Schwab says TD Ameritrade deal causing retail, advisory attrition

Finance chief Crawford says company has stepped back from some custodial relations Ameritrade offered institutional clients.

Charles Schwab Corp. said it’s experiencing temporarily lower net flows of client money as the brokerage sees attrition of some retail and advisory clients’ assets while it integrates TD Ameritrade into its business.

The company has stepped back from certain custodial relationships that Ameritrade had offered to institutional clients, Peter Crawford, chief financial officer at Charles Schwab, said in a statement Monday. The client attrition is in line with Schwab’s expectations for the deal when it was announced in 2019 and will subside in the first half of next year, Crawford said.

Schwab’s attrition amounts to about 4% of Ameritrade revenue prior to the deal, or around 1% of combined total client assets as of the end of last year, Crawford said.

The Westlake, Texas-based company repeated its expectation that client deposits will begin growing again later this year.

Schwab has faced pressure from investors in recent months, particularly after the March collapse of several midsize U.S. lenders focused attention on unrealized losses from securities held on bank balance sheets.

The Federal Reserve’s interest rate hikes over the past year have pressured the bank’s banking arm, a pivotal source of revenue, as some clients moved their money from the bank to other investment products, including money-market funds, in a process known as “cash sorting.”

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