Millennials allocated a larger percentage of their retirement portfolios to ETFs and cash through self-directed brokerage accounts (SDBA) than other generations during the third quarter of 2019.
Additionally, the average SDBA balance for all participants in the third quarter of 2019 was $276,929, nearly identical to the $276,547 from the previous quarter and 1% above the average balance from the third quarter of 2018 ($275,362), according to Charles Schwab’s SDBA Indicators Report.
SDBAs are brokerage accounts within retirement plans, including 401ks, which participants can use to invest in stocks, bonds, exchange-traded funds, mutual funds and other securities that are not part of their retirement plan’s core investment offerings.
Schwab found that SDBAs held steady overall during the quarter, with Gen X making up approximately 42% of SDBA participants, followed by Baby Boomers (39%) and Millennials (13%).
Unsurprisingly, according to the data, mutual funds continued to hold the highest percentage of participant assets, with Baby Boomers allocating approximately 39% of their portfolios to them, followed by Gen X at 36% and Millennials at 34%.
Equities were the second-largest allocation for all portfolios, with Baby Boomers and Gen X allocating approximately 28% of their portfolios to them, followed by Millennials at 25%.
Millennials continued to allocate more to ETFs than did Gen X and Baby Boomers, and they also held more cash than other generations.
Baby Boomers held approximately 4% of their portfolios in fixed income, followed by Gen X (1%) and Millennials (0.8%), the report adds.
Important SDBA points
- Baby Boomers had the highest SDBA balances at an average of $394,064, followed by Gen X at $213,018, and Millennials at $68,756.
- Of participants using an advisor to manage their SDBA, 22% were Boomers, 21% were Gen Xers and 15% were Millennials.
- On average, Baby Boomers held more positions in their SDBA than other generations (11.4 vs. Gen Xers: 9.6, Millennials: 7.1).
- Mobile trades were equally popular among Millennials and Gen X, with 22% of each generation using that method, compared to 16% of Baby Boomers.
- SDBA users averaged 6.7 trades in the third quarter (Boomers: 7.3, Gen Xers: 6.7, Millennials: 6.1).
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of 401(k) Specialist and Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots. Experienced financial services content executive specializing in creative new media delivery. He joined the American Retirement Association in 2023 as Chief Content Officer, overseeing communications for the organization, as well as its sister organizations.