Fidelity Investments Inc. plans to open the door to a new generation of investors who will be able to trade stocks before they even learn to drive or go to college.
Fidelity announced Tuesday that it will issue debit cards and offer investment and savings accounts to young people aged 13 to 17 whose parents or guardians also invest in the business. The accounts will allow teens to buy and sell US stocks, Fidelity mutual funds, and many exchange traded funds.
Similar to how it works for adults, the service will not charge account fees or commissions for online trading.
The offering marks Fidelity’s latest move to position itself as a lifelong financial advisor to millions of Americans. Once known for the mutual funds it sold through other brokers, the company has spent the past decades establishing direct relationships with individual investors. Today, Fidelity operates one of the world’s largest brokerage firms and the largest manager of 401 (k) plans and other employer-sponsored retirement accounts.
Fidelity and other large wealth managers have reduced their stock trading commissions to zero in recent years. Eliminating these costs had set the stage for the industry banner of 2020, when many individual investors rediscovered the allure of stock trading. Many brokerage and wealth management firms reported renewed enthusiasm and new accounts, especially among younger participants.
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Loyalty is one of them. In the first three months of 2021, the company added 1.6 million investor accounts aged 35 or under, more than triple the number of new accounts in this demographic a year earlier, Fidelity said. .
Yet the decision to make it easier for Americans to invest has been the subject of controversy over the past year.
Lawmakers have criticized some online brokers for turning the previously complex process of trading stocks into a swipe on a screen and encouraging investors to make riskier trades.
Brokers, including Fidelity, do not allow investors to open accounts until they are old enough to enter into a legal contract. This exact age differs by state. Many companies offer custody accounts where parents can invest on behalf of their children.
In the case of Fidelity’s new teen offering, the parent will enter into the brokerage contract with Fidelity. Once opened, the account is fully transferred to the teenager, said Jennifer Samalis, senior vice president of customer acquisition and retention, which means the ability to execute transactions.
“ There has been more interest, so we expect demand to be high ”
But parents retain the right to close the account at any time and can sign up to receive alerts on the child’s transactions, a Fidelity spokesperson said.
Fidelity’s plans for its youth account program predate the recent commercial frenzy, said David Dintenfass, chief marketing officer and head of experience design. The company launched a pilot program last year, attracting nearly 1,000 teenage accounts, he said. These participants tended to trade larger securities, often no more than once or twice a month, and used accounts to track their spending habits. In most cases, the accounts sparked conversations about money between teens and their parents or guardians, he said.
Fidelity has high expectations for the new offering. There are approximately 27 million teens in the United States, and several million households already have Fidelity accounts.
“There has been more interest, so we expect demand to be high,” Dintenfass said.
Young account holders will not be allowed to trade options or borrow on margin to amplify their bets, he said. Deposits are capped at $ 30,000, Mr. Dintenfass said.
Fidelity’s standard brokerage, retirement and cash management accounts are available to investors 18 years of age or older.
Write to Justin Baer at [email protected]
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