing in life. Sometimes you have to go backwards before you go forward. So the Scots developed this crazy game called golf.

So anyway, going to the home of golf is sort of a real treat.

MASON: You're flying halfway around the world to have to hit it backwards out of a bunker …

CHUCK: Yeah, haha.

MASON: … but there's something really enjoyable about that. 

Chuck, when you think back to some of your favorite professional golfers of all time, when you were a kid, was it the Hogans and Sarazens? And, as the decades have gone by, who are some of the people you really enjoyed watching or looking up to?

CHUCK: Well, Ben Hogan was always my top favorite. I just … his life of ups, and then he had the accident, and then he came back to golf and won another championship afterwards. And his game was impeccable. And obviously he was not using the modern equipment—he was using older equipment—but he was a high performer and dedication and all that. He wasn't a big-time personality, but he had real focus, dedication to his profession, and played at the highest level. So he was very instrumental and very influential to me when I was in my teens.

MASON: Were you a fan of Arnold Palmer's as well?

CHUCK: I loved Arnold Palmer. I enjoyed playing with him. He has a great personality. Any fan who came along who wanted to have his signature, he was so willing to do it, walking around, signing balls, signing programs, etc. I really think in some ways, I think every time he signed something, he thinks he's going to sell another set of clubs. But anyway …

MASON: Haha.

CHUCK: … he had yet an unbelievably positive personality.

MASON: Well he was one of the original, you know, marketers of the game with brands and with everything. He was a commercialized professional golfer.

CHUCK: Well that, and I think he was sort of the dawn of when television was really picking up golf. And that's when the public could get more interested and see some of the real things going on in golf—when TV became to attract golf and golfers.

MASON: People got to see his swashbuckling ways in Arnie's Army and everything on TV.

CHUCK: Right.

MASON: Are there any current golfers? In recent years, you're still playing when we have our Charles Schwab Challenge. You have the opportunity to play a few holes with some of today's great golfers as well. Anybody that you've enjoyed watching play in some of those events when we've been out here in Texas or anywhere else?

CHUCK: Well, I watch it obviously quite regularly, and I have had the opportunity to play with some of the wonderful players of the last 20 years and so forth. And things continue to improve, and players get better and more consistent. And Scottie Scheffler is wonderful. And I think my old friend Mickelson, I played golf with him in the AT&T. He was fantastic and a great personality, really a smart guy.

MASON: Yeah, so fun to watch all of them, everybody that you just mentioned. And they play a different game than you and I do …

CHUCK: They do.

MASON: … but still fun to go around the course with them.

Well, you mentioned being a supporter of golf. I know you've been a big supporter of the First Tee. And you were talking about people being interested in the Hale Irwins and Arnold Palmers and Bernhard Langers, but the First Tee is getting a next generation of people going. What attracted you to the First Tee, and what made you want to get involved in that?

CHUCK: The First Tee program is all about taking on kids who are between probably 10 and 15 or something like that. But it teaches the very fundamentals. Usually we have some identification with kids that are a little bit underprivileged, who aren't part of the … don't have a family that belongs to a country club or something of that nature. And so it teaches kids that are a little bit … don't have the same advantages or focus on that and gives them an opportunity to understand what golf's all about.

And it gets back to the fundamentals which I was talking about. It teaches them discipline in some respects, self-respect, respect for the other people. They learn things about what it means to have integrity, what it means about the rules, the rules and regulations that put all golfers together in sort of a format. But it has applications to your whole life. It teaches you about practice, how important practice is. And that's the same thing in business. You work hard and you practice, you learn, and then you can develop a skill that then can be useful to help other people, whether it's investing or whether it's in golf. Same kind of thing applies.

So there are a lot of parallels between golf and business and investing. It all sort of connects.

MASON: Chuck, just wanted to ask you one final question. And feel free to answer this about golf or about life, or both. But what give you optimism when you think about the future?

CHUCK: Obviously optimism is the only thing that can drive any of us forward and to have a completely fulfilled life. I've always been an optimist, whether it's in business—there's always growth and new opportunities going on. I've been very lucky to be a part of a fantastic 50 years here of the introduction to computers, to internet, to cars that are better and better, radios, music.

The human race is all about self-improvement and improvement of things and capabilities of knowledge, leads to better things. It's a wonderful thing to be optimistic about because it's real. And we as humans are always pushing ourselves to the next frontier.

And in golf, yeah, I like the new clubs that come out. They hope they give you a little bit of promise that maybe the ball will go further, maybe straighter. And then I hope I get a lower score.

MASON: Haha.

CHUCK: Now that doesn't always happen. You have to be an optimist if you're a golfer, to say the least.

MASON: We had a guest on previously that said this is a crazy game, and it's maddening, and in some ways it's almost a stupid thing, and we love it. And we keep going back for more and more and more. And it's … I guess we're a little bit deranged that we keep going back to this crazy thing.

CHUCK: I think so. That's sort of the history of my golf game. But I do get enjoyment as it's not simply just the score. There are other things that really are beneficial about golf. You've got exercise. You're with friends. You have a time off from not thinking about all the other worries of the world. You're thinking about your swing. You're thinking about other things that would be, hopefully improve your game. And those are all wonderful diversions in life.

MASON: Well, and what you just said may be more important than it ever was. There's phone distractions and internet distractions and news, and sometimes you just need to get away.

CHUCK: You're out on the golf course away from it all.

MASON: Away from it all.

Chuck, I'm going to wrap it there. You are the reason our company has been so invested in the game of golf, which in turn enables us to do a podcast like this. So thanks for everything, and thanks so much for making time to chat. We really appreciate it.

CHUCK: Thanks, Mason.

MASON: So that's it for us today. Thanks for listening.

You can read Chuck's complete bio and more on his investing philosophy at AboutSchwab.com.

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For important disclosures, see the show notes or schwab.com/TheGame.