Schwab in Talks to Buy USAA Wealth-Management, Brokerage Units -- Sources
July 15 2019 - 12:44PM
Dow Jones News
By Dana Cimilluca and Telis Demos
Charles Schwab Corp. is in talks to buy brokerage and
wealth-management operations from USAA for roughly $2 billion, a
move that would push the discount-brokerage pioneer further into
financial advice.
The deal, which could bring Schwab roughly $100 billion of
assets from closely held USAA, may be reached this month, people
familiar with the matter said.
Schwab, which already has north of $3.5 trillion in client
assets, has been moving further into wealth management for clients
who once represented the turf of elite Wall Street firms. Since
2015, Schwab has had a 63% increase in the number of new retail
clients opening managed investment accounts. New accounts receiving
advice now average about $600,000.
In March, the San Francisco firm launched a new subscription
model in an effort to attract more wealth-management clients by
making advice more affordable than the traditional arrangement of
charging a percentage of assets.
A deal with USAA would be the latest move to expand Schwab's
reach beyond its brokerage roots. Schwab, which reports results
Tuesday, is a powerhouse with tentacles in banking,
financial-advisory and custodial services and a market value of
almost $55 billion.
Should there be a deal, it would transform San Antonio-based
USAA, which provides an array of financial services to military
customers, into more of a pure-play insurer.
USAA offers home, life and auto insurance as well as online
banking and investment services to current and former military
personnel and their families. It was founded in 1922 by a group of
25 Army officers to self-insure their vehicles and was originally
known as the United States Army Automobile Association, according
to USAA's website.
USAA earlier this month closed a deal to sell its
asset-management business, including its mutual fund and ETF
operations and its 529 college-savings plan, to Victory Capital
Holdings Inc. As of April 30, that USAA business had assets under
management of $81.3 billion.
--Lisa Beilfuss contributed to this article.
Write to Dana Cimilluca at dana.cimilluca@wsj.com and Telis
Demos at telis.demos@wsj.com
(END) Dow Jones Newswires
July 15, 2019 12:29 ET (16:29 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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