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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