Charles Schwab started a wave of layoffs yesterday after CEO Walt Bettinger said that around $500 million in cuts were coming to the company earlier in the year, according to published reports.

Up to 2,000 Schwab employees were told that their jobs were being eliminated, according to reports in RIABiz and The Wall Street Journal on Monday.

Schwab released a statement but did not provide the number of employees who were terminated. "In July, we shared our intent to take certain steps 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," the statement said.

"We are now in the process of sharing organizational changes with employees. While these steps are necessary to ensure Schwab remains a highly competitive and efficient company well into the future, they nonetheless impact people personally," the statement continued. "This is a difficult day for our firm, and our priority is ensuring that all employees are treated with care and the utmost respect. Out of respect for our employees and the ongoing notification process, we will refrain from making further comments."

In delivering the statement, a Schwab spokesperson also questioned the accuracy of the 2,000 jobs figure, but declined to provide a more specific number.

The cuts appeared to happen across the organization, encompassing retirement, technology and wealth management staff, as well as both former TD Ameritrade personnel and Schwab employees. The layoffs were also geographically dispersed, and were not concentrated to the firm’s Westlake, Texas headquarters or its former San Francisco headquarters—though Schwab is reportedly also looking to downsize its office footprint in several major cities, according to the reports.

Internal Schwab communications said that none of the layoffs would involve client-facing employees, according to the RIABiz report.

In August, the wealth management behemoth notified the U.S. Securities and Exchange Commission that it intended to cut jobs and downsize offices to create at least $500 million in annual cost savings, anticipating that most of the layoffs would occur in the second half of 2023.

Schwab also closed offices in five cities between August and Monday’s layoffs, according to the Associated Press: Atlanta, San Antonio, San Diego, St. Louis  and Tampa, Fla. It also announced earlier this year that it is closing or downsizing locations in Boston, Chicago, San Francisco, Jersey City, N.J. and Henderson, Nev., according to RIABiz.  

Schwab, which earns the bulk of its profits from holding short-term customer cash, has seen its bottom line suffer this year from cash sorting as financial advisors and retail clients have moved cash balances from so-called low-interest sweep accounts to higher interest yielding money market funds and other instruments. Schwab Bank, although a small part of the discount brokerage firm's overall business, has been afflicted many of the same problems as regional banks struggling to match assets and liabilities in the face of the Federal Reserve's steep increase in interest rates over the last 18 months.

Schwab's decision in 2019 to eliminate commission charges on the vast majority of commission-based securities transactions also eliminated a source of profits. That decision preceded its agreement to merge with TD Ameritrade in November 2019. Among financial advisors, the TD Ameritrade merger was controversial as the Omaha-based discount brokerage was a favorite service provider to small investment advisors.

It wasn't clear what effect, if any, the layoffs would have on client service levels. Last week at its annual IMPACT conference for RIAs in Philadelphia, Schwab executives apologized for the snafus advisors and their clients encountered in September when the giant broker-dealer onboardeded about 3.6 million investors to its platform.