Charles Schwab Total Client Assets Jump 23% in January; Expects More Mutual Fund Clearing Outflows – Investopedia

Charles Schwab ended the month of January with client assets that increased by double digits compared with a year ago as investors giddy about tax reform sent shares surging to record highs. That has since changed in February, with the Dow Jones Industrial Average logging its biggest point drop in one day earlier this month. But for January, the love of stocks helped The Charles Schwab Corporation (SCHW) bring in even more assets.

According to the San Francisco-based brokerage, core net new assets totaled $18.7 billion at the end of January, excluding outflows of $7.2 billion from a mutual fund clearing services client. “The $7.2 billion clearing outflow in January was the first of several transfers scheduled for that client,” wrote Schwab’s Chief Financial Officer Peter Crawford in a blog post addressing the outflows. “Over the course of the next few months, we expect additional outflows from a couple of other clients as well, which, in combination with the January outflow, could reach approximately $100 billion.”

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Crawford noted that, based on the company’s methodology, all of those outflows will be excluded from its net new assets, and the revenue impact from the outflows will be “minimal.” He stressed that the outflows have already been included in the company’s financial forecasts for this year. “While flows of this magnitude are unusual, they are not unprecedented. If you look across our NNA over time, you can see that in 2013, we had $99 billion excluded from core NNA, of which the majority was due to large clearing outflows,” he wrote.

As of the end of January, Schwab said that total client assets were at $3.48 trillion, which is up 23% from a year ago and a record for the online brokerage. New brokerage accounts hit 165,000 in January, up 49% from a year ago. “Overall January results demonstrated strong client engagement and momentum, with 165,000 new accounts, the highest month since 2000, and record daily average revenue trades up nearly 50% from last January,” said Crawford in the blog post. “Our core NNA rose 68% from a year ago to $18.7 billion and represents the largest January in our company’s history. Our goal for 2018 and beyond is to sustain the growth we’ve achieved and lay the foundation for ongoing success in expanding our client base. With one month under our belts, we are off to a promising start.”

Charles Schwab isn’t the only discount brokerage that saw brisk business during the first month of 2018. E*TRADE reported this week that daily average revenue trades, or DARTs, were 315,572 in January, up 29% from December and up 57% year over year. The brokerage said that it added 64,581 gross new brokerage accounts during January and ended the month with 3.7 million brokerage accounts, an increase of 25,529 from December alone.

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