Charles Schwab’s Investor Services Expansion Supports Growth



Investor Services division

As of June 30, 2015, Charles Schwab’s (SCHW) Investor Services division reported total client assets of $1.41 trillion, which is an increase of 6.50% from the prior year’s quarter. Clients in the division added new assets totaling $26.8 billion. The Investor Services division’s assets make up 55% of Charles Schwab’s total client assets. The company provides retail brokerage and banking services to individual investors, retirement plan services, and corporate brokerage services under its Investor Services division.

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Charles Schwab is focusing on individual customers’ financial needs and providing customized solutions. Its prime focus is handling wealth management rather than just providing the platform for trading activity. The company’s banking services are utilized by brokers, dealers, and clients to maximize the value of deposits.

New initiatives

In March, Charles Schwab launched Schwab Intelligent Portfolios, which provide fully automated investment advisory service, with assets totaling $3 billion as of June 30, 2015. The company’s technology addition includes its “Trade Source” tool for simplification of trading on Schwab.com. Overall, the company operates 27 independent branches, most of which have exceeded the targets of net new assets.

Enabling clients easy access is key in the brokering industry. Charles Schwab has launched an Apple Watch app that will allow clients to access headlines and watchlists and initiate equity or options trades. It has also launched Apple Touch ID capability for its mobile application, giving clients the additional security of fingerprint access.

Charles Schwab’s Investor Services added 176,000 retail brokerage accounts, up 19% from the prior year’s quarter. Total accounts for the division expanded by 2% to 6.7 million as of June 30, 2015. The company is focusing on financial planning for retail customers, with a conversation for financial planning totaling 29,000 in 2Q15.

Here’s how a few of the firm’s peers in the brokerage industry fared in terms of revenue in the last 12 months:

  • Interactive Brokers (IBKR) posted revenue of $1.1 billion.
  • TD Ameritrade (AMTD) posted revenue of $3.1 billion.
  • E*TRADE (ETFC) posted revenue of $1.8 billion.

Together, these companies form 10.80% of the iShares U.S. Broker-Dealers ETF (IAI).


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