One overlooked advantage of a brokerage window is implementation flexibility. For investors with substantial balances, the real question is not just whether an SDBA exists, but whether the available investment universe is broad enough to support a disciplined portfolio process. Access to ETFs and other outside-the-menu holdings can help close gaps left by a narrow core lineup, but it also shifts more responsibility to the participant and advisor to define clear roles for each holding.
That makes policy and structure matter as much as selection. A workplace plan may offer a brokerage window while still imposing trading limits, cash drag, or procedural friction. Those constraints can affect rebalancing cadence, asset-location decisions, and how quickly a portfolio can be adjusted when household circumstances change. For long-term investors, the practical value of an SDBA often depends on whether the account can be managed consistently rather than opportunistically.
Another key issue is coordination. In-plan assets should not be treated as a separate silo if the same household also holds IRAs and taxable accounts. The planning benefit of an SDBA is strongest when it is used to align risk exposure, diversification, and contribution flows across the full retirement picture. Without that coordination, added choice can create overlap instead of better portfolio design.
The takeaway for ETF-focused readers is simple: a brokerage window is less about the novelty of access and more about whether it supports a durable allocation framework. Investors should care about the accountโs rules, investment flexibility, and ability to fit into an overall strategy before assuming it meaningfully improves outcomes.
Why SelfโDirected Brokerage Accounts Matter More Than Ever for Advisors
For decades, financial advisors have built strong relationships by helping clients manage IRAs, taxable accounts, and rollover assets after they leave an employer. Meanwhile, a significant, often the largest pool, of client wealth has quietly remained out of reach: assets inside workplace retirement plans.
That has begun to change.
Across thousands of 401(k), 403(b), and 457 plans, a feature exists that many advisors and most participants are still unaware of: the SelfโDirected Brokerage Account, commonly known as an SDBA or โbrokerage window.โ
For advisors looking to grow AUM, deepen client relationships, and deliver more holistic retirement advice, SDBAs represent one of the most underutilized opportunities in the market today.
What Is a SelfโDirected Brokerage Account?
A SelfโDirected Brokerage Account is an optional feature embedded within certain workplace retirement plans. It allows participants to invest their retirement assets beyond the planโs core investment menu.
Instead of being limited to a small lineup of targetโdate funds or curated mutual funds, participants with access to an SDBA may invest in a broad range of securities such as mutual funds, ETFs, and professionally managed strategies that are not otherwise available in the planโs default lineup.
Crucially, SDBA assets remain inside the employerโsponsored plan. The assets retain their taxโadvantaged status and do not require a rollover, distribution, or employment change.
How Common Are SDBAs in 401(k) Plans?
SDBAs are far more common than many advisors realize.
According to research cited by the ERISA Advisory Council, brokerage windows are offered in roughly oneโquarter of all defined contribution plans and in nearly half of large plans with more than 5,000 participants.
Despite that broad availability, participant usage remains low. Testimony collected by the Council shows that approximately 2 to 4 percent of plan assets are invested through SDBAs, with usage concentrated among higherโbalance and more engaged participants.
The gap is not access. The gap is awareness and guidance.
What the Data Shows About SDBA Participants
Recent data from Charles Schwabโs SelfโDirected Brokerage Account Indicators Report for quarter ending 12/31/2025 highlights the profile of typical SDBA users:
- Average SDBA account balances exceeded $380,000 in 2025
- Advised SDBA accounts averaged more than $580,000, compared to roughly $334,000 for nonโadvised accounts
- Investors using professional advice held nearly twice as many positions and exhibited more diversified allocations
These figures reinforce two critical points for advisors. First, SDBAs attract higherโvalue retirement assets. Second, professional guidance plays an important role in how participants use these accounts.
Why SDBAs Matter to Financial Advisors
Access Workplace Retirement Assets While Clients Are Still Working
SelfโDirected Brokerage Accounts allow advisors to extend their advisory services into 401(k), 403(b), and 457 plans without waiting for a rollover event. Advisors can help clients manage significant retirement assets during their peak earning years.
Deliver More Comprehensive Retirement Advice
Clients rarely think of their retirement finances in account silos. Advisors who only manage assets outside workplace plans risk leaving major allocation and risk decisions uncoordinated. SDBAs allow advisors to incorporate inโplan assets into a unified retirement strategy.
Differentiate Through Expertise, Not Products
Most participants receive limited support inside their workplace plans. Advisors who understand SDBAs can offer guidance that few competitors actively provide, positioning themselves as specialists in workplace retirement planning.
Grow AUM Without Competing for Rollovers
Rather than waiting for uncertain timing around job changes, SDBAs allow advisors to grow assets under management while strengthening longโterm client relationships.
Why Participants Benefit from Professional Management Inside Their 401(k)
Modern workplace plans are built for scale, compliance, and simplicity. They are not designed for personalization.
For participants with larger balances, evolving goals, or specific risk considerations, default investment menus may fall short. Professional management inside an SDBA can offer:
- Customized money management aligned with a householdโs full financial picture
- Ongoing monitoring and portfolio discipline
- Riskโaware strategies beyond static targetโdate funds
- Access to professional management while keeping assets inโplan
SDBAs help bridge the gap between workplace retirement plans and professional portfolio management.
Where Potomac Fits In
At Potomac, we believe advisors should be able to deliver a consistent investment approach across their clientsโ entire retirement picture, including assets held inside workplace retirement plans.
Potomacโs SDBA solutions allow advisors to implement professionally managed strategies within brokerage windows offered by eligible 401(k), 403(b), and 457 plans, helping maintain alignment across held-away assets and external accounts.
Potomac also supports advisors through a compensation structure that does not require direct fee deductions from clientsโ workplace retirement accounts, reinforcing alignment, simplicity, and transparency for both advisors and participants.
Our focus is helping advisors extend professional management to workplace retirement plan assets while participants are still working in a compliant, scalable, and clientโcentric way.
Disclosures
Potomac Fund Management (โPotomacโ) is an SECโregistered investment adviser located in Bethesda, Maryland. Registration does not imply a certain level of skill or training, nor is it an endorsement by the SEC. This material is for general informational purposes only and does not constitute investment advice, tax advice, or a recommendation regarding any specific product, security, strategy, or investment decision. Readers should not assume that any discussion or information applies to their individual circumstances. This communication does not constitute an offer to buy or sell any security or a solicitation to provide personalized investment advice for compensation. Nothing herein should be construed as individualized or tailored advice delivered over the internet.
Opinions expressed are current as of the date of publication and may change without notice. Information obtained from thirdโparty sources is believed to be reliable, but Potomac does not guarantee its accuracy or completeness and is not responsible for any thirdโparty content referenced or linked in this material.
Investing involves risk, including the possible loss of principal. Past performance does not guarantee future results. For additional important disclosures, please visit potomac.com/disclosures.
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