Schwab Headwinds?

[Route246]

Anyone following news about Schwab?

"Schwab to Cut Staff, Real Estate to Save $500 Million a Year"

Some stuff on youtube and bloomberg regarding their banking operation facing issues with their low interest bond portfolio locked in for a long duration. I don't know if there is a story here or not but there is very little about it in the trade press.

 

[Markola]

[emoji897]

 

[Route246]

[emoji897]

 

[Surewhitey]

Living in Dallas, it made the local news. Made me dig a little as a friend was just asking me about CD's & he mentioned that CS was his main hub... YouTube likened them to SVB for the reason you mentioned too. I've always heard they're one of the best, but have never been a client.

 

[athena53]

I own the stock, bought after the SVB collapse. I'm not panicking. It's a good company and it's not going down.

 

[Car-Guy]

TBTF

 

[jebmke]

This is the banking side? Not the broker? Their issues on the banking side surfaced back in the spring.

 

[Car-Guy]

This is the banking side? Not the broker? Their issues on the banking side surfaced back in the spring.

I have a ton of money at Schwab but almost all of it is in my brokerage account(s). I have a checking account there too but I usually keep less than 10k in it, so that's not a big deal and well below the FDIC protection limits. However, I suspect if the "banking" side started to have serious problems, (like SVB, etc) a lot of folks would start bailing from the brokerage side too.


Here's Motley Fools take,
https://www.fool.com/investing/2023/08/22/why-charles-schwab-stock-is-down-today/

 

[target2019]

The stock SCHW I bought will likely rise even more. Or not?

Charles Schwab Corp. is planning to cut at least $500 million in annual staff, professional services and real estate costs in the latest step by the brokerage to respond to investor pressure. https://www.advisorhub.com/schwab-will-cut-staff-close-offices-to-save-500-million-a-year/

 

[Andre1969]

Since Schwab acquired TD Ameritrade a few months back, roughly 60% of my investible assets are tied up with Schwab. I don't know if that's something to be leery of, but they haven't given me any concerns, yet.

My current 401k is with Schwab, as is the one from my previous employer, which was rolled over into an IRA.

About the only thing that happened, was a few months ago, I got a call from a Schwab employee. Apparently I'm high-worth-enough to qualify for some kind of special treatment from them that the "masses" don't get. For some reason, the guy on the phone kept stressing all the things that Schwab offers, and that if I was thinking about moving my assets to another institution, to reach out to them first, because they can probably do everything for me that another institution would.

I wonder if they had a lot of TD Ameritrade customers jumping ship, or something? Anyway, I just told the guy that as long as they don't offer to take me to lunch and sell me on an annuity, they should be fine!

 

[Car-Guy]

About the only thing that happened, was a few months ago, I got a call from a Schwab employee. Apparently I'm high-worth-enough to qualify for some kind of special treatment from them that the "masses" don't get. For some reason, the guy on the phone kept stressing all the things that Schwab offers, and that if I was thinking about moving my assets to another institution, to reach out to them first, because they can probably do everything for me that another institution would.

I got a similar call... I wasn't even thinking much about it, until they called and said everything was alright.

 

[Texas Proud]

Thee is also an accounting component in this... if you want to take a write off due to layoffs you have to identify them (IIRC) 50 days before year end to take the hit this year.... they might be doing this a bit sooner...



I have no problem with staying with them and I also bought some share when SVB took a dive... a small amount so if it goes bad not a big deal.. I think I will make money...

 

[FREE866]

I have all my securities with Schwab and God forbid they did go bankrupt I'm fine because segregated securities are not available to general creditors and are protected against creditors' claims

 

[Car-Guy]

~90% of my money at Schwab is in CD's these days and all are FDIC insured.

 

[jebmke]

I have a ton of money at Schwab but almost all of it is in my brokerage account(s). I have a checking account there too but I usually keep less than 10k in it, so that's not a big deal and well below the FDIC protection limits. However, I suspect if the "banking" side started to have serious problems, (like SVB, etc) a lot of folks would start bailing from the brokerage side too.


Here's Motley Fools take,
https://www.fool.com/investing/2023/08/22/why-charles-schwab-stock-is-down-today/

Could be - but some of them will run out of options if they are the same ones that were whining about VG on Bogleheads mega-grievance thread.

 

[OldShooter]

I have all my securities with Schwab and God forbid they did go bankrupt I'm fine because segregated securities are not available to general creditors and are protected against creditors' claims

Agree. I am not worried in the least. Actually a RIF and ditching some real estate is a logical consequence of the TDAmeritrade purchase. Watching from the sidelines it appears that Schwab is being thoughtful and patient in transitioning both customers and the TDA workforce.

Re calls, my guy knows me well enough that he hasn't bothered to call, but goals of customer retention and of looking for additional services to sell are both logical and expected. I wish the company well in both efforts.

 

[jebmke]

Thee is also an accounting component in this... if you want to take a write off due to layoffs you have to identify them (IIRC) 50 days before year end to take the hit this year.... they might be doing this a bit sooner...



I have no problem with staying with them and I also bought some share when SVB took a dive... a small amount so if it goes bad not a big deal.. I think I will make money...

Is that unique to banking. When I was still working we regularly made accounting entries for layoffs late in the quarter -- sometimes even after the end of the quarter.

 

[Texas Proud]

Is that unique to banking. When I was still working we regularly made accounting entries for layoffs late in the quarter -- sometimes even after the end of the quarter.

No, not only banking... you can make entries any time during the year but if you want to put a reserve aside for future costs in the current year that will occur in the next there is a time component...


Remember, accounting is supposed to match income and expenses but someone clearing out a lot of excess wants to throw the whole kitchen sink into the expense now... there are rules on what you can do... this also makes the next year look better as the expenses were already booked..



I was laid off one year after they set aside a reserve for me... I was kinds surprise when it happened as it was a year after the reserve had been booked... usually they do not take that long...

 

[aja8888]

I've been with Schwab for 43 years and met Charlie when he first started the business.

Except for a few bucks here and there in credit unions, Ally and Chase bank, all the big $$$$ are at Charlie's place, and staying there. DD has her accounts there too!

 

[jazz4cash]

I own the stock, bought after the SVB collapse. I'm not panicking. It's a good company and it's not going down.

I bought also for my IRA but sold 100 days later for 25% gain. If I had a bigger position I would’ve only sold half. I think they are fine. I am wondering if “facility exit” means closing B&M locations. I think many clients favor local offices. The press release was too vague. They did have a successful debt offering.

 

[jesaco]

I have been with Schwab for over 35 years. at the time when I only had about $7,000 to invest, other brokers ignored or told me to go somehwere else. Only schwab was willing to set up an account with them with small amount. I met with an advisor, gave me advice without rushing me then even recieved a leather bound portfolio analysis (by mail) and course of action to take. Today, I have a modest mid 7 figure account, Helped my wife open an account with them 23 years ago and now my son has an account with them too.
Been loyal to them but will monitor thier situation and probably move half of my account to Fidelity. Just for my own peace of mind.

 

[OldShooter]

... I am wondering if “facility exit” means closing B&M locations. I think many clients favor local offices. ...

Yes, once every year or two I have some reason to go to a Schwab office. But locally the TDAmeritrade and the Schwab offices were only a couple of blocks apart. There's probably a lot of that duplication to clean up.

 

[tulak]

This thread reminds of Bernstein’s comment regarding the free lunch at Schwab and Fidelity in comparison to Vanguard.

I hope all of them survive, but it looks like they are feeling some pain due to low cost investment options. I suspect that Fidelity is the strongest of the group and will hold out on services the longest. Schwab is cutting costs and adding friction for investors, such as not defaulting to a high yielding money market sweep account. And Vanguard, they’re probably ok since they’ve already reduced their costs (aka, customer service).

It’ll be interesting to see how this plays out.

 

[target2019]

This thread reminds of Bernstein’s comment regarding the free lunch at Schwab and Fidelity in comparison to Vanguard.

I hope all of them survive, but it looks like they are feeling some pain due to low cost investment options. I suspect that Fidelity is the strongest of the group and will hold out on services the longest. Schwab is cutting costs and adding friction for investors, such as not defaulting to a high yielding money market sweep account. And Vanguard, they’re probably ok since they’ve already reduced their costs (aka, customer service).

It’ll be interesting to see how this plays out.

All true, but I don't think Schwab ever had a default money market account in the brokerage product. But I'm not a Schwab old-timer, so I don't know for certain whether that is true.

 

[Gotadimple]

All true, but I don't think Schwab ever had a default money market account in the brokerage product. But I'm not a Schwab old-timer, so I don't know for certain whether that is true.

Actually up until about 5 or 6 years ago they did have a default MM account where they would sweep funds. But they wanted to feature the bank, so 'sweeping' was moved to the bank.

I am not concerned about the brokerage, and keep a small amount at the bank that I sweep into their Money Market account. The issue as I read it above is consolidating facilities with the acquisition of TDA and not having reasonable savings products (read abysmal interest rates) causing low deposits.

Like the banks that failed earlier this year, the issue is low deposits and high loan portfolios. They can't make loans if they don't have deposits, once defaults start then that's where the trouble began for those banks. IMO that was the wake-up call for the FDIC that they were not paying attention. Schwab has several functions tied to the bank for its customers and really is acting to protect any actions by the FDIC regarding its deposits and loans.