What characterizes a "self-directed" account?

A self-directed account is characterized as an investment account where the investor takes full control of their investment decisions without relying on the guidance or advice of a broker. This means that the individual has the freedom to choose which securities to buy or sell, determine their investment strategy, and manage their portfolio directly. Self-directed accounts are often favored by more experienced investors who are comfortable with making their own financial decisions and who prefer to engage with the market actively.

The other options do not accurately define a self-directed account. Accounts that automatically reinvest earnings or those that involve frequent professional management are not self-directed because they rely on automatic processes or the guidance of financial professionals. Additionally, self-directed accounts are typically available to individual investors, not restricted to large institutional investors, which further helps distinguish them from other account types.