US: Schwab in talks to buy USAA units

Charles Schwab appears to be making a play to grab more advisory clients as fees fall for asset management and trading.

The San Francisco-based brokerage firm is in talks to buy USAA’s brokerage and wealth-management operations for roughly US$2 billion, the Wall Street Journal reported Monday, July 15. The deal may be reached this month, the newspaper reported, citing people familiar with the matter.

The potential transaction underscores the increasing race by asset managers to diversify amid competition to lower fees for trading and fund management. In March, Schwab introduced the first monthly subscription plan for clients. Vanguard Group, the low-fee fund leader, is devoting more resources to offering advice and Fidelity Investments last year started offering zero-fee index funds.

“We’ve seen Schwab in general moving more in the direction of providing wealth-management and financial planning advice, more than just the DIY-investor platform,” Donnie Ethier, director of wealth management at Boston-based consulting firm Cerulli Associates, said. USAA’s clientele represent current and former members of the military who “tend to have a very strong culture and client loyalty and retention.”