Understanding the
Self-Directed
Brokerage Account
Many 401(k) plans now offer a Self-Directed Brokerage Account (SDBA)—an optional feature that gives you more control and flexibility over how your retirement savings are invested.
What Is a
Self-Directed Brokerage Account?
A Self-Directed Brokerage Account is a special window inside your 401(k) that allows you to invest a portion of your retirement savings in a much wider range of investments than your plan's standard lineup.
Instead of being limited to a preset menu of mutual funds, the SDBA gives you access to a brokerage platform where you can choose from thousands of investments.
Benefits of an SDBA
Greater Investment Choice
With an SDBA, you can typically access:
- A broad universe of mutual funds and ETFs
- Individual stocks and bonds (depending on plan rules)
- Specialized or low-cost investment strategies not offered in your core plan menu
This flexibility allows you to tailor your portfolio more closely to your financial goals, investment preferences, and risk tolerance.
Ability to Work With a Financial Advisor
An SDBA also enables you to hire a professional financial advisor to help manage your account. This can be especially beneficial if you:
- Prefer hands-off portfolio management
- Want personalized investment strategies
- Seek ongoing monitoring and rebalancing
- Want guidance on how your SDBA fits into your broader retirement plan
How to Open an SDBA
If your plan offers an SDBA, opening one is usually simple:
- Log in to your 401(k) account
- Navigate to the Investments or Account Options section
- Look for the SDBA or brokerage window option and select Open Account or Enroll
- Complete a brief online application
- Reallocate funds from your core 401(k) investment lineup into the SDBA to begin investing
If you plan to work with a financial advisor, you may need to sign an additional authorization form allowing them to manage the account.
The steps shown are for Fidelity, but the process for other custodians will be similar.
Ready to Unlock Your SDBA?
A Self-Directed Brokerage Account can be a powerful tool for investors who want more choice, more control, and the ability to partner with an advisor. Schedule a free consultation to explore how an SDBA can help you maximize your 401(k) and build true wealth.