A Fidelity Investments location in New York.
Scott Mlyn | CNBC
Fidelity Investments lowers the barrier to entry for a new cohort: teenagers.
The investment firm launches the Fidelity Youth Account, Here, 13 to 17 year olds receive an investment and savings account. The toll-free account allows teens to buy and sell stocks, ETFs, and fidelity mutual funds.
The accounts that Fidelity calls the first of their kind in the industry are only available to teenagers with a parent who also has a Fidelity account. Fidelity portrays the company as an educational opportunity where parents can monitor their child’s activities.
Younger investors flocked to the stock market last year as the Covid-19 pandemic created a unique climate for retail investors. Millions of new customers traded the epic market comeback of the coronavirus recession in 2020, opting for an epic short squeeze in GameStop in January.
Although the onslaught of new young investors has not been without its negative effects, critics argue. The popularity of the stock trading app Robinood, which requires investors to be at least 18 years old to use its services, has been criticized for helping to create bubbles in so-called meme stocks like GameStop as well as in cryptocurrencies. Robinhood isn’t the only broker going after younger generations, however.
Of the 4.1 million new accounts Fidelity added in the first quarter of 2021, 1.6 million were opened by retail investors age 35 and under. This corresponds to an increase of more than 222% compared to the previous year.
Fidelity’s new youth report, published for the first time by the Wall Street Journaloffers customers a debit card with no minimum investment when opening an account.
“Our goal for the Fidelity Youth Account is to encourage young Americans to learn through action and have meaningful family conversations on financial topics,” said Jennifer Samalis, senior vice president of acquisitions and loyalty for Fidelity Investments, in a press release.
When the teenager turns 18, the account will switch to a standard brokerage account.
As of the first quarter, Fidelity has 83.4 million accounts and $ 10.4 trillion in assets under management.
Become a smarter investor with CNBC Pro.
Get stock picks, analyst calls, exclusive interviews and access to CNBC TV.
Sign in to start a free trial today