Schwab says the TD Ameritrade deal is spurring retail and advisory attrition

(Bloomberg) — Charles Schwab Corp. said it is seeing temporary lower net inflows of client funds as the brokerage sees a drain on some of the assets of retail and advisory clients as it integrates TD Ameritrade into its business.

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Chief Financial Officer Charles Schwab Peter Crawford said in a statement Monday that the company also reneged on some custody relationships that Ameritrade provided to institutional clients. Crawford said customer attrition was in line with Schwab’s expectations for the deal when it was announced in 2019 and would ease in the first half of next year.

Shares of the company fell 3.59% to $61.78 at 4 pm in New York, the biggest decline in more than three months.

The drain on Schwab amounts to about 4% of Ameritrade’s pre-transaction revenue, Crawford said, or about 1% of total customer assets accumulated as of the end of last year. The company also reported that its new core net assets in July fell 59% to $13.7 billion from the previous month.

Texas-based Westlake has reiterated its prediction that customer deposits will start growing again later this year.

Schwab has faced pressure from investors in recent months, particularly after the March collapse of several mid-size US lenders, as attention focused on unrealized losses from securities held on banks’ balance sheets.

Increased interest rates at the Federal Reserve over the past year have put pressure on the bank’s banking arm, a pivotal source of revenue, as some customers have shifted their money from the bank into other investment products, including money market funds, in a process known as “cash-out.” ” Sort.”

(equity updates in third paragraph and net new assets in fourth. sin)

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