Charles Schwab plans to lay off approximately 1,000 employees, the company announced Monday, and its chief executive said more positions are expected to be eliminated next year.
On Tuesday, during Schwab’s annual Impact conference for financial advisors, CEO Walt Bettinger told attendees that additional job cuts are “still to come,” Investment News reported.
Changes at the huge financial services company, with $6 trillion in client assets across 28 million brokerage accounts, were anticipated. Last October, Schwab dropped commissions to zero, crushing the stocks of competing discount brokerages, then announced shortly after that it was acquiring rival TD Ameritrade for $26 billion. It was already dissecting TD Ameritrade this summer, but changes as a result of the merger have accelerated since the deal closed earlier this month.
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Schwab and TD Ameritrade were similar companies, with overlapping lines of business including online retail brokerages, financial professionals in bricks-and-mortar branches, RIA custody, and others. Like in all mergers and acquisitions, finding synergies often means seeking ways to accomplish the same tasks with fewer people and that has begun at Schwab.
“Today, we are taking further steps to bring our companies together—streamlining our structure and reshaping our branch network. As a result, we have begun notifying individuals that their roles have been eliminated and they will be leaving the firm,” the company said in a statement Monday.
“These reductions are part of our efforts to reduce overlapping or redundant roles across the two firms, but the combined firm will continue to hire in strategic areas critical to support our growing client base.”
The 1,000 jobs eliminated represent about 3% of the combined workforce of Charles Schwab and TD Ameritrade. Those individuals will receive reemployment assistance and severance benefits. They will also have early access to more than 1,000 current job openings at Schwab and be treated as internal candidates during their 60-day notice period.
“Since the close of our acquisition, teams across our combined organization have been working hard to create the best operating model in service to our clients and each other,” the company said.
“Streamlining” its structure and changes to its branch network were reasons Schwab gave for the recent job cuts. Executives and directors across different parts of the company, including the RIA custody business, were part of the cuts. With TD Ameritrade’s RIAs, Schwab will be the custodian to well over 10,000, although about 30% of TD Ameritrade’s RIAs already custodied assets with Schwab.
In its statement Monday, the company said no further company-wide layoffs would be announced this year. It is not clear whether Bettinger’s comments on Tuesday about future layoffs were referring to more focused layoffs in November and December, or others next year.
The recent job cuts came only weeks into a merger integration that is expected to last 18 to 36 months and executives have said evaluations and changes will happen at different paces.
“Leaders will share more context specific to your enterprise as soon as they can,” Schwab the company said in a statement. “We understand that each of you likely has questions and wants some level of certainty about your future role.”
The layoffs at Schwab come weeks away from the holiday season and amid a resurgence of Covid-19 in the U.S. A single-day record of 85,000 new cases was reported last week, according to The New York Times.
Michael Thrasher (@Mike_Thrasher) is a reporter at RIA Intel based in New York City.