Schwab Report: Self-Directed 401(k) Balances Down, Investors Hold Steady as S&P 500 Experiences First Correction in Two Years


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 Q1 2022 at $332,017, a 0.51% decrease year-over-year and a 6.25% decrease from Q4 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 first quarter SDBA Indicators align with the performance of volatile equity and bond markets where the combination of a pivoting Federal Reserve and conflict in Ukraine drove volatility up and equity prices down globally. Despite market turbulence, participants did not make significant changes to their investments during this period. Participant holdings remained similar to the prior quarter, with a slight increase in cash. Individual equities held the majority of participant assets (36%). Mutual funds were the second largest holding at 29%, followed by ETFs (21%), cash (13%), and fixed income (1%).

Allocation Trends

The data also reveals specific asset class and sector holdings within each investment category. Overall, allocations were very similar to the prior quarter:

  • Mutual funds: Large-cap stock funds had the largest allocation at approximately 35.4% of all mutual fund allocations. They were followed by taxable bond (18.7%) and international (14.5%) funds.
  • Equities: The largest equity sector holding was Information Technology at 30.5%, down slightly from 31.8% the prior quarter and up from 28.5% in the first quarter of last year. The top five equity holdings remained the same as the prior quarter. Apple was the largest individual stock holding (12%), followed by Tesla (9.4%), Amazon (4.7%), Microsoft (3.2%) and NVIDIA (2.7%).
  • ETFs: Among ETFs, investors continued to allocate the most dollars to U.S. equity (51.3%), followed by sector ETFs (13.2%), U.S. fixed income (12.6%) and international equity (12.4%).

Other Report Highlights

  • Advised accounts held higher average account balances compared to non-advised accounts, $525,254 vs. $286,008.
  • Gen X had the most advised accounts at 49.6%, followed by Baby Boomers (32.5%) and Millennials (14.9%).
  • Gen X made up 45.5% of SDBA participants, followed by Baby Boomers (30.0%) and Millennials (18.9%).
  • Baby Boomers had the highest SDBA balances at an average of $520,616, followed by Gen X at $299,520 and Millennials at $102,113.
  • Trading volumes decreased significantly from one year ago, down to 13.7 trades from 19.6 in Q1 of 2021, and are up slightly from Q4 of 2021 (13.3).
  • On average, participants held 12.5 positions in their SDBAs at the end of Q1 2022, consistent with the prior quarter and up slightly from 12.2 at the end of Q1 2021.

About the SDBA Indicators Report

The SDBA Indicators Report includes data collected from approximately 181,000 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 2022, 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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Source: The Charles Schwab Corporation