Retail Stock Traders Live On As Schwab Adds Record Clients

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With individual investors still piling into the stock market, Charles Schwab added more new clients in the first quarter of 2021 than it did all of last year.

During the first three months of this year, Schwab—already one of the largest retail brokerage firms in the country—added 3.2 million accounts, topping the 3 million new clients it added in 2020, it said Thursday. Last year’s number does not include 14.5 million new brokerage accounts Schwab gained with its acquisition of TD Ameritrade and 1.1 million new brokerage accounts related to its acquisition of the assets of USAA’s Investment Management Company. In total, Schwab had 31.9 million active brokerage accounts at the end of the quarter.

Retail investing has grown in popularity over the last few years with the introduction of $0 commission trading by Robinhood, and it gained further momentum during the pandemic. With people stuck at home and extra cash from stimulus checks, individual investing boomed. Earlier this year, individual traders grabbed headlines after a band of Reddit traders decided to pour their money into GameStop and give Wall Street hedge funds a run for their money. Since then, retail traders have been relatively quiet but, as Schwab’s numbers show, they are far from gone.

As COVID-19 vaccines roll out and the economy accelerates, major stock indexes have climbed to record highs on optimism, and the 10-year Treasury yield rose to its highest level in more than a year. That helped boost client interest in the markets even beyond last year’s levels, said Schwab Chief Executive Officer Walt Bettinger in a statement.

“At the same time, elevated interest in technology and other growth-oriented stocks, as well as heightened market attention to certain names via social media, significantly bolstered trading activity,” Bettinger said, noting daily trades also rose to an average of 8.4 million in the first three months, with a single-day peak of 12.3 million. That average is approximately four times higher than in fourth-quarter 2019, when Schwab launched its own $0 online equity commission trading.