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Charles Schwab’s Investor Services: What We Could See with the Recovery


Mar. 22 2016, Published 6:08 p.m. ET

Investor Services

Charles Schwab’s (SCHW) Investor Services division’s assets make up 54% of the company’s total client assets. The company provides retail brokerage and banking services to individual investors, retirement plan services, and corporate brokerage services under this division.

The Investor Services division reported total client assets of $1.4 trillion in the fourth quarter of 2015, a rise of 4% over 3Q15. Clients in this division added $21.6 billion in new assets. As of February 28, 2016, total client assets stood at ~$2.4 trillion as compared to ~$2.5 trillion as of December 31, 2015. However, markets have improved substantially in March 2016, which should positively impact overall client assets.

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Charles Schwab’s Investor Services added 151,000 retail brokerage accounts in 4Q15, up 3% over 4Q14. Total accounts for the division rose by 3% to 6.9 million as of December 31, 2015. The company focuses on financial planning for retail customers, holding 29,000 conversations about financial planning in 4Q15, up 21% compared to 4Q14.

Here’s how a few of the company’s peers in the brokerage industry have fared in revenue during the past 12 months:

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

Together, these companies make up 10.8% of the iShares US Broker-Dealers ETF (IAI).

Financial planning

Charles Schwab focuses on individual customers’ financial needs. It aims to provide customized solutions to these needs, and its prime focus is handling wealth management rather than simply providing a platform for trading activity. The company’s banking services are utilized by brokers, dealers, and clients to maximize the value of its clients’ deposits.

Charles Schwab’s retirement plan services sub-segment has introduced advisor-managed accounts, under which retirement plan consultants can build and manage customized portfolios for the plans they support, helping more 401(k) participants receive retirement plan advice and achieve better outcomes. Charles Schwab has also launched electronic agreements and disclosures, enabling it to send new account documents electronically, simplifying the paperless enrollment process.

Now let’s analyze Charles Schwab’s Advisor Services.


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