Yet it’s unlikely thatSchwab declined to serve smaller RIAs, Roame says.While the idea that Schwab doesn’t servethese firms “seems to be a common headline,” the consultant says he’s not sure that is accurate. “Actually, I think Schwab had more under $100 million” RIAs than TD Ameritrade had at the time of the merger, he said.
‘Very Transparent’
Pirker Partners CEO Alois Pirker praised Schwab for being “very transparent about this, which is great.”
After all, Pirker said, “Typically migrations happen in stages with the easiest retail clients/RIAs being migrated first and the most difficult cases being moved last.”
At this point, “as the migration goes into the final stages, Schwab is tackling exactly those difficult cases and, as they stated publicly, the contract with some RIAs that don’t fit the mold will be terminated with others that are not willing to adjust making the jump themselves,” Pirker said.
Therefore, Schwab’s comments on Monday “make perfect sense,” Pirker said. “If all they lose is 4% of revenue and 1% of client assets, the acquisition has been a rousing success,” he said. “The proof will be once they run the numbers at year-end.”
Noting that Schwab has been “proactive in jettisoning TDA advisors that don’t fit their ‘risk profile’ or have small AUM prior to the switchover,” Timothy Welsh, president, CEO and founder of Nexus Strategy, said it was “not a surprise” that attrition was happening.
Also, “retail TDA clients didn’t choose to go to Schwab,” Welsh pointed out. “They were forced to via the acquisition,” so it was “not a surprise that a segment of them are going elsewhere.”
FAQs
Schwab likely chose to resign from serving those clients given the ultra-low revenue model,” Roame explained. TD Ameritrade “understandably took those clients on to generate net new assets without as much focus on the revenue and the risks associated with those clients,” he added.
Are people leaving Charles Schwab? ›
Schwab let staff attrition and position eliminations contribute to its notable reduction in staff size. The Charles Schwab Corp. has 4,000 fewer people on its payroll than it did nine months ago – double the reductions expected. The Westlake, Texas, firm reported that it has a lean 32,600 staffers as of Mar.
Is Schwab losing clients? ›
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."
Did TD Ameritrade get bought out by Schwab? ›
In November 2019, Charles Schwab announced its acquisition of TD Ameritrade for $26 billion. The deal closed a year later. So, for the past three years, Charles Schwab (SCHW) has been integrating TD Ameritrade into its business, including the well-regarded Thinkorswim trading platform.
Are assets safe at Schwab? ›
The standard FDIC insurance provides up to $250,000 per depositor per insured bank based on an ownership category. So you could get insurance for an individual account and additional insurance for a joint account. The same applies to trust accounts. All of the deposits at Schwab Bank are protected by FDIC insurance.
Why is Charles Schwab struggling? ›
Schwab felt the worst of it from August 2022 through April 2023, when its bank account deposit balances plummeted by nearly $50 billion, or 32%. In other words, clients pulled funds from their bank accounts at Schwab at a pace of $5.6 billion per month to take advantage of higher-interest-earning assets.
What is going on with Schwab? ›
Schwab (SCHW) Reports Sequential Fall in April Net New Assets. Schwab's (SCHW) core net new assets of $1 billion for April 2024 decline 98% from the previous month but increase 143% from the prior-year month.
Is Charles Schwab in financial trouble? ›
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.
Is Charles Schwab brokerage in financial trouble? ›
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.
How financially stable is Charles Schwab? ›
Fitch Ratings - Chicago - 29 Jan 2024: Fitch Ratings has affirmed The Charles Schwab Corporation's (Schwab) Long- and Short-Term Issuer Default Ratings (IDRs) at 'A'/'F1', and its Viability Rating (VR) at 'a'. The Rating Outlook is Stable.
Charles Schwab's competitors and similar companies include BlackRock, Goldman Sachs, FirstRand, Mizuho Financial Group, Nomura Holdings and Morgan Stanley. Charles Schwab Corporation (CSC) is a company that provides brokerage, banking, and financial advisory services.
Why is TD Ameritrade selling to Charles Schwab? ›
A: This transaction is squarely in line with Schwab's long-term strategy. It allows Schwab to continue to add scale on top of its organic growth, with the addition of approximately 12 million client accounts, $1.3 trillion in client assets and $5 billion in annual revenue.
Which is better, Schwab or TD Ameritrade? ›
TD Ameritrade offers numerous daily updates on individual stocks and economic data. It also offers stock-specific research from several independent research companies. Charles Schwab offers real depth in research. Clients get access to proprietary research and commentary from in-house analysts.
What happens if Schwab collapses? ›
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 it safe to keep more than $500,000 in a brokerage account? ›
They must also have a certain amount of liquidity on hand, thus allowing them to cover funds in these cases. What this means is that even if you have more than $500,000 in one brokerage account, chances are high that you won't lose any of your money even if the broker is forced into liquidation.
Which is safer Schwab or Vanguard? ›
Is Charles Schwab better than Vanguard? After testing 18 of the best online brokers, our analysis finds that Charles Schwab (96.6%) is better than Vanguard (80.3%).
Why is Schwab laying people off? ›
The layoffs affected approximately 5% to 6% of its employees, totaling around 2,000 individuals. The decision is part of a broader cost-cutting strategy aimed at enhancing the company's efficiency and competitiveness.
