2020 Year-End Self-Directed 401(k) Balances Soar

The stock market’s strong fourth quarter provided a nice year-end boost for retirement plan participants with self-directed brokerage accounts (SDBAs).

Charles Schwab’s latest SDBA Indicators Report released March 2 found the average account balance across all SDBA participant accounts finished Q4 2020 at $331,664, a 13% increase year-over-year and a 10% increase from Q3 2020. The average account balance finished 2019 at $294,105, which was a 19% increase from year-end 2018.

SDBAs are brokerage accounts within retirement plans, including 401ks and other types of retirement plans, that participants can use to invest retirement savings in individual stocks and bonds, as well as exchange-traded funds, mutual funds and other securities that are not part of their retirement plan’s core investment offerings.

Schwab’s SDBA Indicators Report also revealed that participants remained resilient in the face of volatility and early 2020 market lows driven by the COVID-19 pandemic. Average account balances finished the year up 31% compared to the lows they experienced at the end of Q1 2020.

The majority of participant assets continue to be held in equities (35%), up from Q4 2019 at 29%. Mutual funds were the second largest holding at 31%, followed by ETFs (18%), cash (14%), and fixed income (2%).

The data also reveals specific asset class and sector holdings within each investment category:

More highlights

The SDBA Indicators Report, an industry-leading benchmark on retirement plan participant investment activity within SDBAs, includes data collected from approximately 161,000 retirement plan participants who currently have balances between $5,000 and $10 million in their Schwab Personal Choice Retirement Account.

Data contained in the quarterly report can be found here, along with prior reports.

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