The past year has been a very good one for retirement plan participants with self-directed brokerage accounts, according to today’s release of Charles Schwab’s Q3 SDBA Indicators Report.
The average SDBA balance finished Q3 2024 at $347,437, up by 20.7% year-over-year and a 3.7% increase from the second quarter of 2024. Balances continued to rise on strong market performance amid interest rate cuts, easing inflation, and cooling labor market, the report noted.
Equities continued to hold the majority of assets in SDBAs at 34.4%, and the largest equity sector holding was Information Technology at 37% during the third quarter. Apple (10.9%) reclaimed the top spot from Nvidia (10.4%) as the largest individual stock holding and Tesla (6.1%), Amazon (4.8%), and Microsoft (3.8%) remained top holdings.
More allocation trends
• Mutual funds: Mutual funds held steady as the second largest holding at 27.9%, with the largest allocation going to large-cap stock funds at 34.2%, followed by money market funds (16%) and taxable bond funds (14.6%).
• Exchange-Traded Funds: ETFs held 25.7% of client assets. U.S. equity (52%) was again the most popular ETF investment category, followed by U.S. fixed income (13%) and international equity (12%).
• Cash and Fixed Income: Cash and equivalents held steady from the second quarter at 7.4%, while fixed income decreased slightly to 4.7%.
Other report highlights
• Advised accounts held higher average account balances compared to non-advised accounts, $548,576 vs $303,297.
• As in the second quarter, Gen X held the largest share of advised accounts (51.9%), followed by Baby Boomers (23.4%) and Millennials (22.9%).
• Gen X made up 46.6% of SDBA participants, followed by Baby Boomers (25.3%) and Millennials (25.2%).
• Once again, Baby Boomers had the highest SDBA balances at $571,441, followed by Gen X at $346,306, and Millennials with $122,366.
• On average, participants held 11.7 positions in their SDBAs, similar to the second quarter.
• Trading volumes also remained similar to the second quarter, with an average of 13 trades per account.
SDBAs are brokerage accounts within workplace retirement plans, including 401(k)s 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 (ETFs), mutual funds and other securities that are not part of their retirement plan’s core investment offerings.
The SDBA Indicators Report includes data collected from approximately 295,000 retirement plan participants who currently have balances between $5,000 and $10 million in their Schwab Personal Choice Retirement Account. Data is extracted quarterly on all accounts that are open as of quarter-end and meet the balance criteria.
SEE ALSO:
• 401(k) Balances at Bank of America Spike 11% in Q3
• Another Solid Quarter for Self-Directed 401(k)s
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
