Charles Schwab Corporation (SCHW) continues to lose retail customers following its merger with TD Ameritrade that was announced in late 2019, the brokerage said today.
Key Takeaways
- Charles Schwab is seeing "temporarily lower net flows" as retail clients take their business elsewhere.
- Chief Financial Officer Peter Crawford said the losses were "in-line or slightly better than [the company's] initial estimates."
- SCHW stock is down 3% in trading today and down nearly 25% year-to-date.
The company's stock fell almost 4% today as Schwab said "temporarily lower net flows reflect... expected attrition" among Ameritrade's retail and advisory clients. Charles Schwab is also exiting some of Ameritrade's "atypical custodial relationships" that don't align with the company's approach.
While the brokerage declined to offer specific details on the current state of client loss, Chief Financial Officer Peter Crawford said, "ultimate attrition will be in-line with or slightly better than our initial estimates—approximately 4% of Ameritrade revenue prior to the deal or around 1% of combined total client assets as of December 31, 2022."
Despite the customer outflows, Charles Schwab saw growth in total assets: $8.24 trillion under management at the end of July. That is up 3% compared to the month prior and 13% compared to a year ago.
Charles Schwab stock is down nearly 25% this year, thanks to a high interest rate environment and increased balance sheet scrutiny following the regional bank crisis triggered by the collapse of Silicon Valley Bank.
Despite slowing deposits, Schwab has performed well in quarterly earnings this year, with SCHW stock popping higher in April and again in July as deposit losses shrank.
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FAQs
MarketWatch has been in direct contact with dozens of TD Ameritrade users who say their accounts were moved to Schwab this week. Many of their biggest issues involved the Schwab interface and overall user experience, which many said is not up to the standard of their previous brokerage.
Are people leaving TD Ameritrade? ›
The financial-services company also provided a statement: "Over the weekend, we transitioned 1.8 million Ameritrade client accounts and $350 billion in assets to Schwab - the final 10 percent of the total Ameritrade client population. All of Ameritrade's client accounts and assets have now transitioned to Schwab.
Where are TD Ameritrade clients going? ›
The final group of TD Ameritrade customers transitioned to Charles Schwab 's platform this past weekend, marking the last milestone in Schwab's four-year long integration of its longtime rival. Schwab closed its acquisition of TD Ameritrade in 2020.
What happens if Charles Schwab goes under? ›
In the very unlikely event that Schwab should become insolvent, those segregated assets are not available to general creditors. They're protected from any other creditor claims. They remain the client's assets.
Is Schwab going to go under? ›
Charles Schwab's threat of distress is under 37% at this time. It has slight chance of undergoing some form of financial crunch in the near future.
Will my TD Ameritrade account become a Schwab account? ›
How do I access my account? All clients of TD Ameritrade, Inc. are now Schwab clients. If you're new to Schwab, you'll need to set up a Schwab Login ID and password to access your account. If you're already a Schwab client, you can use your existing Schwab login; there's no need to create new credentials.
What broker is better than TD Ameritrade? ›
TD Ameritrade and its alternatives compared
| Broker | Web platform score | Mobile platform score |
|---|
| Interactive Brokers | 4.3 /5 | 4.3 /5 |
| eToro | 4.4 /5 | 4.9 /5 |
| Fidelity | 4.5 /5 | 5.0 /5 |
| Zacks Trade | 4.3 /5 | 3.5 /5 |
7 more rowsMay 10, 2024
Commissions do not affect our editors' opinions or evaluations. At the end of 2020, Charles Schwab completed its acquisition of TD Ameritrade. This means big changes for customers of TD Ameritrade. As the transition nears completion, all customers at TD Ameritrade will have their accounts moved over to Schwab.
Is Charles Schwab reputable? ›
There are hundreds of branches across the country and thousands of financial consultants, both in branches and available online. Search tools allow clients to filter for branch locations as well as financial consultants. Charles Schwab Corp. has an A+ rating with the Better Business Bureau.
What is the 4% rule in Charles Schwab? ›
One frequently used rule of thumb for retirement spending is known as the 4% rule. It's relatively simple: You add up all of your investments, and withdraw 4% of that total during your first year of retirement.
Clients who have more than one million dollars in qualifying assets at Schwab automatically get access to these benefits, including—a dedicated Financial Consultant, access to a wide range of specialists, tailored solutions, and pricing advantages.
Is my money at risk at Schwab? ›
Your securities are protected at Schwab.
This is the legal requirement for all U.S. broker-dealers. Your segregated assets are not available to general creditors and are protected against creditors' claims in the unlikely event that a broker-dealer becomes insolvent.
What is going on with TD Ameritrade? ›
At the end of 2020, Charles Schwab completed its acquisition of TD Ameritrade. This means big changes for customers of TD Ameritrade. As the transition nears completion, all customers at TD Ameritrade will have their accounts moved over to Schwab.
Will TD Ameritrade cease to exist? ›
The conversion of TDA accounts to Charles Schwab & CO., Inc. (SCH) is scheduled to be completed by September 5, 2023, at which time TD Ameritrade will cease to exist. Advisers who utilized TDA as their custodian need to decide immediately on whether to convert accounts to SCH or select an alternate custodian.
Did Charles Schwab move the final 10% of TD Ameritrade customers to its platform this week? ›
Earlier this week, Schwab said it completed its last group of TD Ameritrade customers to its platform with 1.8 million clients with roughly $350 billion in assets. The group was the final 10% of Ameritrade's client population.
Why did Charles Schwab decline? ›
From August 2022 through March 2023, Charles Schwab lost deposits due to client cash sorting at a pace of $5.6 billion per month as yields on savings accounts or other safe short-term assets like certificates of deposits rose. These deposit outflow pressures slowed significantly following the regional banking crisis.
