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Schwab's RIA Assets Still on a Tear: Q4 Earnings

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Schwab disappointed analysts with its fourth-quarter earnings Tuesday but reported a 24% rise in advisory assets from a year earlier.

Adjusted earnings per share for the brokerage were $0.86 in the fourth quarter of 2021, up 6% from the prior year. Equity analysts had expected $0.88. 

Net income, though, improved 18% year over year and totaled $2.14 billion.  

Revenue missed estimates at $4.7 billion, a jump of 13% from the prior year. Total asset management and administrative fees in the quarter were $1.1 billion versus $987 billion in Q4’20. 

While acknowledging that the firm’s results missed expectations, Schwab CEO Walt Bettinger told CNBC that the firm overall “had an outstanding quarter from a financial standpoint” and added that rising interest rates would likely help its revenues in 2022. Net interest income was $2.14 billion in Q4’21 versus $1.81 billion in Q4’20. 

Overall client assets were $8.14 trillion, up 22% from a year earlier.

Assets handled by advisors rose 24% from the prior year to $3.74 trillion. In the final quarter of 2021, net new assets for advisors were $101.2 billion vs. $33.4 billion for DIY investors.  

Assets in Schwab Intelligent Portfolios, Schwab Managed Portfolios and similar products were $570 billion as of Dec. 31, 2021, up from $470 billion at the end of 2020.

“I would actually say that the greatest threat for us over the coming years is ourselves,” Bettinger said in the CNBC interview. “We need to continue to be a company that innovates, a company that’s willing to be disruptive to ourselves.” 

Pictured: Schwab CEO Walt Bettinger. (Photo: Charles Schwab)