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Self-Directed Brokerage Accounts

At George Wealth Management, through a strategic relationship with Pacific Financial Group, we may be able to offer you financial planning and investment guidance for your personal 410k account. We do this through an arrangement that will select 401k plans through the Self Directed Brokerage option in the plan. 

What is SDBA? For many years, the investment options offered in company-sponsored retirement plans were limited to a pre-selected list of mutual funds and annuity contracts. However, thousands of 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, known as the Self-Directed Brokerage Account (SDBA), exists in 401(k), 403(b), or 457 plans where participants have access to stocks, bonds, mutual funds, and ETFs. According to Aon Hewitt, approximately 40% of retirement plans offer SDBAs. However, Hewitt also found that only around 3% to 4% of retirement plan participants with access use this option. 

How it Works A self-directed brokerage account is an option that opens up access to a network of mutual funds. Some SDBAs may also allow investments in stocks, bonds, and exchange-traded funds. When retirement savings are placed in an account like this, investments are allocated to investments apart from those available in the core plan.

GREATER FLEXIBILITY The self-directed brokerage account gives investors access to a broader range of investment choices than the default ones presented in the plan. If you are unimpressed or dissatisfied with the investment choices available in their retirement plan, check to see if a self-directed 401(k) is available. It could be a viable alternative rather than settling for the core investment lineup. The accounts may come in the form of a "mutual fund window" providing access to thousands of funds to choose from. In addition, some plans give investors access to a more flexible "brokerage window" account that may allow you to invest in mutual funds, exchange-traded funds, and even individual stocks and bonds. The main concept is to give more choices to a more hands-on investor. Limited core investment options turn to greater choice, flexibility, and access to financial advice:

SDBA Access Points Our Self-Directed Brokerage Account investment options are available through a variety of custodians:


Value of Using an Advisor

An abundance of recent studies emphasizes the importance of client-advisor relationships. These reports prove that advisors can add 3% to clients' net returns and retirement savers who sought investing advice enjoyed a median annual return almost 3% higher than those who didn't – even after the fees they paid for that advice. By working with a financial advisor, you can create and understand an investment strategy, along with the guidance from the advisor to stick with the process. As a result, investors have a better chance at avoiding a panic sale at the bottom of the market, overinvesting at a market top (FOMO), chasing returns, not being properly diversified, and the list goes on. Financial advisors still impact client portfolios, but more than portfolio management comes from behavior management.

Behavior Management and Coaching A 2016 study by Vanguard (you can read it here) concluded the single factor providing the greatest value-added by advisors is behavioral coaching. In the report and you'll notice portfolio management factors like Rebalancing, keeping expenses low, and asset-allocation have value, but behavioral coaching brings the most. Not only does behavioral coaching bring the most value, but it is also the factor that Robo-advisors and technology cannot replicate–yet.

Active Rebalancing Rebalancing a portfolio regularly can help an investor stay within a risk tolerance zone and prevent an overreaction to market movements, benefits that outweigh rebalancing costs. In addition, regular, systematic Rebalancing has the potential to generate higher returns when taking market momentum into account. For example, Vanguard research estimates that annual systematic Rebalancing can increase the expected portfolio return by up to 0.35% annually, while Russell and Envestnet estimate this annual return improvement to be 0.30% and 0.44%, respectively.

Financial Planning While investments show up in a financial plan; a comprehensive financial plan also addresses insurance, estate, tax, retirement, and college planning. In financial planning, the financial advisor separates himself from the Robo-advisor. It takes the coordination of multiple facets of a client's life to create, implement and monitor a financial plan. And not only does the financial advisor create, implement and monitor the financial plan, but he makes adjustments when life happens–and it will. A financial plan is a fluid document; it will change multiple times over time, sometimes because of choice and sometimes because life throws curveballs. Financial advisors have the experience and expertise to provide value to their clients by adjusting the financial plan to keep them moving forward.

Accountability Not only will a financial advisor keep you accountable with your budget and saving, but a financial advisor will keep you accountable in areas you may want to ignore. A financial advisor will help address risks associated with death or disability–everyone's favorite subjects; ignoring these risks leaves a family open to financial devastation by death or the inability to earn an income due to a disability. Not only is the family subject to financial risks, but it also runs the risk of allowing the legal system to determine guardianship of minors in the event of the loss of both parents. The conversations surrounding these risks are uncomfortable, and without the encouragement of a financial advisor to discuss them, they often remain unaddressed. While portfolio management often brings investors into a financial advisor's office, they won't be why they stay. The true value of a financial advisor comes in a variety of other things that will be different for every individual investor.

 If you would like to investigate your potential options with a Self-Directed Brokerage Account (SDBA) and how you can engage our services, please fill in the below contact form today, and our office will arrange for an introduction conversation.