“By several measures we study, we believe that this cash realigning process is now slowing and getting closer to its endpoint, which should then likely reverse to a stage where bank balance sheet cash begins to grow as a result of our organic net new asset growth as well as new accounts that we attract.”

In context

“e's very little incentive during times like that to move their investment cash into solutions that offer higher yields than bank sweep. But when interest rates rise, we reach out to clients and suggest they consider realigning their investment cash into other solutions, whatever the client sees fit, whether that would be a purchase money fund -- a purchase money market fund, a CD, a treasury security or another appropriate cash solution that the client is interested in. And of course, this has been taking place, predominantly inside Schwab, as rates have been rising over the past year or so. The rate, pace and ultimate level of this realigning has a large impact on our near-term financial results. So not surprising, we study it closely, and we have models that estimate how it will unfold. By several measures we study, we believe that this cash realigning process is now slowing and getting closer to its endpoint, which should then likely reverse to a stage where bank balance sheet cash begins to grow as a result of our organic net new asset growth as well as new accounts that we attract. Now in terms of the slide, we've included a chart that goes back to 2004, and it illustrates multiple time frames where interest rates were relatively high as well as several time frames where interest rates were near 0, often referred to as ZIRP periods. When we study this information, RIA per account basis, what we see as the most accurate way to model this. Transactional cash per account is down to an average of approximately $10,400, a level as low as we have seen in the past 20 years and down about 50% from the peak period during the COVID pandemic. From a percent standpoint, transactional cash per account is at a 20-year low of approximately 5%. Now could it go lower? Yes, of course, but we believe it is closer than ever to finding its ending point. Here's why. If you look at daily”