The average self-directed 401(k) balance fell another 3.55% during the third quarter of 2022, and are now down nearly 20% year-over-year, according to the latest SDBA Indicators Report from Charles Schwab, released today.
The average self-directed 401k account balance at the end of Q3 was down 3.55% from Q2 and down 19.84% year-over-year
Charles Schwab SDBA Indicators Report
The industry-leading benchmark on retirement plan participant investment activity within self-directed brokerage accounts (SDBAs) reveals the average account balance across all participant accounts finished at $273,412 for the third quarter ending September 30, down by 3.55% from the second quarter of 2022 and down 19.84% year-over-year (average balances started the year at $352,764).
The Q3 SDBA Indicators reflected another volatile period with some recovery in July and August before markets retracted in September for a third consecutive quarter of negative returns amid high inflation, increasing interest rates, rising recession risks, and ongoing geopolitical unrest.
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 (ETFs), mutual funds and other securities that are not part of their retirement plan’s core investment offerings.
Allocation trends
Overall, SDBA participant holdings were similar to the second quarter.
- Equities remained the largest holding. The largest equity sector holding was Information Technology at 28.8%. The top equity holdings remained Apple (12.5%), Tesla (9.6%), Amazon (4.8%) and Microsoft (3.2%). Berkshire Hathaway held 1.95%.
- Mutual funds were the second largest holding at 28.4%, with the largest allocation going to large-cap stock funds at 33.7%. They were followed by taxable bond (19.7%) and international (12.9%) funds.
- ETFs held nearly 21% (20.96%) of participant assets. Among ETFs, investors continued to allocate the most dollars to U.S. equity (51.7%), followed by fixed income (14.1%), international equity (12.7%) and sector (11.3%) ETFs.
More highlights
- Trading volumes were slightly lower at an average of 10.6 trades per account compared to 11.2 trades per account in the second quarter and a year ago.
- Advised accounts held higher average account balances compared to non-advised accounts, $435,604 vs. $233,875.
- Gen X had the most advised accounts (50%), followed by Baby Boomers (30.7%) and Millennials (15.8%).
- Gen X made up approximately 46% of SDBA participants, followed by Boomers (30%) and Millennials (19%).
- Boomers had the highest SDBA balances at an average of $437,280, followed by Gen X at $246,206 and Millennials at $83,408.
- On average, participants held 13 positions in their SDBAs at the end of Q3 2022, consistent with the second quarter and similar to last year.
The SDBA Indicators Report includes data collected from approximately 186,000 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.
The SDBA Indicators Report tracks a wide variety of investment activity and profile information on participants with a Schwab Personal Choice Retirement Account (PCRA), ranging from asset allocation trends and asset flow in various equity, exchange-traded fund and mutual fund categories, to age trends and trading activity. The SDBA Indicators Report provides insight into PCRA users’ perceptions of the markets and the investment decisions they make.
Data contained in this quarterly report is from the third quarter of 2022, and can be found here, along with prior reports.
SEE ALSO:
• Fidelity 401k Report Card: Silver Linings Among More Declines in Q3