Another setback for Schwab as net new assets decline again

investmentnews.com:

Following a protracted period of pain in 2023, Charles Schwab encountered yet another setback in January as it saw a steep decline in asset flows.

In its latest monthly activity report, the financial services behemoth said it took in $14.8 billion in net new client assets in January, which marked a 65% decline from the $36.1 billion for the same period last year, and a 59% deceleration from the $42.1 billion it raked in during December.

A look at core net assets reveals a similarly pessimistic picture. While the $17.2 billion in core net new assets might seem encouraging at first blush, it’s still a 60% annual decline from January 2023, and 52% less than in December.

“Transactional sweep cash ended January 2024 at $406.1 billion, representing a decrease of $11.3 billion versus the prior month,” Schwab said in the statement announcing its January results. “This decline was in-line with typical January seasonality as clients reengaged with the markets following a nearly $15 billion build-up in cash during December 2023.”

Over the past 12 months, Schwab has suffered several periods of significant slowdowns in new client assets. From a peak of nearly $73 billion in March last year, new assets trickled down to $8.1 billion in August, then rebounded to $27.2 billion in September before hitting a new low of $5 billion in October.

Those fits of weakening roughly coincided with a number of concerning revelations from the brokerage giant.

Among the first cracks was a 9% year-on-year decline in revenue during the second quarter of 2023, which CFO Peter Crawford chalked up to “significant near-term headwinds” during the rising-rate cycle.

“Net interest revenue declined 10% from the prior year to $2.3 billion as the incorporation of