Yield of Dreams

Schwab’s Asset Growth Dwindles in Third Quarter

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Charles Schwab announced a decline in net new assets in its Advisor Services unit for the third quarter, but total client assets in the unit were up from last quarter.

According to the firm’s quarterly earnings report, net new assets in Advisor Services were down 4 percent from last quarter and 10 percent from the year-ago quarter to $9.5 billion. Total client assets, however, were $762.3 billion, up 5 percent sequentially and 19 percent over the third quarter of 2011.

Schwab would not provide the number of new RIA recruits for the quarter, but the firm did say they’re seeing an acceleration of larger deals this quarter. The size of deals were 20 percent larger than deals in the second quarter. Teams from the wirehouses made up 45 percent of new recruits, followed by independent broker/dealer teams at 35 percent. So-called “tuck-ins”—when advisors leave a firm to join another rather than start their own practice—represent 36 percent of deals so far this year.

TD Ameritrade has not reported its third quarter earnings yet, so we don’t know how Schwab’s results stack up. That said, Schwab still likely dominates the custodians by advisor assets.

Total client assets across the entire firm grew 20 percent to a record $1.89 trillion, the firm said. Net income was $247 million, up 12 percent from a year ago.

During the quarter, the firm expanded its ‘Insight to Action’ practice management consulting program, which provides hands-on support to its RIA firms. The program covers strategic planning, managing profitability, driving productivity through technology and succession planning.

The firm reported lower mergers and acquisitions activity in the second quarter of this year, with eight deals during that period with acquired assets under management of $12.3 billion, compared with 17 deals with $24 billion in AUM in the first quarter. In comparison, there were 70 deals in 2010 that accounted for $62.7 billion in AUM.

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