After entering the home stretch of a Acquired for $22 billion Charles Schwab had to cover many areas in order to keep an eye on his competitors in his wealth custody game. This is a notice of the annual winter business.
On the earnings front, Schwab announced fourth quarter 2022 net income of $2.0 billion, up 25% from the $1.6 billion recorded in the fourth quarter of 2021. Net income for the year was his highest ever at $7.2 billion, up 23% in comparison. Until 2021.
However, the January 27 winter update provided an opportunity for senior Schwab leaders to disclose details regarding the merger with TD Ameritrade. It will soon impact the lives of thousands of advisors and their clients, outlining our strategic priorities for 2023.
Here are some highlights from the 4+ hour event that took place on Friday.
in numbers
Schwab CEO Walt Bettinger set the stage by explaining the challenges the company faced throughout 2022. He then cited the company’s performance as an example of how Schwab’s “all-weather business model” worked.
“We can see that the last two years have shown it perfectly. 2021 has been an extraordinary year for the stock market, dealing with near-record low interest rates and delivering record financial results,” he said. said. “Looking back at 2022, it was a near-record year in terms of stock market pain and hardships. We have achieved financial results.”
Bettinger said investors have been operating with a bear market mindset over the last year. But Schwab’s clients remain enthusiastic and the company has managed to generate $428 billion in core net new assets over the last 12 months.
This was a point of pride for the CEO, despite a significant drop from the record $558.2 billion in core net new assets recorded by the end of 2021.
Schwab’s total client assets ended the year at $7.05 trillion as the company’s asset collections were offset by a $1.5 trillion decline in market value over the past 12 months. The company has added over 4 million new brokerage accounts to him, pushing the total number of accounts to approximately 34 million by December 31, 2022.
The company is gaining traction within the retail channel, achieving record core inflows in the past six months. Schwab Advisor Services has attracted a team of over 350 Migration Advisors. This is the second highest number ever reported by the company.
Bettinger also referenced the ongoing acquisition of TD Ameritrade, saying he was encouraged by the response from clients as the two companies, huge logistics and technology businesses, are about to formally transform in the coming weeks. .
“We know this is a large and complex transformation. No one in the history of our industry has transformed a brokerage firm of this size or scale. I’m very confident about where I’m at. “Recent test results offer an accuracy of 99.9%. But I’m confident it will be a great experience overall, and needless to say, both former Schwab and former Ameritrade clients have both had a better experience, better tools, and better features than before. I am ready.”
TD Ameritrade merger progressing well
Schwab’s Chief Operating Officer, Joe Martinetto, provided an update on the giant operation, which is now in its third year.
“Where possible, we can elicit some of these questions before the conversion and address them before the client comes so they don’t have a kind of cold experience when they actually convert,” he says. said..
And the temperature of that experience is quickly taken away. Martinetto said Schwab plans to convert about 500,000 customer accounts in his February, and the process is expected to begin over President’s Day weekend, which spans about three weeks.
He added that through the rest of 2023, three large groups of clients will be traveling, targeting Memorial Day weekend, Labor Day weekend and early November weekends.
Charles Schwab
Migration will end in early 2024 with a small number of client accounts migrated. The goal is to avoid investment and trading confusion for clients and advisors.
Labor Day will be a day to save for Wealth Managers as the accounts of Advisors and their clients will be converted in the September 2023 “Transition Group”.
“In total, we have between 18 million and 20 million accounts that we plan to move over the course of this entire integration. He noted that the President’s Day migration group was intentionally small and made up of people who weren’t the most active users of the platform.
“But before joining a large migration group later this year, it’s an opportunity to move assets, bring them to the platform, test the service experience, and ensure all technology is working as expected. ”
Labor Day belongs to advisors, while Memorial Day primarily caters to unadvised retail customers.
Schwab also leaves nothing to chance when it comes to letting clients know what’s happening and when. More than 10 million communications have been distributed to customers to help them plan and prepare, Martinetto said, and the company has trained 11,000 employees to support customers through the transition. doing.
“So we have done a lot of good work to remove as much friction from this system as possible to ease the migration process for our clients,” he said.
Schwab believes there is a great opportunity to optimize and modernize its integrated technology over the next three to five years.
Areas of focus include ongoing automation and efficiency improvements, modernizing books and records for broker-dealers and workplace solutions, and streamlining data centers and applications.
Promise to Advisors
Taking the stage, Bernie Clarke, head of Schwab Advisor Services, said far from the first pledge Schwab made to the independent advisor community in March, about a month before the COVID-19 pandemic changed everything. He started by reminding everyone he shared a room with by watching the webinar from. 2020.
Its pledge, he said, is to provide industry-leading storage services with no AUM minimums or storage fees. We support advisors with leading technology and an open architecture. We provide in-depth practice management consulting and insights for all companies on our platform. We offer a digitally streamlined account opening process.
Why retell Lara after 3 years? He says that as Schwab prepares to welcome new professionals into the family, it’s important to tell them “who we are.”
“And these are the businesses, so it’s very important. These are the people who entrust the franchise to us as custodians. And they don’t know us,” he said. “There’s like 7,000 or 8,000 people coming. Maybe they’ve read the article or heard a story about who we are. That’s the whole purpose of the pledge. What do we do now that we have this big share of the market and how can we help the franchise continue to grow?”
Clarke then emphasized the collaboration across spaces required to succeed in the modern environment. Expectations from wealthy investors are rising, and as RIAs evolve to meet the needs of investors, providers must step up to support the growing needs of both her RIAs and their clients.
He believes cooperation is taking place at Schwab. Along with attracting a team of 353 advisors to transition, Schwab Advisor Services has earned him a net worth of $224 billion in 2022. Those totals are down from his $364 billion and his $315 billion in 2021.
However, the average size of teams in transition increased from $90 million in 2021 to $102 million in 2022, the second consecutive year of growth.
