Schwab Report: Self-Directed 401(k) Investors Stay the Course in Q3, See Balances Increase 12.8% Year-over-Year

WESTLAKE, Texas–(BUSINESS WIRE)–#CharlesSchwab–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 Q3 2021 at $341,068, a 12.8% increase year-over-year and a 2.0% decrease from Q2 2021.

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 individual stocks and bonds, as well as exchange-traded funds, mutual funds and other securities that are not part of their retirement plan’s core investment offerings.

The third quarter SDBA Indicators Report overall showed steady investing behavior among participants. Trading volumes were similar to trades from one year ago and slightly lower than last quarter at an average of 13.1 trades per account compared to 13.8 in Q2.

Participant holdings also remained similar to last quarter, with a slight increase in cash holdings. The highest allocation of participant assets was in equities (36%). Mutual funds were the second largest holding (30%), followed by ETFs (20%), cash (13%) and fixed income (1%).

Allocation Trends

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

• Mutual funds: Large-cap funds had the largest allocation at approximately 34% of all mutual fund allocations, followed by taxable bond (19%) and international (15%) funds.
• Equities: The largest equity sector holding was Information Technology at 29.8%, up slightly from 29.3% last quarter. The top five equity holdings remained the same as last quarter. Apple was the top overall equity holding, comprising 10.6% of the equity allocation of portfolios. The other equity holdings in the top five include Tesla (6.9%), Amazon (4.9%), Microsoft (2.9%) and NVIDIA (2.0%).
• ETFs: Among ETFs, investors continued to allocate the most dollars to U.S. equity (50%), followed by sector ETFs (14%), U.S. fixed income (14%) and international equity (13%).

Other Report Highlights

• Advised accounts held higher average account balances compared to non-advised accounts – $542,365 vs. $294,215.
• Gen X had the most advised accounts at approximately 49%, followed by Baby Boomers (35%) and Millennials (14%).
• Gen X made up approximately 45% of SDBA participants, followed by Baby Boomers (31%) and Millennials (18%).
• Baby Boomers had the highest SDBA balances at an average of $526,193, followed by Gen X at $301,686 and Millennials at $101,670.
• On average, participants held 12.4 positions in their SDBAs at the end of Q3 2021, consistent with Q2 2021.

About the SDBA Indicators Report

The SDBA Indicators Report includes data collected from approximately 176,000 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 2021 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.

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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

Carly Taylor

The Neibart Group

718-801-8206

schwabrps@neibartgroup.com