Charles Schwab (SCHW, Financial) reported strong third-quarter 2024 results, with total client assets reaching a record $9.92 trillion, representing a 27% year-over-year increase. Net revenues grew 5% to $4.8 billion, while net income totaled $1.4 billion or $0.71 per share. Adjusted net income, excluding $153 million in transaction-related costs, came in at $1.5 billion or $0.77 per share. Schwab also recorded $95.3 billion in core net new assets for the quarter, pushing the year-to-date total to $252.1 billion, a 10% increase over 2023. The successful integration of Ameritrade and robust client engagement contributed to these impressive results.
One of Schwab's major revenue opportunities in the coming years is its push into alternative investments, including private equity, real estate, and hedge funds. While institutions allocate roughly 30% of their assets to these investments, only 1% to 2% of Schwab's individual investors' assets are in alternatives. J.P. Morgan projects that if this allocation grows to 10%, Schwab could generate an additional $4 billion annually. This growth is expected to come from Schwab's plans to offer a curated selection of alternative funds, catering to wealthier clients, which could significantly boost the company's profitability. However, investors should be cautious, as alternative investments tend to carry higher fees that may weigh down returns.
During Charles Schwab's earnings call on Wednesday, CEO Walt Bettinger deliver his final remarks after leading the company since 2008. Under his leadership, Schwab's client assets grew from $1.14 trillion to nearly $10 trillion. Bettinger expressed gratitude to employees and investors while sharing a message from founder Chuck Schwab. As part of a leadership transition, Rick Wurster will take over as CEO on January 1, 2025, with Mike Verdeschi stepping in as CFO.
