Schwab to Buy $10.5B RIA Focused on Fixed Income

The latest acquisition by Charles Schwab is Naples, Florida-based RIA Wasmer, Schroeder & Co., which has $10.5 billion in assets under management, the firms said in a joint announcement Monday.

The firms on Tuesday declined to say how much Schwab is paying for the specialist in fixed income separately managed accounts. However, the all-cash purchase is expected to close in mid-2020, subject to customary closing conditions, the companies said.

Wasmer Schroeder’s assets will be a “complementary extension of Schwab’s fixed income capabilities” and expand its separately managed accounts, which now stand at about $90 billion, helping to meet the income needs of clients, the companies said.

The purchase also provides an opportunity for increased asset flows and the ability to offer clients access to strategies with established track records, helping Schwab “deliver on growing client demand for investment solutions that help retirees draw an income from their wealth,” according to the announcement.

Schwab had $4.05 trillion in client assets as of Jan. 31, it said. Its recent M&A transactions included its 2019 deal to buy TD Ameritrade for $26 billion in an all-stock transaction. That planned acquisition is currently being scrutinized by the Antitrust Division of the Department of Justice.

Wasmer Schroeder provides a wide lineup of tax-exempt and taxable strategies with “strong risk-adjusted performance track records, and a tenured team of investment professionals with deep fixed income expertise,” the firms aid.

“Generating income is one of the greatest financial needs facing the growing number of investors who are in, or preparing for retirement,” according to Rick Wurster, executive vice president at Schwab Asset Management Solutions.

“Wasmer Schroeder’s professionally managed portfolios and investment capabilities will help Schwab deliver on a wide range of fixed income investment needs and preferences, and complements the total wealth management offering we make available to our retail and RIA clients,” he said in a statement.

Wasmer Schroeder had engaged New York-based investment banker PL Advisors, who “recommended Schwab as a potential fit,” Wasmer Schroeder CEO Martin Wasmer told ThinkAdvisor Tuesday. “PL Advisors initiated all discussions,” he said.

Wasmer Schroeder was started by him in 1987. “Over the course of our 32-year history, we have had an unwavering focus on delivering for investors,” he said in a statement. “Clients value the combination of our team’s in-depth credit research capabilities, performance record and superior client service experience, which set us apart in the industry,” according to Wasmer. “We look forward to joining Schwab to deliver our strategies to their clients and to help investors with their overall wealth management needs.”

Wasmer Schroeder’s team has grown to more than 60 employees, including more than 30 investment professionals with broad experience in the fixed income markets, the firms said.

The companies did not specify in the announcement if the entire Wasmer Schroeder staff including management will be joining Schwab after the purchase is finalized. Schwab said only that it “looks forward to welcoming Wasmer Schroeder’s team when the transaction closes.”

However, Martin Wasmer told ThinkAdvisor: “The intent is to incorporate the entire Wasmer Schroeder team into Schwab Asset Management.”

Schwab and Wasmer Schroeder plan to “work together on a smooth transition for clients leveraging the combined capabilities of the two firms,” the firms said.

Morgan Lewis and Sidley Austin served as legal advisors to Wasmer Schroeder and Schwab, respectively, while PL Advisors served as exclusive investment banking advisor to Wasmer Schroeder.

— Check out What’s the Real Deal With M&As? on ThinkAdvisor.