Self-Directed Securities Brokerage

Brokerage Account Features

Via a brokerage firm that you select, eligible employees would have access to a whole world of choices: stocks, bonds, CDs, ETFs, and an expansive universe of mutual funds.  

  • no asset fee

  • no advisory firm fee

  • routine trading fees apply per your brokerage firm’s schedule

  • a fee of $50 per participant per year applies only to persons who select the SDBA option

  • limitation on % of plan assets in SDBA, based on plan size

Participant Advantages

  • investment spectrum is extended to most individual securities

  • most all funds and ETFs open to 401k investing are also included

  • investment research tools are expanded as offered by the securities brokerage firm

Plan Sponsor Advantages

  • allows experienced investors to personalize by leveraging a greater variety of options

  • participants can manage their own investments and expenses via combined selections

  • customization by either imposing limits on how much participants may allocate, or by the types of investments available

Considerations

  • SDBA requires a greater degree of prudence by the employer fiduciary considering the additional risk by participants holding individual securities

  • SDBA also requires more experience and investment education on the part of the employee in order to maneuver the dynamic nature of individual securities selecting and monitoring

  • Related, owning an individual stock or bond does not give the diversification of a mutual fund or ETF

  • SDBA is self-managed vs. having a professional management team for a fund or ETF

  • Federal rules require that plans offering a securities brokerage option make it availble to all employees including those who have not had securities trading experience.

Let us know of your favorite brokerage firm. The administrator will do the rest with instructions for account setup to make it easy on your end.

Additional Disclosure: A self-directed brokerage account enables a Plan Sponsor to deliver an extra level of diversification and personalization to participants but adds certain specific responsibilities and liabilities in the Fiduciary capacity. As with any retirement investment option, a SDBA should be carefully reviewed prior to its addition in the Plan. The Plan Sponsor should consider the pros and cons, associated trading fees, and participants’ educational needs accompanying the addition of a SDBA.

Not all investment types are available in a self-directed brokerage account, including but not limited to: options, purchases on margin, short sales, commodities, outright precious metals, collectibles, futures, currencies, and penny stocks.