Fidelity Launches Youth Account: What You Need To Know

After rolling out a pilot verison in the middle of 2020, Fidelity is launching a Youth Account.

It's “the account where teens 13 to 17 can learn to spend, save and invest,” according to Fidelity. 

Fidelity said it's further democratizing investing, as the new Youth Account is different from custodial accounts that many firms already offer, where parents can make investments on behalf of their children.

WSJ quoted Fidelity’s Jennifer Samalis, senior vice president of customer acquisition and loyalty, that in the case of Fidelity’s new teen offering, the account is fully transferred to the teen, meaning they will have the ability to execute trades.

Related Link: Fidelity Launches Crypto Analytics Platform For Institutional Investors

Fidelity's Youth Account: The Details

• The teen must have a parent or guardian with an existing Fidelity account.
• Teens will own the account and can trade most U.S. stocks, ETFs and Fidelity mutual funds, but are not permitted to trade options.
• Deposits in the account are capped at $30,000 annually.
• The service will not have subscription fees, account fees, minimum balances, debit card domestic ATM fees or commissions for online trading.
• At age 18, the account will be transitioned to a retail brokerage account for free.
• Parents or guardians will be able to have ongoing oversight by monitoring account activity through monthly statements, trade confirmations and by viewing debit card transactions. They can also set up alerts to be notified of trades, transactions, and cash management activity.

Why It's Important

Smart money habits start young. The Washington Post quotes David Dintenfass, Fidelity’s chief marketing officer and head of experience design, as saying: “There is a lack of financial literacy. People who are already Fidelity customers, they want to pass their knowledge on to their children. When we talked to them, they said they would love to have a product to develop better conversations with their children as soon as possible.”

Fidelity said it hopes the Youth Account product will provide younger generations with smarter financial knowledge and decisions for the long-term.

To do this, as described on Fidelity’s website, it also offers “101-level educational content that explains complicated financial concepts in simple ways that anyone can understand” that can be easily accessed through the account either on the mobile app or online.

Kate White is a Benzinga intern.