Despite a year-over-year increase, the recent merge of TD Ameritrade into Charles Schwab could have impacted self-directed brokerage accounts (SDBAs) for the final quarter of 2023.
The latest findings from Schwab’s Q3 2023 SDBA Indicators Report, an industry-leading benchmark on retirement plan participant investment activity within SDBAs, shows that average account balances finished at $287,769 for the third quarter of 2023, with an increase of 5.3% year-over-year but down 9.2% from $316,826 in Q2 2023.
According to the Schwab, TD Ameritrade’s recent transition of SDBA retirement plans and participants to its platform in September could have impacted data in the third-quarter report, including figures for average balances and participant accounts.
Investing behaviors among generations
Out of all age groups, Baby Boomers ended the quarter with the largest account balance of $466,246, yet lower than the $509,969 reported in the previous quarter. This was followed by Generation X participants at $270,370 and Millennials at $97,875, both lower balances than last quarter. Gen Z participants were not included in the Schwab report.
Gen X also made up approximately 46% of SDBA participants, followed by Baby Boomers (28%) and Millennials (21%).
This group was also most likely to use an advisor, at 51.5%, followed by Boomers at 27% and Millennials at 18.2%. The average participant balance for advised accounts also came in lower this time around, to $468,516 from $501,906 last quarter. This was still severely higher than non-advised accounts, which also saw a decrease from $271,134 in the second quarter to $251,723.
Apple reigns as top equity holding
Overall, Schwab found that participant holdings were comparable to the second quarter, with equities remaining the largest holding at 34.2%, followed by mutual funds (32.7%), ETFs (21.9%), and cash and fixed income (9.7%).
Apple once again came in as the top equity holding (12.21%), followed by Tesla (8.79%), Amazon (4.57%), NVIDIA (4.53%), and Microsoft (3.57%). Other leading holdings included Berkshire Hathaway (2.21%), Alphabet (1.78%), Meta (1.48%), and Costco (0.89%).
Both Schwab and Vanguard dominated the top mutual fund holdings, with the Schwab S&P 500 Index coming in as the leading fund at 5.56%. This was followed by the Schwab Total Stock Market Index (2.53%), Vanguard 500 Index (2.32%), Vanguard Total Stock Index (2.10%), and the Schwab International Index (0.84%).
As for the top ETF holdings, Vanguard Total Stock Market came in at 5.32%, trailed by the SPDR S&P 500 ETF (4.40%), the Vanguard S&P 500 ETF (4.36%), and the Invesco QQQ Trust (4.01%).
Trading volumes were lower at an average of 7.8 trades per account compared to 10.3 trades per account in the second quarter and lower than a year ago.
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Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.
