Schwab says TD integration depressed client inflows

Charles Schwab Corp. said it has been temporarily affected by attrition from clients as it integrates TD Ameritrade, leading to a decline in net new money for the company last month.

Schwab had $4.9 billion of total core net new assets in August, a 64% decline from July and 89% from a year earlier, the company said in a statement Friday. Core net new assets excluding Ameritrade brokerage clients equaled $28.1 billion for the month. 

Firmwide new money “has been temporarily impacted by asset attrition from clients originating at Ameritrade,” chief financial officer Peter Crawford said in the statement. 

The majority of deal-related outflows have been attributed to Ameritrade advisory clients, “including a select number of relationships that did not meet our criteria for an ongoing service relationship,” Crawford said.

Shares of the brokerage fell 3.2% to $57.87 at 9:30 a.m. in New York. The stock has tumbled about 30% this year.

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

The company’s executives said previously that the worst of that deposit move is over and they anticipate growth again by the end of this year.

In the first half of September, Schwab has seen essentially neutral flows on cash after a “brief uptick“ in cash moving into higher-yielding investment options at Schwab following the Federal Reserve’s latest increase in interest rates.