Retirement plan participant account balances in self-directed brokerage accounts averaged $352,764 at the end of the fourth quarter, a 6.4% year-over-year increase and a 3.4% increase from the third quarter, Charles Schwab reported this week.
SDBA account holders can use their brokerage accounts to invest retirement savings in individual stocks and bonds, ETFs, mutual funds and other securities that are not part of their retirement plan’s core investment offerings.
During the fourth quarter, investors remained resilient in a historically volatile year, the report noted. November began with fears over new COVID variants, inflation and Federal Reserve asset tapering, but as investor concerns subsided and the economy proved stable overall, their balances ended the quarter higher.
Participant holdings remained similar to the fourth quarter of 2020. Thirty-seven percent of participant assets were in equities versus 35% in 2020; 30% in mutual funds versus 31%; 21% in ETFs versus 18%; 11% in cash versus 14%; and 1% in fixed income versus 2%.
Schwab based its report on data collected from some 178,000 retirement plan participants who currently have balances between $5,000 and $10 million in their Schwab Personal Choice Retirement Account.
Other Report Highlights
The report said advised accounts held average account balances of $558,470, compared with $304,164 in non-advised accounts. Forty-nine percent of Gen X investors had advised accounts, followed by 34% of baby boomers and 15% of millennials.
Gen X made up approximately 45% of SDBA participants in the fourth quarter, boomers 31% and millennials 19%.
Boomers’ SDBA balances averaged $548,658, compared with $315,574 for Gen X and $106,408 for millennials.