Texas-based USAA announced that it’s selling its brokerage and wealth-management operations to financial services giant Charles Schwab Corp for at least $1.8 billion.
The deal could bring to San Francisco-based Charles Schwab, traditionally known as a discount brokerage, roughly $90 billion of assets from USAA’s Investment Management Co.
Schwab will also acquire 1 million brokerage and managed portfolio accounts from the multi-strategy firm that provides insurance, banking, investments, retirement products, and advice to current and former members of the US military and their families.
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Pending regulatory approvals, the acquisition gives Schwab, which provides brokerage and financial advisory services and has $3.5 trillion of client assets, the rights to offer products and services using the USAA brand.
Commenting on the news, USAA Chief Executive Stuart Parker said in a statement: “We are committed to making this a seamless transition for members and providing opportunities for employees. USAA remains focused on providing award-winning customer service and advice on products and services across property and casualty, banking and life insurance.”
Schwab expands takeover targets
While Schwab has been named a takeover target in the potential consolidation of the brokerage market, the company has made moves over the last several years to push further into the financial advice market. The acquisitions centered mostly on firms that have wealth management units that would give the San Francisco discount brokerage access to more customers and thus more assets under management.
Back in 2011, Charles Schwab acquired OptionsXpress for about $1 billion, adding the retail options brokerage, which was founded in 2000, to its equity and mutual fund offerings. The acquired entity has given Schwab a leg up in fast-growing foreign exchange and futures trading, diversifying its online platform that now relies heavily on cash equities.