Participants June 1, 2018

Most SDBA Participants Invest in Mutual Funds

Retirement plan participants in advised SDBAs displayed a more diversified asset allocation mix and had a lower concentration of assets in particular securities than those in non-advised accounts.

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Mutual funds continued to hold the highest percentage of participant assets in self-directed brokerage accounts (SDBAs) with approximately 38%, an increase of 1% from last year, according to Charles Schwab’s SDBA Indicators Report.

The report is based on data from participants in the Schwab Personal Choice Retirement Account (PCRA), which showed the average account balance was up 23.4% to $261,900 from $212,178 a year ago and slightly down by .3% from last quarter.  Trading volumes were up 21% from last quarter to 7.8 average trades per quarter from 6.4. Despite the high market volatility experienced in the first quarter, participants averaged just 2.6 trades per month.

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Allocations to equities remained the same at 29%, and exchange-traded funds (17%), cash (14%), and fixed income (2%) rounded out participants’ portfolios.

Baby Boomers made up approximately 42% of SDBA participants, followed by Gen X (40%) and Millennials (11%). Millennials had the lowest PCRA balance at $59,548, while the average for Gen X was $188,176 and for Baby Boomers was $359,568, very similar to last quarter. All three generations had very similar equity holdings, with Apple, Amazon, Facebook and Berkshire Hathaway coming in at the top. Millennials also had Tesla and Netflix stocks as their top holdings, while Gen X and Boomers held the more conservative Bank of America.

As for the top exchange-traded fund (ETF) holdings, they were very similar across generations: Schwab US Broad Market ETF, SPDR S&P 500 ETF, Vanguard and Schwab International Equity were at the top for all. As opposed to last quarter, the Bitcoin ETF fell out of the Top 10 ETF holdings for Millenials.

All held Schwab S&P 500 Index FD as their top mutual fund holding, followed by Schwab Total Stock Market Index.

The Roth PCRA account holder balance was much lower than the non-Roth PCRA: $63,885 vs. $265,195. Gen X had the most Roth accounts as a percentage of accounts in their respective generations, while Baby Boomers were highest in the non-Roth accounts.

Schwab’s analysis found 18.7% of SDBA accounts were managed by an independent investment adviser. The average balance of advised accounts was $434,513. Those participants who used advisers displayed a more diversified asset allocation mix and had a lower concentration of assets in particular securities. As for ETF holdings, advised participants again had more balance among all the holdings, not having more than 3% of any one ETF.

Break from the Grind May 31, 2018

A Little Friday File Fun

And now it's time for FRIDAY FILES!
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In Portland, Oregon, a couple discovered their Amazon Alexa device recorded a private conversation in their home and then sent it to a random person on their contact list. When the wife called Amazon, the company investigated and found it to be true. Amazon told CNET.com, “Echo woke up due to a word in background conversation sounding like ‘Alexa.’ Then, the subsequent conversation was heard as a ‘send message’ request. At which point, Alexa said out loud ‘To whom?’ At which point, the background conversation was interpreted as a name in the customers contact list. Alexa then asked out loud, ‘[contact name], right?’ Alexa then interpreted background conversation as ‘right.’ As unlikely as this string of events is, we are evaluating options to make this case even less likely.”

 

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In Camillus, New York, a 30-year-old man was ordered by a State Supreme Court Justice to move out of his parents’ house after living there rent free for eight years, the Syracuse Post-Standard reports. The man’s parents sent him numerous eviction notices and even gave him $1,100 to help him find a new place, WSTM, a local news channel, reports. However, while in court, the man refused to directly speak to his parents and argued with the Justice for a half an hour that he was entitled to an additional six months before eviction, citing a legal case he found on the internet that appeared to back his claim. The justice reportedly praised the man’s legal argument but sided with his parents and ordered him to move out, calling his demand for six more months “outrageous.” The man fired back, calling the judge’s order “outrageous.” He plans to appeal the decision. “I’m not bothering them by living here,” the man said in an interview with Good Morning America. “It’s little to no cost to them, and considering how much they’ve harassed me, I think it’s the least that they should be required to do, which is just let me hang here a bit longer and use their hot water and electricity.”

 

In Park City, Utah, a couple ran into a different sort of hazard during a round of golf on Memorial Day. A young moose bigger than their golf cart chased them off the links at the Park City Golf Club. The husband told the Deseret News he was getting ready to hit a shot when his wife started yelling. They jumped in the cart and made an escape as the animal headed off to a nearby pond. He says the animal wasn’t super aggressive, but it was “gigantic” so they didn’t hang around.Roundabouts can be tricky for some drivers.

If you can't view the video below, try https://youtu.be/1bdYyd87wjM.
In Sydney, Australia, a hotel valet escaped a crash, but the luxury car he was trying to park didn’t. According to the Associated Press, the valet drove the soft-top Porsche Carrera under another vehicle outside the Hyatt Regency Hotel. Emergency workers cut the driver out from the Porsche. The larger vehicle was propped up and its wheels were anchored while the vehicles were separated. The black Porsche, its hood and front bumper crunched and dented, was then backed onto a tow truck.
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