Schwab Report: Self-Directed 401(k) Balances Rebound in Q2, Up 13% Quarter-Over-Quarter

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 across all participant accounts finished Q2 2020 at $285,616, a 3.3% increase year-over-year and a 13% increase from Q1 2020.

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 second quarter SDBA Indicators Report also showed trading volumes were slightly higher than the first quarter, at an average of 14 trades per account up from 13.4 trades in Q1 2020.

Asset allocation remained similar to Q1, with the exception of an increase in equities holdings from 27% in Q1 2020 to 30% in Q2. Mutual funds continue to hold a majority of participant assets (33%), followed by equities (30%), ETFs (18%), cash (17%), and fixed income (2%).

Allocation Trends

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

• Mutual funds: Large-cap funds had the largest allocation at approximately 31% of all mutual fund allocations, followed by taxable bond (21%) and international (14%) funds.
• Equities: Information technology remained the largest equity sector holding at 30%, up from 29% in Q1 2020. 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) (7.1%), Microsoft (MSFT) (3.5%), Tesla (TSLA) (3.0%), and Berkshire Hathaway (BRKA) (1.9%).
• ETFs: Among ETFs, investors allocated the most dollars to U.S. equity (47%), followed by U.S. fixed income (18%), international equity (12%) and sector ETFs (12%).

Report Highlights

• On average, participants held 10.5 positions in their SDBAs at the end of Q2 2020, which has remained consistent both year-over-year and quarter-over-quarter. Baby Boomers held more positions in their SDBA than other generations (11.9 vs. Gen X: 10.3, Millennials: 7.9).
• Gen X made up approximately 43% of SDBA participants, followed by Baby Boomers (36%) and Millennials (15%).
• Baby Boomers had the highest SDBA balances at an average of $418,743, followed by Gen X at $231,798 and Millennials at $76,282.
• Gen X had the most advised accounts at 46%, followed by Baby Boomers (40%) and Millennials (11%).
• Mobile trades were most popular among Millennials (33%), followed by Gen X (28%) and Baby Boomers (20%).

About the SDBA Indicators Report

The SDBA Indicators Report includes data collected from approximately 152,000 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 second quarter of 2020, and can be found here, along with prior reports.

About Charles Schwab

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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.

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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