Self-directed brokerage accounts within 401(k)s and other retirement plans grew by 22% over the past year, according to a report today from Charles Schwab & Co.
As of the end of the second quarter, the average account balance was more than $348,000, up from nearly $287,000 a year prior, according to the data. That increase is similar to the annual growth seen in 401(k)s and IRAs, which Fidelity Investments recently reported increased in size by 24% and 21%, respectively.
Brokerage accounts, however, are favored by investors who want to be more active in managing their retirement assets. During the second quarter, such accounts had an average of 14 trades, roughly the same level seen during the second quarter of 2020, likely due in part to the market volatility and overall uncertainty tied to Covid-19, according to Schwab.
Stocks represented the biggest chunk of assets in self-directed brokerage accounts, at 37%, followed by mutual funds (30%), ETFs (20%), cash equivalents (12%) and bonds (1%), the report noted.
That is a big change from how assets were allocated in those accounts during the second quarter of 2014, the oldest year for which Schwab has the data available on site. At that time, mutual funds accounted for 41% of assets, while stocks represented 28%.
The most popular stocks during the second quarter were Apple, which accounted for more than 10% of equity allocations, Tesla (6%), Amazon (5%), Microsoft (3%) and NVIDIA (2%), Schwab’s new report stated.
Among mutual funds, large-cap varieties were the most popular, representing 34% of that category by assets. Taxable bonds accounted for 19% and international funds 16%, according to the report. The most popular fund was Schwab’s S&P 500 Index Fund. Among ETFs, the most assets were invested in the Vanguard Total Stock Market, Invesco QQQ Trust, SPDR S&P 500, Vanguard S&P 500 and Schwab U.S. Broad Market, according to the report.
By generation, baby boomers by far had the largest average account balance at more than $532,000, followed by Gen Xers at more than $306,000, and millennials at nearly $104,000.
Traditional tax-deferred accounts were on average much larger than Roth accounts, at about $356,000 versus $83,000, according to Schwab.
People with higher balances were also more likely to use in-plan advice. Among advised accounts, the average balance was more than $550,000, compared with $302,000 among those without advice.
IRAs now hold nearly twice the assets of 401(k) plans — and most of that money didn't arrive through annual contributions.
A new survey finds that many women prioritize financial security but continue to leave savings in accounts that may not keep pace with inflation.
Roundhill, Bitwise and GraniteShares funds remain on hold while the agency weighs how novel ETFs should be regulated.
"Shares of alternative assets managers have lagged this year as investors grow wary of private-credit exposure."
The fintech platform is touting a new AI-free Planning Observations feature, which draws on IRS tax records to uncover opportunities for advisors.
Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income
Direct indexing is on pace to outgrow ETFs and mutual funds. Northern Trust's Ken Lassner explains why the advisors who get it wish they had started sooner.
