Self Directed Accounts

The Self-Directed Brokerage Account (SDBA)

Over the past few years, many employers have enhanced their retirement plans to include a brokerage window opportunity so that plan participants have more choice and greater flexibility with their retirement investments. This option, knows as the Self Directed Brokerage Account (SDBA), exists in 401(k), 403(b), and 457 plans. All participants have access to professional management, stocks, bonds, mutual funds, and ETFs.

How it Works

Plans that offer the SDBA option provide the opportunity for employees to take full control of a portion of their current retirement account by linking it to the existing Core account. In doing so, participants expand the range of investment choices beyond the Core investments and will have access to the same management style as high net-worth investors, institutions, and foundations. The Core account refers to the retirement account through the employer that offers limited pre-selected investment choices.

The SDBA is very similar to traditional brokerage accounts, which exist as an eligible option on retirement plans. Employers that offer the SDBA option allow employees to transfer a portion of their investments from the Core account to SDBA. Through this account, employees have access to investment choices such as mutual funds, stock, bonds, and access to professional investment advice through a Registered Investment Advisor.

SDBAs are currently the most underutilized investment options in 401(k), 403(b), and 457 accounts. However, this option should be used by investors who feel comfortable managing their own risk or are working with a professional Investment Advisor.
Additional costs incurred by participants, if any, can vary from one SDBA provider to another. For additional information on your plan options and costs, please contact your HR department or your Investment Advisors.

The SDBA or a ‘brokerage window’ is a choice on eligible plans that offer investment choices such as mutual funds, stocks, bonds, and access to fiduciary investment advice through a Registered Investment Advisor.