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Retirement Planning > Saving for Retirement > 401(k) Plans

Self-Directed Retirement Account Balances Rose on Stock Rally: Schwab

By Michael S. Fischer

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What You Need to Know

  • Tech stocks were the top equity holdings, according to Schwab's quarterly survey.
  • Advised accounts had more assets and more balanced allocations than non-advised accounts.
  • Roth balances were much lower, and Gen Xers were the most likely to have this type of account.

The average account balance across all participant self-directed brokerage accounts ended the second quarter at $335,008, up by 5.7% year over year and up by 2.1% from the first quarter, according to Charles Schwab’s SDBA Indicators Report, released Thursday. 

Second-quarter account balances rose as equity markets continued to rally, the report said. The economy showed resilience while the Federal Reserve held interest rates steady during the period. 

Trading volumes averaged 12 trades per account, down slightly from 12.3 in the first quarter but higher compared with trades from a year ago.

SDBAs are brokerage accounts within workplace 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 SDBA Indicators Report includes data collected from some 290,000 retirement plan participants who have balances between $5,000 and $10 million in their Schwab Personal Choice Retirement Account. Researchers extract data quarterly on all accounts that are open as of quarter-end and meet the balance criteria.

Tech Stocks Are Tops

Overall, participant holdings in the second quarter were similar to those in the first quarter, according to the new report. 

Equities remained participants’ largest holding at 34.9%, with information technology the dominant sector at 37.9%, up from 34.6% last quarter, and Nvidia the largest individual stock holding at 11.1%.

Other top equity holdings: Apple, 10.7%; Amazon, 5.2%; Tesla, 5.1%; and Microsoft, 4.1%.

Mutual funds again were participants’ second-largest holding at 28.1%. Large-cap stock funds had the largest allocation, 34.2%, followed by money market funds, 16.2%, and taxable bond funds, 14.2%

ETFs held 24.7% of participant assets in the second quarter. Investors allocated 51.8% to U.S. equity, 12.7% to U.S. fixed income, 11.9% to international equity and 9.3% to sector ETFs. 

Cash and cash equivalents held 7.4% of participant assets in the April-to-June period, while fixed income held 5% of assets.

Advised vs. Non-Advised Accounts

Advised accounts held average balances of $528,287 in the second quarter, according to the report, compared with $293,455 in non-advised accounts. Fifty-two percent of Gen Xers had advised accounts, followed by 24% of baby boomers and 22% of millennials.

Participants who worked with advisors displayed a more diversified asset allocation mix than non-advised participants and had a lower concentration of assets in particular securities. Advised participants also had a lower percentage in cash, showing a balanced amount among all the advised investments.

Balances by Generation

Boomers had the highest average account balance at $548,353, up from $531,201 last quarter. Gen Xers’ average balance was $329,089 and millennials’ $115,867. All three generations had very similar equity holdings, with Apple, Tesla, Amazon, Nvidia and Microsoft coming in at the top.

Roth balances were much lower than in the non-Roth Schwab Personal Choice Retirement Account: $90,411 vs. $354,320. Among the generations, Gen Xers had the highest percentage of Roth accounts, 43.6%.

Those with Roth accounts also had lower trade volumes: 7.6 vs. 12.3 trades.

Michael S. Fischer

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