Individual investor biz lags at Schwab, TD Ameritrade

The individual investor businesses at Charles Schwab Corp. and TD Ameritrade Holding Corp. remain in the doldrums, with low trading volumes and interest rates. Meanwhile, the RIA units at both companies continue to snare most of the new assets. Schwab reported today a 2% gain in net revenue, to $1.21 billion, in its second quarter, which ended in June. Net income fell 3%, to $231 million, excluding an extraordinary gain. TD Ameritrade's net revenue fell 3%, to $667.2 million, for its third fiscal quarter, which ended in June. Net income dropped 2.3%, to $153.8 million. Schwab's individual investor business brought in $2.9 billion in net new assets during the quarter. That was dwarfed by the $9.9 billion in net new assets from the Schwab Advisor Services custody unit. TD had $9.7 billion in net new assets, compared with $7.9 billion a year earlier. Some 50% to 60% of new flows are from RIAs, according to Peter Dorsey, head of sales for TD Ameritrade Institutional, the custody unit. The results show “how important” RIAs have become for TD Ameritrade, Mr. Dorsey said. A record 120 breakaway brokers joined during the third quarter, a 48% increase from the year-earlier period, TD Ameritrade said in a release. Mr. Dorsey said that he expects full-year results to pass the 324 breakaway brokers TD Ameritrade Institutional brought on board in fiscal 2012. "There has been a crisis of confidence with Wall Street in general" that continues to help drive the breakaway trend, he said.