Charles Schwab sees 7% boost in fee-based assets

Company says clients turning to advisory accounts as a result of market turbulence.

The Charles Schwab Corp.’s efforts to expand its fee-based advisory business to retail clients is bearing fruit.
For the three-month period ended Sept. 30, the company reported $190.3 billion of client assets under its “total advice solution” metric, according to Schwab’s quarterly earnings report. That’s a 7.1% increase over the same period last year, when the company reported $177.8 billion of fee-based assets.
Advice solutions at Schwab includes managed portfolios, specialized strategies and customized investment advice, according to the earnings report.
Schwab CEO Walt Bettinger two years ago said his goal was to move Schwab away from the transactional business to the point where the vast majority of its revenue was from fee-based managed assets and interest revenue.
The broad market’s recent turbulence has resulted in retail clients’ increased interest in fee-based accounts, Mr. Bettinger said in the company’s earnings report.
“Faced with economic uncertainty and the resulting market volatility, investors increasingly turned to our advice offerings throughout the quarter,” Mr. Bettinger said. “Approximately 36,000 accounts enrolled in one of our retail advisory solutions during the last three months, 57% more than the year-earlier period, and total accounts using these reached 550,000, up 13% year-over-year.”
“All wealth managers are increasing fee-based offerings such as separately managed accounts, which have a higher revenue yield” than traditional brokerage accounts, noted Michael Wong, an equity analyst at Morningstar Inc. “There is definitely a push at Schwab and other firms to go that route.”
Net income at Schwab for the third quarter was $376 million, an increase of 17% from $321 million for the same period in 2014. Net income for the nine months that ended in September was $1 billion, up 6% over the same period last year, the company reported.