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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 at $273,412 for the third quarter ending September 30 — down 3.55% from the second quarter of 2022 and down 19.84% year-over-year.
SDBAs are brokerage accounts within retirement plans, including 401(k)s and other types of retirement plans, that employees can use to invest retirement savings in individual stocks and bonds, as well as exchange-traded funds (ETFs), mutual funds, and other securities that are not part of their retirement plan's core investment offerings. Gen Xers made up approximately 46% of SDBA participants, followed by baby boomers (30%) and millennials (19%).
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The SDBA Indicators Report includes data collected from approximately 186,000 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 third-quarter indicators reflect another volatile period, according to Schwab officials, with some recovery in July and August before markets retracted in September for a third consecutive quarter of negative returns amid high inflation, increasing interest rates, rising recession risks, and ongoing geopolitical unrest.
Related: 401(k) balances drop 23% this year (yet contributions steady)
"Overall, participant holdings remained similar to last quarter, with an increase in fixed income," stated the report asset balance summary. The largest equity sector holding was Information Technology at 28.8%. Mutual funds were the second largest holding at 28.4%, with the largest allocation going to large-cap stock funds at 33.7%. Meanwhile, exchange-traded funds (ETFs) held nearly 21% of participant assets; among ETFs, investors continued to allocate the most dollars to U.S. equity (51.7%).
Other Report Highlights
Here are more takeaways from the indicators report:
- Trading volumes were slightly lower at an average of 10.6 trades per account compared to 11.2 trades per account in the second quarter and a year ago.
- Advised accounts held higher average account balances compared to non-advised accounts, $435,604 vs. $233,875.
- Gen X had the most advised accounts (50.0%), followed by baby boomers (30.7%) and millennials (15.8%).
- Baby boomers had the highest SDBA balances at an average of $437,280, followed by Gen X at $246,206 and millennials at $83,408.
- On average, participants held 13 positions in their SDBAs at the end of 2022's third quarter, which is consistent with the second quarter and similar to last year.
The Q3 report can be found here, along with prior reports.
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