Tags: retail | investors

Investors Dump Brokerages for Online Trades

By Elaine Barr   |   Tuesday, 04 Nov 2008 04:47 PM

U.S. retail investors aren't letting the financial crisis keep them from trading stocks and options.

In fact, they've been doing it at record levels recently by taking greater control of their own investments and conducting trades online.

Fidelity Investments, TD Ameritrade, and Charles Schwab, for example, each reported record sales in the third quarter.

Fidelity told the Financial Times that during the three months ended Sept. 30, it had added more than 200,000 net client accounts across its three brokerage units and $23.5 billion in net new client assets.

TD Ameritrade added 75,000 net new client accounts in the first 20 days of October, which brings its total to 6.9 million.

Charles Schwab attracted nearly $24 billion in net new client assets in the period ended Sept. 30, less than the previous two quarters.

But that's not keeping the brokerage companies from feeling the effects of the volatile markets.

Fidelity posted a 9 percent drop in client assets at its brokerage arm as volatile markets slowed inflows and cut market values in the third quarter. The company reported that new asset inflows more than halved to $18.4 billion in the third quarter from $54.8 billion a year earlier.

TD Ameritrade's net new assets slipped 30 percent from the previous quarter, and its fourth quarter profit dropped 14 percent due to a smaller number of new assets and higher costs.

According to Reuters, that suggests that Ameritrade may be seeing a short-term benefit from recent market volatility, but that pain may be coming soon if there is a prolonged market slump.

"As we look out into the marketplace, we see a higher level than normal of uncertainty. Clearly, we are in unprecedented times," TD Ameritrade Chief Executive Fred Tomczyk told Reuters.

Charles Schwab's asset-focused business fell, and concerns persist that its managed assets will drop further along with the market, according to Reuters.

"Right now, Schwab is suffering the pain of the market because of their revenue model. But they're still opening new accounts and bringing in assets," Adam Honore, senior analyst at Aite Group told Reuters.

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U.S. retail investors aren't letting the financial crisis keep them from trading stocks and options. In fact, they've been doing it at record levels recently by taking greater control of their own investments and conducting trades online.Fidelity Investments, TD Ameritrade,...
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