FYI: Charles Schwab's purchase of 1 million USAA accounts will benefit the industry titan's bottom line — but it will also cut into returns on cash belonging to veterans and their families.
As part of the deal set to close in 2020, Schwab will sweep $7 billion in cash from USAA retail brokerage accounts — currently held in money market funds — into Schwab’s bank, CFO Peter Crawford told analysts and shareholders on a webcast last week.
“We’re moving all that over to the balance sheet,” he said. While Schwab will alert USAA clients about the change, and they will have the option to choose better yielding options for their cash themselves, Schwab will benefit from inertia. The company estimates it will generate approximately $130 million in additional annual revenue following the deal, which Crawford said would primarily come from the sweeps.
Regards,
Ted
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https://www.financial-planning.com/news/veterans-with-usaa-to-see-reduced-cash-yields-following-charles-schwab-deal?brief=00000153-6773-d15a-abd7-efff45d10000
