Schwab Report: Self-Directed 401(k) Balances Hold Steady; Millennials Allocate More to ETFs and Cash Than Gen X, Boomers
December 04 2019 - 9:00AM
Business Wire
According to Charles Schwab’s SDBA Indicators ReportTM, an
industry-leading benchmark on retirement plan participant
investment activity within self-directed brokerage accounts
(SDBAs), Millennials allocated a larger percentage of their
portfolios to ETFs and cash than did other generations during the
third quarter of 2019, while mutual funds remained the largest
holding in the accounts of all generations and Apple the top
overall equity holding.
SDBAs are brokerage accounts within retirement plans, including
401(k) 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. Gen X made up approximately 42% of SDBA
participants, followed by Baby Boomers (39%) and Millennials
(13%).
According to the Schwab data, mutual funds continued to hold the
highest percentage of participant assets, with Baby Boomers
allocating approximately 39% of their portfolios to them, followed
by Gen X at 36% and Millennials at 34%. Equities were the
second-largest allocation for all portfolios, with Baby Boomers and
Gen X allocating approximately 28% of their portfolios to them,
followed by Millennials at 25%.
Millennials continued to allocate more to ETFs (24%) than did
Gen X (20%) and Baby Boomers (17%), and they also held more cash
(16%) than other generations (Gen X had 14% followed by Boomers at
12%). Baby Boomers held approximately 4% of their portfolios in
fixed income, followed by Gen X (1%) and Millennials (0.8%).
U.S. broad funds were the most popular ETFs. All three
generations held these three funds among their top ETF holdings:
Schwab U.S. Broad Market ETF, SPDR S&P 500 ETF and Vanguard
Total Stock Market ETF. Additionally, all three generations
continued to hold the Schwab S&P 500 Index Fund as their top
mutual fund holding, followed by the Schwab Total Stock Market
Index Fund.
Equity Holdings
The following chart shows the top ten equity holdings as a
percentage of assets held in equities across all generations:
MILLENIALS
GEN X
BABY BOOMERS
AMAZON.COM INC
7.87%
APPLE INC
10.52%
APPLE INC
9.19%
APPLE INC
6.18%
AMAZON.COM INC
7.16%
AMAZON.COM INC
5.32%
TESLA INC
3.22%
BERKSHIRE HATHAWAY
2.37%
BERKSHIRE HATHAWAY
2.75%
FACEBOOK INC
3.03%
FACEBOOK INC
2.26%
MICROSOFT CORP
2.69%
GRAYSCALE BITCOIN TRUST
1.84%
MICROSOFT CORP
2.16%
FACEBOOK INC
1.43%
BERKSHIRE HATHAWAY
1.73%
TESLA
1.45%
VISA INC
1.25%
WALT DISNEY CO
1.68%
ALPHABET INC.
1.30%
ALPHABET INC.
1.23%
NETFLIX INC
1.58%
NETFLIX
1.29%
AT&T INC
1.17%
MICROSOFT CORP
1.53%
ALIBABA GROUP HOLDING
1.23%
BOEING
1.08%
ALIBABA GROUP HOLDING
1.39%
VISA INC
1.23%
ALIBABA GROUP HOLDING
0.98%
Report Highlights
- The average SDBA balance for all participants in the third
quarter of 2019 was $276,929, nearly identical to the $276,547 from
the previous quarter and 1% above the average balance from the
third quarter of 2018 ($275,362).
- Baby Boomers had the highest SDBA balances at an average of
$394,064, followed by Gen X at $213,018, and Millennials at
$68,756.
- Of participants using an advisor to manage their SDBA, 22% were
Boomers, 21% were Gen Xers and 15% were Millennials.
- On average, Baby Boomers held more positions in their SDBA than
other generations (11.4 vs. Gen Xers: 9.6, Millennials: 7.1).
- Mobile trades were equally popular among Millennials and Gen X,
with 22% of each generation using that method, compared to 16% of
Baby Boomers.
- SDBA users averaged 6.7 trades in the third quarter (Boomers:
7.3, Gen Xers: 6.7, Millennials: 6.1).
About the SDBA Indicators Report TM
The SDBA Indicators Report includes data collected from
approximately 142,000 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 2019, and can be found here, 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.
Investors should consider carefully information contained in
the prospectus, including investment objectives, risks, charges,
and expenses. You can request a prospectus by visiting Schwab.com
or calling 800-435-4000. Please read the prospectus carefully
before investing.
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.
(1219-91YJ)
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version on businesswire.com: https://www.businesswire.com/news/home/20191204005172/en/
Mike Peterson Charles Schwab 330-908-4334
mike.peterson@schwab.com Mary Chung Lansons Intermarket
Communications 212-754-5479 mchung@intermarket.com
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