Victory Capital Holdings announced it has completed the acquisition of USAA’s investing division. Through this acquisition, Victory is expanding its multistrategy business by adding mutual funds and the USAA 529 college savings plan from USAA, further strengthening its presence in San Antonio.
But now a new challenge has emerged – Schwab is siphoning off billions in assets from USAA funds that Victory purchased.
USAA Marketplace
USAA Marketplace is a revolutionary new online service providing car loans, credit cards, and other financial products tailored specifically for military members and their families. Their auto loan rates are much lower than many competitors’ offerings. At the same time, they also provide numerous credit card options with cashback and rewards features – making the website easy for users to navigate while comparing all rates available.
The company provides an accessible trading platform. Its user-friendly trade ticket offers full range of orders (except advanced conditional orders ), a real-time quotes screen, charting, news, and research. In addition, the account opening process is quick and streamlined, while this provider also provides comprehensive mobile apps.
USAA provides more than brokerage and mutual fund businesses; they also offer credit cards, insurance policies, and an online banking product. USAA credit cards include cashback cards with travel rewards and travel rewards cards from USAA National Insurance Company – in addition to their car loan programs offering competitive interest rates on both new and pre-owned car purchases.
Victory Capital’s acquisition will grant USAA access to over 1.1 million investment accounts and add many mutual funds, such as USAA Mutual Funds and 529 Education Savings Plans, into its fold. Victory plans on closing its acquisition early next year, subject to regulatory approval. USAA will continue marketing its fund brand to an estimated customer base of more than 58 million military personnel and their immediate families. Financial literacy will also remain a priority, funding grants to non-profit organizations focusing on the army and financial education to assist veterans and their families in paying off debt, improving budgeting practices, and building wealth. Furthermore, the company plans to strengthen website security by increasing two-factor authentication measures to prevent hackers from accessing its members’ personal data.
USAA Investments
USAA Investments provides military members an investment platform to manage and grow their funds. Offering mutual funds and ETFs alongside CDs with competitive interest rates. In addition, the company provides low-interest car loans and loan products for new and used car purchases. USAA also provides banking services, including credit cards and checking accounts.
USAA provides its customers with many valuable benefits, but there are also some drawbacks. Notably, they lack an online trading platform. Their website features an intuitive design with easy navigation and a news section, enabling users to prioritize news articles about tickers on their watchlist and educational resources for novice investors.
USAA provides an impressive portfolio of mutual funds, boasting more than 74 actively managed funds with high expense ratios compared to competitors, and often require minimum initial purchases of $10,000 or more for initial investment. However, USAA remains attractive to many investors and continues offering worthwhile options.
USAA provides more than just mutual fund services; their wealth management division offers IRAs, 529 college savings plans, and brokerage accounts. In addition, USAA also offers comprehensive insurance that includes auto and homeowners policies, life, disability, and long-term care coverage, as well as mortgage and car financing products explicitly tailored for servicemembers and their families.
Although USAA does not provide an online trading platform, it offers an impressive selection of mutual funds and low-cost brokerage accounts. Their website boasts extensive research and educational content from Morningstar’s proprietary mutual fund screener and some of the industry’s most competitive margin rates.
This acquisition should significantly boost earnings and cash flow for the company, benefit shareholders, and increase market share by drawing more military clients to its services. How this might impact competitiveness against Schwab and other brokers remains unknown; nonetheless, its core membership should likely remain large and loyal.
USAA Private Client Services
USAA Private Client Services offers wealth management services to military members and their families, such as investments, insurance, banking, and credit card services. USAA Private Client Services specializes in 529 plans and mutual funds – it also provides retirement planning advice, life and disability coverage, and retirement planning advice.
USAA provides an array of banking services, such as no monthly service fees for checking and savings accounts, no reload fees for gift cards, and free ATM withdrawals in the US. Furthermore, USAA provides low rates on auto loans and mortgages with no annual fee on its credit cards and even reimburses other banks’ ATM usage fees!
This company provides numerous services for military communities, including home ownership, auto and personal loans, financial planning, and investments. These are designed to assist military families in building wealth and reaching financial independence; their services are open to current and former service members and veterans. Additionally, educational programs are also provided so military members may prepare for their future careers.
USAA has recently become increasingly aggressive at purchasing small asset management firms. Most recently, USAA purchased Harvest Volatility Management for $300 Million as it increased its focus on alternative strategies and brought in additional profits for USAA.
Business Model Designed for Efficiency This business model was designed to maximize efficiency, benefitting its clients by cutting expenses. With access to substantial funds at lower costs than others and investments in enterprise-class systems that consolidate buy/sell orders and negotiate better pricing for investors.
USAA has also taken advantage of an increase in asset management companies looking to sell themselves by purchasing these smaller firms to increase revenue without increasing expenses.
San Antonio-based firm Global Assets manages accounts nationwide. While their primary market is military members and their families, services extend to high-net-worth individuals, charitable organizations, corporations, pension/profit sharing plans, and pension/profit-sharing plans. Furthermore, this firm boasts an expansive network of independent financial advisers.
USAA Financial Advisors
USAA provides military members and their families with various financial services, from attractive credit card terms and loans for new or used cars and homes through loan services to banking. They also offer online investing and retirement account solutions and full-service brokerage available to anyone with active military or retired service membership accounts. However, commission charges on stocks and ETFs can be costly. Thankfully, there are also no-fee mutual funds and educational resources.
USAA Financial Advisors offers excellent investment advice and guidance. As experts in tax planning and IRAs, they specialize in personalized recommendations for their investments based on client needs. Their advisors can assist with deciding how much can afford to be invested each month, how to manage risk effectively, whether or not to take on additional debt, and exploring both self-directed vs professionally managed accounts and any possible benefits of robo-advisors.
Though USAA’s acquisition of Victory Capital is significant, it is too soon to tell whether or not it will increase returns and reduce expenses on their fund family. USAA holds billions in assets spread among mutual funds, 529s, and brokerage accounts, yet their costs tend to exceed many competitors.
USAA’s acquisition of Victory Capital came amid an upsurge of smaller multi-strategy asset management shops looking to sell themselves and took full advantage of it. Financing included cash on hand and debt financing options, paying approximately 6.9 times the EBITDA valuation of Victory’s assets.
Goldman analyst Alexander Blostein asked Victory Capital CEO Thomas Brown how it could avoid Schwab-related attrition eroding its assets under management. Brown responded that any outflows due to Schwab were more event-specific and unlikely to signal issues within its strategy, while its distribution deals will eventually pay dividends.
Brown defended Victory’s decision by noting that purchasing USAA was an ideal cultural fit and would enable Victory to better target potential new clients for advertising purposes. A digital service to be launched on Nov 10 will also help stem the flow of USAA money away from Schwab by providing more direct-to-consumer communication with existing and prospective customers.
