Schwab Report: Self-Directed 401(k) Account Balances Lower in Q1, in Line With Overall Markets

Firm also announces Schwab Stock Slices™ now available in Schwab Personal Choice Retirement Account^®

SAN FRANCISCO–(BUSINESS WIRE)–According to Charles Schwab’s SDBA Indicators Report, an industry-leading benchmark on retirement plan participant investment activity within self-directed brokerage accounts (SDBAs), the average account balance finished Q1 2020 at $252,675, down approximately 6% year-over-year and down 14% from Q4 2019.

SDBAs are brokerage accounts within retirement plans, including 401(k)s and other types of retirement plans, that participants can use to invest retirement savings in stocks, bonds, exchange-traded funds, mutual funds and other securities that are not part of their retirement plan’s core investment offerings.

The first quarter SDBA Indicators Report also showed trading volumes increased compared to the previous quarter, at an average of 13 trades per account up from seven in Q4 2019, which is in line with broader investor activity seen during the first quarter as major stock indexes fell and trading activity rose amid market volatility.

Asset allocations remained similar to last quarter, with the exception of an increase in cash holdings from 12% in Q4 2019 to 19% in Q1. Mutual funds continue to hold a majority of participant assets (34%), followed by equities (27%), cash (19%), ETFs (17%), and fixed income (3%).

Allocation Trends

The data also reveals specific sector holdings within each investment category:

• Mutual funds: Large-cap funds had the largest allocation at approximately 30% of all mutual fund allocations, followed by taxable bond (22%) and international (14%) funds.
• Equities: Information technology remained the largest equity sector holdings at 29%, up from 27% last quarter. Apple (AAPL) continues to be the top overall equity holding, comprising 11% of the equity allocation of portfolios. The other equity holdings in the top five include Amazon (AMZN) (6.5%), Microsoft (MSFT) (3.6%), Berkshire Hathaway (BRKA) (2.5%), and Tesla (TSLA) (2.1%).
• ETFs: Among ETFs, investors allocated the most dollars to U.S. equity (48%), followed by U.S. fixed income (18%), international equity (13%) and sector ETFs (10%).

Report Highlights

• On average, participants held 10 positions in their SDBAs at the end of Q1 2020, which has remained steady both year-over-year and quarter-over-quarter.
• Gen X made up approximately 43% of SDBA participants, followed by Baby Boomers (37%) and Millennials (14%).
• Baby Boomers had the highest SDBA balances at an average of $367,425, followed by Gen X at $199,071 and Millennials at $65,207.
• Gen X had the most advised accounts at 45%, followed by Baby Boomers (41%) and Millennials (11%).

Schwab Stock Slices™ Now Available

Schwab also announced that its new Schwab Stock Slices™ service is now available in the Schwab Personal Choice Retirement Account^®, the firm’s SDBA offering. Schwab Stock Slices™ lets investors own any of America’s leading companies in the S&P 500^® for as little as $5 each, even if their shares cost more. Investors can use the new service to purchase a single stock slice or up to 10 different Stock Slices™ at once, and they can hold slices of as many S&P 500 companies in their account as they wish through multiple purchases. Schwab Stock Slices™ are purchased commission-free online, just like regular stock trades at Schwab.

About the SDBA Indicators Report

The SDBA Indicators Report includes data collected from approximately 145,000 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 first quarter of 2020, and can be found here, along with prior reports.

About Charles Schwab

At Charles Schwab we believe in the power of investing to help individuals create a better tomorrow. We have a history of challenging the status quo in our industry, innovating in ways that benefit investors and the advisors and employers who serve them, and championing our clients’ goals with passion and integrity.

More information is available at www.aboutschwab.com. Follow us on Twitter, Facebook, YouTube and LinkedIn.

Investors in mutual funds and ETFs should consider carefully information contained in the prospectus, including investment objectives, risks, charges, and expenses. You can request a prospectus by visiting Schwab.com or calling 800-435-4000. Please read the prospectus carefully before investing.

Disclosures:

Brokerage Products: Not FDIC‐Insured • No Bank Guarantee • May Lose Value

The securities shown are for informational purposes only and are not a recommendation to transact in any security.

Through its operating subsidiaries, The Charles Schwab Corporation (NYSE: SCHW) provides a full range of securities brokerage, banking, money management and financial advisory services to individual investors and independent investment advisors. Its broker-dealer subsidiary, Charles Schwab & Co., Inc. (member SIPC, www.sipc.org), and affiliates offer a complete range of investment services and products including an extensive selection of mutual funds; financial planning and investment advice; retirement plan and equity compensation plan services; compliance and trade monitoring solutions; referrals to independent fee-based investment advisors; and custodial, operational and trading support for independent, fee-based investment advisors through Schwab Advisor Services. Its banking subsidiary, Charles Schwab Bank (member FDIC and an Equal Housing Lender), provides banking and lending services and products. More information is available at www.schwab.com and www.aboutschwab.com.

This report is for informational purposes only and is not a solicitation, or a recommendation that any particular investor should purchase or sell any particular security.

Schwab Personal Choice Retirement Account^® (PCRA) is offered through Charles Schwab & Co., Inc. (member SIPC), the registered broker/dealer, which also provides other brokerage and custody services to its customers.

All corporate names are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security.

Schwab Stock Slices™ is not intended to be investment advice or a recommendation of any stock. Investing in stocks can be volatile and involves risk including loss of principal. Consider your individual circumstances prior to investing.

The standard online $0 commission does not apply to trades placed through a broker ($25). See the Charles Schwab Pricing Guide for Retirement Plan Accounts for full fee and commission schedules.

The “S&P 500^® Index” is a product of S&P Dow Jones Indices LLC or its affiliates (“SPDJI”), and has been licensed for use by Charles Schwab & Co., Inc. (“CS&Co”). Standard & Poor’s^® and S&P^® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”); Dow Jones^® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). Schwab Stock Slices™ is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, or their respective affiliates, and none of such parties make any representation regarding the advisability of using Schwab Stock Slices™ or investing in any security available through Schwab Stock Slices™, nor do they have any liability for any errors, omissions, or interruptions of the S&P 500 Index.

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Contacts

Mike Peterson

Charles Schwab

330-908-4334

mike.peterson@schwab.com

Travis Fishstein

The Neibart Group

718-801-8205

schwabrps@neibartgroup.com