Please ensure Javascript is enabled for purposes of website accessibility
Vote? Not Yet. Invest? Yes. Fidelity Launches Teen Accounts
gvw_ap_news
By Associated Press
Published 3 years ago on
May 18, 2021

Share

NEW YORK  — Looking to draw in the next generation of investors, Fidelity Investments is launching a new type of account for teenagers to save, spend and invest their money.

The account is for 13- to 17-year-olds, and it will allow them to deposit cash, have a debit card and trade stocks and funds. The teens can make their own trades through a simplified experience on Fidelity’s mobile app, with zero account fees or minimum balances, though the youth account requires a parent or guardian to have their own Fidelity account as well.

Fidelity says it’s the first such account designed for teenagers, but it’s only the latest step in a broad push by the industry to draw more first-time investors into the market. Over the years, brokerages have slashed trading commissions to zero and offered easy-to-use apps in hopes of boosting the percentage of U.S. households that are in the stock market, which has climbed back above half. Holding stocks is one of the best ways to build wealth over the long term, but with that also comes risk.

Younger investors in their 20s and 30s have been taking the market by storm, with trading volumes rising across brokerages. But they sometimes get criticized for trading too quickly and rashly. Earlier this year, a loosely organized band of investors sent GameStop’s stock soaring suddenly, while communicating with each other on Reddit and other social media, in the highest-profile example. Much of the gains evaporated almost as quickly, though, before the stock began yo-yoing.

Fidelity Hopes to Address Lack of Financial Literacy

Fidelity’s youth account will not put limits on how much or how often a teen can trade, though it won’t let them buy or sell cryptocurrencies, stock options or ETFs that use borrowed money to supercharge gains and losses. Fidelity’s hope is that parents and guardians will use the new youth account as a way to have conversations with their kids about how to safely invest for the long term.

“There is a lack of financial literacy,” said David Dintenfass, Fidelity’s chief marketing officer and head of experience design. “People who are already Fidelity customers, they want to pass on their knowledge 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 began a pilot of the youth account program in the middle of 2020. While the sample size is admittedly small, only about a third of the pilot participants actually made trades. More of the teenagers in the pilot used their debit cards, 40%, said Jenn Samalis, senior vice president of customer acquisition and loyalty at Fidelity.

The youth accounts offer educational materials for teenagers about finances, and they will transition into a standard brokerage account after the child turns 18.

Nearly half of the money in the pilot accounts came from the teens themselves. Parents can monitor the teen’s trading and spending activities with the youth account, but they cannot block transactions. That separates it from custodial accounts, which are widely available, where parents and guardians control the account until turning it over to the beneficiary.

“This is positioned as a way for parents to have good conversations with their children,” Dintenfass said of the new youth account. “That, I think, has led to the ideas about responsibility, and that has led to responsible behavior.”

DON'T MISS

Caitlin Clark and Iowa Draw Nearly 5 Million Viewers for Second-Round NCAA Win

DON'T MISS

Canadian School Boards Sue Snapchat, TikTok and Meta for Disrupting Students’ Education

DON'T MISS

California Law Enforcement Agencies Obstruct Transparency Efforts in Use-of-Force Cases

DON'T MISS

No Police Charges for Taylor Swift’s Dad Over Paparazzi Incident in Sydney

DON'T MISS

Biden Administration to Lend $1.5B to Restart Michigan Nuclear Power Plant, a First in the US

DON'T MISS

Tonight’s Biden Fundraiser With Obama and Clinton Already Nets a Record $25 Million

DON'T MISS

Former Sen. Joe Lieberman, Democrats’ VP Pick in 2000, Dead at 82

DON'T MISS

Trump Criticizes Judge and His Daughter After Gag Order in Hush-Money Case

DON'T MISS

Police Had About 90 Seconds to Stop Traffic Before Baltimore Bridge Fell. 6 Workers Are Feared Dead

DON'T MISS

NBC Has Cut Ties With Former RNC Head Ronna McDaniel After Employee Objections, Some on the Air

No data was found

Facebook News Tab Will Soon Be Unavailable as Meta Scales Back News and Political Content

12 hours ago

Stock Market Today: Wall Street Rises to More Records to Close Out Its Latest Winning Month

12 hours ago

A Fresno County First: Kerman Council Passes Amended Gaza Cease-Fire Resolution

12 hours ago

UN Top Court Orders Israel to Open More Land Crossings for Aid into Gaza

12 hours ago

How Involved Is Southern California Consulting Firm in FUSD Executive Dealings?

12 hours ago

Biden’s Fundraiser with Obama and Clinton Nets a Record $25 Million, His Campaign Says

13 hours ago

Fresno Unified’s Self-Protection Racket Is Hurting Our Kids

13 hours ago

Rockin’ Out or Laughing, the Valley Has Its Pick of Weekend Events

14 hours ago

Ex-Correctional Officer at Women’s Prison in California Sentenced for Sexually Abusing Inmates

16 hours ago

Caitlin Clark and Iowa Draw Nearly 5 Million Viewers for Second-Round NCAA Win

17 hours ago

PGA HOPE at Riverside Golf Course Introduces Military Veterans to the Game

PGA HOPE, now underway at Fresno’s Riverside Golf Course, is designed to introduce golf to veterans and active duty military members t...

10 hours ago

PGA HOPE at Fresno's Riverside Golf Course
10 hours ago

PGA HOPE at Riverside Golf Course Introduces Military Veterans to the Game

11 hours ago

Cronenworth’s Big Hit Helps Lift the Padres to a 6-4 Win Over Melvin’s Giants

11 hours ago

Shohei Ohtani Reaches 3 Times in Home Debut as the Dodgers Rout the Cardinals 7-1

12 hours ago

Facebook News Tab Will Soon Be Unavailable as Meta Scales Back News and Political Content

12 hours ago

Stock Market Today: Wall Street Rises to More Records to Close Out Its Latest Winning Month

12 hours ago

A Fresno County First: Kerman Council Passes Amended Gaza Cease-Fire Resolution

12 hours ago

UN Top Court Orders Israel to Open More Land Crossings for Aid into Gaza

12 hours ago

How Involved Is Southern California Consulting Firm in FUSD Executive Dealings?

MENU

CONNECT WITH US

Search

Send this to a friend