Charles Schwab's Q3 2024 Earnings Call took place on October 15, 2024. The discussion involved remarks from key executives including Jeff Edwards, Head of Investor Relations; Walt Bettinger, Co-Chairman and CEO; Rick Wurster, President; Mike Verdeschi, the new CFO; and Peter Crawford, Managing Director. This call marked a transitional moment for Schwab as it was the final business update for both Walt Bettinger and Peter Crawford in their current roles.
Walt Bettinger began by reflecting on his time providing updates since 2005 and expressed gratitude toward the audience for their support and engagement over the years. The third quarter of 2024 was noted as significant for the company, with strong progress made across key areas, marking it as a potential turning point. Former Ameritrade clients have continued to contribute positively to net new assets for the second consecutive quarter. Transactional sweep cash balances have improved, and supplemental funding has been reduced.
Overall, Schwab is experiencing strengthening in firm-wide net new assets, with clients increasingly engaging in their retail advisory solutions, signaling optimism for the future. Market conditions were described as slightly volatile, yet clients remained engaged with Schwab's services across trading, banking, advisory solutions, custody for RIAs, and asset management. Investment sentiment was positive, demonstrated by a 4% increase in trading activity from the previous quarter and a billion-dollar rise in margin balances to $73 billion.
Managed investing reached new highs with $15 billion in retail advisory flows. Net new assets more than doubled compared to Q3 2023, boosted by contributions from Ameritrade clients as attrition from that acquisition subsides. Around 1 million new brokerage accounts were added during the quarter. Through clients' eyes remain the core philosophy at Schwab, focusing on scale, efficiency, and monetization. The company reached a near-complete capture of Ameritrade's expense synergies and has maintained a low-cost position.
Schwab has reduced adjusted expenses on client assets to 12 basis points this year from 16 basis points in 2019. Wealth management remains crucial, with year-to-date managed investing flows up 65%. New accounts and interest in retail advisory solutions continue to grow, with significant uptake among former Ameritrade clients. Segmented client approaches, notably RIAs and ultra-high-net-worth clients, are also part of the company’s strategy.
Schwab has bolstered its trader offerings, investments in mobile experience, and research and education features, ensuring it can delight its existing clients, retain trust, and earn referrals. Positive trends in client service metrics signal high levels of satisfaction. In his closing remarks, Rick Wurster stressed that through client-focused strategies, Schwab plans to perpetuate growth well into the future.
His commitment to maintaining Walt and Chuck Schwab's vision remains apparent as he prepares to step into the CEO role. The call concluded with strategic financial overviews and queries from analysts addressing various aspects, including deposit growth, RIA opportunities, and future growth models. The call demonstrated confident positioning for Schwab's sustained performance and adaptation amidst industry changes.
