Schwab in Talks to Buy USAA Wealth-Management, Brokerage Units -- Sources

By Dana Cimilluca and Telis Demos 

Charles Schwab Corp. is in talks to buy brokerage and wealth-management operations from USAA for roughly $2 billion, a move that would push the discount-brokerage pioneer further into financial advice.

The deal, which could bring Schwab roughly $100 billion of assets from closely held USAA, may be reached this month, people familiar with the matter said.

Schwab, which already has north of $3.5 trillion in client assets, has been moving further into wealth management for clients who once represented the turf of elite Wall Street firms. Since 2015, Schwab has had a 63% increase in the number of new retail clients opening managed investment accounts. New accounts receiving advice now average about $600,000.

In March, the San Francisco firm launched a new subscription model in an effort to attract more wealth-management clients by making advice more affordable than the traditional arrangement of charging a percentage of assets.

A deal with USAA would be the latest move to expand Schwab's reach beyond its brokerage roots. Schwab, which reports results Tuesday, is a powerhouse with tentacles in banking, financial-advisory and custodial services and a market value of almost $55 billion.

Should there be a deal, it would transform San Antonio-based USAA, which provides an array of financial services to military customers, into more of a pure-play insurer.

USAA offers home, life and auto insurance as well as online banking and investment services to current and former military personnel and their families. It was founded in 1922 by a group of 25 Army officers to self-insure their vehicles and was originally known as the United States Army Automobile Association, according to USAA's website.

USAA earlier this month closed a deal to sell its asset-management business, including its mutual fund and ETF operations and its 529 college-savings plan, to Victory Capital Holdings Inc. As of April 30, that USAA business had assets under management of $81.3 billion.

--Lisa Beilfuss contributed to this article.

Write to Dana Cimilluca at [e-mail] and Telis Demos at [e-mail]

(END) Dow Jones Newswires

July 15, 2019 12:29 ET (16:29 GMT)

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