Advised Self-Directed Brokerage Accounts Are Better Diversified, Have Higher Balances Than Non-Advised Accounts, Says New Sch...
November 27 2018 - 9:00AM
Business Wire
According to Charles Schwab’s latest SDBA Indicators Report™, an
industry-leading benchmark on retirement plan participant
investment activity within approximately 137,000 self-directed
brokerage accounts (SDBAs), participants who worked with an advisor
had higher balances, a more diversified asset allocation mix, and
less exposure to individual stocks compared to non-advised
participants.
SDBAs are brokerage accounts within retirement plans, including
401(k)s and other types of retirement plans, which participants can
use to invest in stocks, bonds, exchange-traded funds, mutual funds
and other securities that are not part of their retirement plan's
core investment offerings. While only 19 percent of SBDA
participants chose to use an advisor, they reported an average
balance of $449,552 – nearly twice as much as the $234,643 reported
by non-advised participants.
Allocation Trends
In advised accounts, mutual funds continued to hold the highest
percentage of participant assets at approximately 50 percent. ETFs
were the second-largest allocation, followed by equities, cash and
fixed income.
Conversely, non-advised participants allocated nearly 35 percent
of their portfolio to individual equities. This was followed by
mutual funds, cash, ETFs and fixed income.
Participants’ Market Value Allocation
in 3Q18
Mutual Funds
Equities ETFs
Fixed Income Cash Advised
50% 20%
22% 4%
4% Non-Advised
32% 35%
15% 2%
16%
When comparing equity holdings, both advised and non-advised
participants held Apple, Amazon and Berkshire Hathaway as their top
three holdings; however, non-advised participants’ positions in
Apple and Amazon were nearly double compared to participants who
used an advisor. Additionally, advised participants invested in
more blue-chip, value companies, whereas self-directed investors
allocated to more growth stocks.
Advised Accounts
% EquityAssets
Non-Advised Accounts
% EquityAssets
APPLE INC 5.79 APPLE INC
10.94 AMAZON.COM INC 3.53
AMAZON.COM INC 7.18
BERKSHIRE HATHAWAY
2.76
BERKSHIRE HATHAWAY
2.44 MICROSOFT CORP 2.58
FACEBOOK 2.27 VISA INC
1.82 NETFLIX INC
1.95 J P MORGAN CHASE & CO
1.45 NVIDIA CORP 1.76
ALPHABET INC 1.36
MICROSOFT CORP 1.75 JOHNSON & JOHNSON
1.36 BANK OF AMERICA CORP
1.31 CHEVRON CORP 1.23
ALPHABET INC 1.28 CISCO
SYSTEMS INC 1.13 ALIBABA
GROUP HOLDING 1.22
“The report highlights the benefits of working with an advisor.
In general, participants who had professional help were more
diversified across all of their holdings. In addition, advisors
typically rebalance a portfolio more often and keep their clients
invested,” said Larry Bohrer, vice president, Corporate Brokerage
Retirement Services at Charles Schwab. Generally, payroll
contributions into SDBAs are allocated to cash. From there, it is
up to the participant or advisor to invest. As the report shows,
advisors kept clients’ cash allocations low, while individual
investors left more of their SDBA in cash pending investment
decisions.
Other Highlights
- The average SDBA account balance for
all participants in the third quarter of 2018 was $265,902, up 3.5
percent from the second quarter of 2018 and up 24 percent from the
third quarter of 2017;
- Advised accounts averaged 9.5 trades in
the third quarter compared to 5.5 trades by non-advised
participants;
- Baby Boomers represented the majority
of advised accounts (45.4%), followed by Gen X (42.2%) and
Millennials (8.5%).
About the SDBA Indicators Report™
The SDBA Indicators Report includes data collected from
approximately 137,000 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 2018, and can be found at www.schwab.com/sdbaindicators,
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.
More information is available at www.aboutschwab.com. Follow us
on Twitter, Facebook, YouTube, and LinkedIn.
Disclosures
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.
(1118-8ZBJ)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20181127005038/en/
Mike PetersonCharles
Schwab330-908-4334mike.peterson@schwab.com
Mike GelorminoIntermarket
Communications212-909-4780mgelormino@intermarket.com
Charles Schwab (NYSE:SCHW)
Historical Stock Chart
From Aug 2024 to Sep 2024
Charles Schwab (NYSE:SCHW)
Historical Stock Chart
From Sep 2023 to Sep 2024