Schwab cutting 600 jobs - announced today

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JAZZISCOOL
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Schwab cutting 600 jobs - announced today

Post by JAZZISCOOL » Wed Sep 11, 2019 3:18 pm

The WSJ announced the job cuts today, about 3% of the work force. The article states the cuts will impact the retail division (financial advisers) so I'm not sure how that may impact customer service overall. Falling interest rates are impacting overall revenue. The article also touched on the recent acquisition of USAA's investment management division.

https://www.wsj.com/articles/charles-sc ... ge=1&pos=2

https://www.barrons.com/articles/charle ... 1568211358

I'm sure other major firms are looking to cut expenses as well.

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unclescrooge
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Re: Schwab cutting 600 jobs - announced today

Post by unclescrooge » Wed Sep 11, 2019 4:00 pm

If it derives half of it's$10 billion in revenue from interest rates, and is cutting 600 retail jobs in response, I don't think those 600 jobs will make any difference compared to the loss of income it already faces.

They are using this as an excuse to become an online-only brokerage. Within 5 years, they will cut the remaining retail employees.

student
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Re: Schwab cutting 600 jobs - announced today

Post by student » Wed Sep 11, 2019 4:25 pm

This is not unexpected since most major mutual fund companies and brokerage firms are focusing on price competition. Eventually I will consolidate and I will pick the one with the best service. If all have sucky service, then I pick Vanguard.

rich126
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Re: Schwab cutting 600 jobs - announced today

Post by rich126 » Wed Sep 11, 2019 4:25 pm

Isn't this a likely scenario for financial advisors and many in the financial investing business? As more people go into passive investing and especially low/no-cost ETFs there is less need for those jobs. Selling variable annuities, funds with 5% loads and taking a couple % of assets under management brings in a lot of money, at least it did in the past. Not saying all those jobs will disappear but I don't see it as a growth industry.

glennherwig
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Re: Schwab cutting 600 jobs - announced today

Post by glennherwig » Wed Sep 11, 2019 5:25 pm

I think there will always be a need for financial advisors as most millennials don’t know how to invest or inherit money. (I am a millennial and talk to many and they simply don’t know how or care to invest) We will just have to see how the next 10 years play out. If millennials don’t invest their money the wealth gap will continue to widen.

student
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Re: Schwab cutting 600 jobs - announced today

Post by student » Wed Sep 11, 2019 5:28 pm

glennherwig wrote:
Wed Sep 11, 2019 5:25 pm
I think there will always be a need for financial advisors as most millennials don’t know how to invest or inherit money. (I am a millennial and talk to many and they simply don’t know how or care to invest) We will just have to see how the next 10 years play out. If millennials don’t invest their money the wealth gap will continue to widen.
You are on bogleheads so I congratulate you of taking the first step. I did not really have money to invest until I got my one first real job in my early 30's many years ago. (Graduate School.)

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Hector
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Re: Schwab cutting 600 jobs - announced today

Post by Hector » Wed Sep 11, 2019 5:34 pm

As more people become bogleheads, less financial advisors and money managers will be needed.

smectym
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Re: Schwab cutting 600 jobs - announced today

Post by smectym » Wed Sep 11, 2019 5:43 pm

Schwab just opened an expansive new office in my area (small-to-midsize city). I was surprised. Doesn't seem to fit with the "moving to online-only" narrative; but sometimes the right hand doesn't know what the left is doing, or business models change in midstream.

X528
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Re: Schwab cutting 600 jobs - announced today

Post by X528 » Wed Sep 11, 2019 5:44 pm

unclescrooge wrote:
Wed Sep 11, 2019 4:00 pm
If it derives half of it's$10 billion in revenue from interest rates, and is cutting 600 retail jobs in response, I don't think those 600 jobs will make any difference compared to the loss of income it already faces.

They are using this as an excuse to become an online-only brokerage. Within 5 years, they will cut the remaining retail employees.
Are they closing any of their brick-and-mortar Schwab investor locations?

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Re: Schwab cutting 600 jobs - announced today

Post by whodidntante » Wed Sep 11, 2019 6:04 pm

JAZZISCOOL wrote:
Wed Sep 11, 2019 3:18 pm
I'm sure other major firms are looking to cut expenses as well.
The retail brokerage could someday be a barely justifiable business model. Maybe Vanguard can fire a few people so I can save another 0.01%. With the money I save there I could possibly enjoy a basic economy airline "seat" with the 1 oz bag of pretzels and the five-ounce pour of water.

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fortfun
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Re: Schwab cutting 600 jobs - announced today

Post by fortfun » Wed Sep 11, 2019 6:06 pm

Probably due to all my international atm reimbursements ;)

Housedoc
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Re: Schwab cutting 600 jobs - announced today

Post by Housedoc » Wed Sep 11, 2019 6:08 pm

A race to the bottom. Sadly we will all be effected sooner or later.

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JAZZISCOOL
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Re: Schwab cutting 600 jobs - announced today

Post by JAZZISCOOL » Wed Sep 11, 2019 6:13 pm

X528 wrote:
Wed Sep 11, 2019 5:44 pm
unclescrooge wrote:
Wed Sep 11, 2019 4:00 pm
If it derives half of it's$10 billion in revenue from interest rates, and is cutting 600 retail jobs in response, I don't think those 600 jobs will make any difference compared to the loss of income it already faces.

They are using this as an excuse to become an online-only brokerage. Within 5 years, they will cut the remaining retail employees.
Are they closing any of their brick-and-mortar Schwab investor locations?
The article did not mention that they are planning to close any physical investor locations.

student
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Re: Schwab cutting 600 jobs - announced today

Post by student » Wed Sep 11, 2019 6:55 pm

whodidntante wrote:
Wed Sep 11, 2019 6:04 pm
JAZZISCOOL wrote:
Wed Sep 11, 2019 3:18 pm
I'm sure other major firms are looking to cut expenses as well.
The retail brokerage could someday be a barely justifiable business model. Maybe Vanguard can fire a few people so I can save another 0.01%. With the money I save there I could possibly enjoy a basic economy airline "seat" with the 1 oz bag of pretzels and the five-ounce pour of water.
Bring your own cup as otherwise, they will charge you. :happy

sabhen
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Re: Schwab cutting 600 jobs - announced today

Post by sabhen » Wed Sep 11, 2019 8:39 pm

In my area, the local Schwab office used to open on Saturday until few months ago. They seem to have many advisors with VP titles at the office. Recently, I have been invited to a (free) lunch at the local fancy restaurant. It was a pitch for their advisory services. But in general, Schwab has been pretty good giving me free trades to buy Vanguard funds.

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Re: Schwab cutting 600 jobs - announced today

Post by GoldenFinch » Wed Sep 11, 2019 8:48 pm

JAZZISCOOL wrote:
Wed Sep 11, 2019 6:13 pm
X528 wrote:
Wed Sep 11, 2019 5:44 pm
unclescrooge wrote:
Wed Sep 11, 2019 4:00 pm
If it derives half of it's$10 billion in revenue from interest rates, and is cutting 600 retail jobs in response, I don't think those 600 jobs will make any difference compared to the loss of income it already faces.

They are using this as an excuse to become an online-only brokerage. Within 5 years, they will cut the remaining retail employees.
Are they closing any of their brick-and-mortar Schwab investor locations?
The article did not mention that they are planning to close any physical investor locations.
They are only cutting 3% of their workforce, so it sounds like just corporate belt tightening. But who knows, it could be a sign of what’s to come for the whole industry.

softwaregeek
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Re: Schwab cutting 600 jobs - announced today

Post by softwaregeek » Thu Sep 12, 2019 1:15 am

Schwab makes much of its money investing idle cash. You have 10k in cash, schwab pays almost nothing and lends it out to margin investors, and invests the rest in various bonds, as most banks do. But rates are going down and therefore margins. So less to play with. Trade fees are not the primary source of revenue. I suspect robo investing is also pushing down margin for advisory. All the financial institutions I deal with have some form of it and are pushing it hard.

MnD
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Re: Schwab cutting 600 jobs - announced today

Post by MnD » Thu Sep 12, 2019 7:21 am

I'd speculate this is affecting the advisors that are assigned to all retail accounts by default.
IMO this service has little value for the DIY investor as much of what they offer to assist with can be done with a few clicks. Schwab is moving to a model of subscription-based unlimited advice from a CFP, so presumably the people who want hand-holding and ongoing advice will sign up for that, further lessening the workload for the generic account advisors.

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Re: Schwab cutting 600 jobs - announced today

Post by Lazareth » Thu Sep 12, 2019 10:37 am

I am 30-years with Schwab for our IRA's, taxable brokerage, and checking with bill-pay and no-ATM-fees globally. The online experience and 24/7 phone support is always top-notch but the geographically assigned Schwab retail broker is useless... totally commission/sales oriented. Schwab could drop the whole brick & mortar operation and the commission reps located within it and it would not matter one bit to me.

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Re: Schwab cutting 600 jobs - announced today

Post by oldcomputerguy » Thu Sep 12, 2019 11:43 am

This topic is now in the Investing - Theory, News & General forum. -- mod oldcomputerguy
"I’ve come around to this: If you’re dumb, surround yourself with smart people; and if you’re smart, surround yourself with smart people who disagree with you." (Aaron Sorkin)

krafty81
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Schwab cuts 3% of workforce

Post by krafty81 » Thu Sep 12, 2019 11:32 pm

[Merged here -- mod oldcomputerguy]

https://www.wsj.com/articles/charles-sc ... 1568160112

Any comments on this? Looks like many of them were advisory personnel. It also said they have bought USAA brokerage, but I thought Victory Capital did that?

Thanks

cheesepep
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Re: Schwab cuts 3% of workforce

Post by cheesepep » Fri Sep 13, 2019 12:23 am

3% isn't much. Just normal cost cutting and normal pruning of a business. I like Schwab and am a Schwab stock holder and client.

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ThereAreNoGurus
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Re: Schwab cuts 3% of workforce

Post by ThereAreNoGurus » Fri Sep 13, 2019 12:54 am

Same topic was brought-up yesterday:
viewtopic.php?f=1&t=290283&p=4744668
Trade the news and you will lose.

tenkuky
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Re: Schwab cutting 600 jobs - announced today

Post by tenkuky » Fri Sep 13, 2019 6:57 am

Lazareth wrote:
Thu Sep 12, 2019 10:37 am
.....but the geographically assigned Schwab retail broker is useless... totally commission/sales oriented. Schwab could drop the whole brick & mortar operation and the commission reps located within it and it would not matter one bit to me.
Actually I disagree. My "local" rep has been most helpful in navigating unusual situations and interceding on my behalf (I railed at Schwab's incompetence one time during a change in owner for a Coverdell), and has facilitated my occasional free trades request. Never tried to upsell me anything.

Lazareth
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Re: Schwab cutting 600 jobs - announced today

Post by Lazareth » Fri Sep 13, 2019 9:17 am

tenkuky wrote:
Fri Sep 13, 2019 6:57 am
Lazareth wrote:
Thu Sep 12, 2019 10:37 am
.....but the geographically assigned Schwab retail broker is useless... totally commission/sales oriented. Schwab could drop the whole brick & mortar operation and the commission reps located within it and it would not matter one bit to me.
Actually I disagree. My "local" rep has been most helpful in navigating unusual situations and interceding on my behalf (I railed at Schwab's incompetence one time during a change in owner for a Coverdell), and has facilitated my occasional free trades request. Never tried to upsell me anything.
If only I had a similar experience.
Years ago I asked my Schwab rep to recommend an independent outside manager and I accepted his suggestion of a particular 1% AUM fee manager. They put me into 15 funds with up to 2% expense ratios and generated up to 20 full-commission re-balancing trades in my Schwab accounts every quarter. Soon afterwards this "independent" firm announced that they were being bought by Schwab. Coincidence? I think not.

The positive from this self-serving recommendation is that it pushed me to the Boglehead forum and I now manage my own 3-fund, $1+ million portfolio at a total cost including commissions (none), management fees (none), and fund expense ratios, of under $800 per year.

Meanwhile Schwab's phone and online support people are phenomenal. Last month they walked me through a no-fee multi-fund withdrawal and re-balancing, plus a no-fee wire cash-transfer, to pay off the home mortgage.

alex_686
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Re: Schwab cutting 600 jobs - announced today

Post by alex_686 » Fri Sep 13, 2019 9:30 am

MnD wrote:
Thu Sep 12, 2019 7:21 am
I'd speculate this is affecting the advisors that are assigned to all retail accounts by default.
IMO this service has little value for the DIY investor as much of what they offer to assist with can be done with a few clicks. Schwab is moving to a model of subscription-based unlimited advice from a CFP, so presumably the people who want hand-holding and ongoing advice will sign up for that, further lessening the workload for the generic account advisors.
I am talking the opposite side here based on working in operations at other brokerage houses. You want your retail personal to focus on top clients. You need a way to purge their books of 3rd tier clients. You can't - and don't want to - kick them off the platform. You can sweep them into the dregs of phone bank and low paid drop in advisers.

cheesepep
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Re: Schwab cutting 600 jobs - announced today

Post by cheesepep » Fri Sep 13, 2019 10:30 am

On a somewhat related note, I am intrigued by the new Schwab managed funds where instead of charging an annual percentage, they are going toward a subscription service which is $300 flat upfront fee and $30 a month. I much prefer this method as charging a percentage (no matter how small) is a bit insane. Flat fee regardless of how much money you have managed is nice because it takes no more time and money (for their funds) to manage $10,000 as managing $10 million.

X528
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Re: Schwab cutting 600 jobs - announced today

Post by X528 » Fri Sep 13, 2019 5:00 pm

Where do these employees being cut go? Is it harder for these people getting cut to find jobs in finance with the same salary, especially if they are older - over 40 or 50?

Small Savanna
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Re: Schwab cutting 600 jobs - announced today

Post by Small Savanna » Fri Sep 13, 2019 8:22 pm

Cutting 3% of jobs may just be a decision not to fill vacancies. It seems like companies announce these as if they are news because it gooses the stock price.

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