Charles Schwab's wealth business is continuing to draw in net inflows, but its group headline results showed that net income fell in the third quarter. The business, which has moved its HQ to Texas from California, is expecting to make signiifiant annual savigs.

Charles Schwab reportedly intends to shrink its global workforce by around 5 to 6 per cent, affecting 2,000 of its total payroll of 35,900 people, according to the San Francisco Chronicle and other media. 

Responding to a query about the reports, Charles Schwab told Family Wealth Report that it was acting to "remove cost and complexity from our organization."

"These steps include some changes to our real estate footprint, streamlining our operating model, and staffing reductions, largely in non-client-facing areas. We have said good-bye to approximately 5-6 per cent of our workforce. These were hard but necessary steps to ensure Schwab remains highly competitive, with industry-leading levels of efficiency, well into the future. They are decisions that impact very talented people personally, and we take that very seriously. We worked diligently to ensure affected employees were treated with care and respect throughout this difficult process."

Formerly headquartered in San Francisco, Charles Schwab has moved its HQ to Texas – a move coinciding with its purchase of TD Ameritrade in 2019, one of the largest deals of its kind and an example of consolidation in the discount-brokerage space.

In its third-quarter financial results, announced on October 16, the US-listed firm said it had net income, on a GAAP basis, of $1.125 billion, falling 44 per cent on a year ago. On a brighter note, its wealth management solutions business attracted year-to-date net flows of $24 billion, including record flows to Schwab Wealth Advisory, Wasmer Schroeder Strategies, and Schwab Personalized Indexing.

When the results were announced, chief executive and co-chairman Walt Bettinger said that once all efficiency measures had been put into force, the firm expected to generate “at least $1 billion of incremental annual expense saving.”

The Financial Times (of London) noted on November 4 that other asset managers, such as Prudential and Invesco, have also launched job cuts. Bloomberg on November 1 separately reported that Prudential Financial intends to cut 243 positions amid cost cuts.

A more volatile period for global financial markets has coincided with firms having to trim costs to protect margins.