reported that its second quarter profit fell 31 percent, thanks to low interest rates and soft capital markets.
Net income dropped to $205 million from $295 million a year earlier, and net revenue dropped 17 percent to about $1.1 billion. Charles Schwab CEO, Walter Bettinger, says while the equityhave rallied since early March lows, the stock market still ended the quarter more than 20 percent below year-earlier levels and government monetary policy continues to keep short-term interest rates at unprecedented, near-zero levels.
“Since both of these factors have a significant influence on the company’s revenues, we remain focused on disciplined financial management. We’ve already taken the steps necessary to ensure Schwab remains a lean and efficient organization in this environment, and our commitment to reduce 2009 expenses by 7 to 8 percent of the 2008 total is on track,” he added.
Schwab’sbusiness took a hit this quarter as well. Client assets in its Advisor Services division fell 12 percent to $505 billion from $575 billion in the second quarter of 2008. Year-to-date, clients assets are up 11 percent. Meanwhile, net new assets in the RIA division were down 47 percent (to $7.7 billion) from the second quarter last year, and down 20 percent for the year. So far this year, the company has added 74 breakaway advisers to its RIA platform, up 54 percent from a year ago.
In June, the RIA custodian announced it will waive commissions on electronic equity trades and reimburse account transfer fees for its RIAs’ clients. It’s also waiving maintenance fees on its portfolio management software. Advisors need to manage their costs without cutting back on client service and outreach,” said Bernie Clark, senior vice president of sales and relationship management for Advisor Services. “These moves are designed to strengthen their ability to do just that.” For more, click here.