08.30.23

LPL, Schwab and Raymond James See Profits Fall as Investors Flee Cash Sweep Accounts

by: Tracey Longo

The four independent broker-dealers rated by Moody’s Investors Service are seeing their bottom line squeezed by investors moving money from lower-interest cash balance sweep accounts into higher-interest cash equivalents, the rating agency reported in its latest quarterly report. LPL, Oppenheimer, Raymond James Financial and Charles Schwab all reported lower pretax earnings in the second quarter, driven almost entirely by ongoing outflows from client cash balances, reported Moody’s. “All the firms in the report had pretax earnings declines and a slowdown in revenues that is definitely due, in part, to this client cash sorting triggered by investors moving their cash balances into higher yield alternatives that don’t benefit brokers much,” said Gabriel Hack, lead author of the report.

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