Fidelity to Offer No-Fee Brokerage Accounts to Teenagers

A brand new account helps teens get a foot in the door.

If you've ever regretted waiting too long to start investing, here's your chance to save your teen from a similar fate.

Fidelity Investments announced Tuesday that it's launching a new investment account -- dubbed the Fidelity® Youth Account -- for teens aged 13 to 17 who want to start trading.

Previously, investment firms have typically required investors to be at least 18 years old to open their own brokerage accounts. Which makes sense, as it's the required age to legally enter into agreements on your own. But it meant that teenagers interested in trading have often had to find other ways to get their feet wet.

Accounts include debit cards, stock and fund trading

Advertised as the "first of its kind," the new Fidelity® Youth Account will allow teens to trade most U.S. stocks, ETFs, and Fidelity mutual funds. However, certain types of trades, including cryptocurrency and foreign currency exchange, won't be allowed.

Accounts can be funded through:

• Cash deposits
• Mobile check deposit
• Bank transfers
• A parent's existing Fidelity account

Teens will also have the option to use payment apps to add funds to their account, such as:

• PayPal
• Venmo
• CashApp

Each account will come with a fee-free debit card for cash withdrawals, though there are daily debit card withdrawal limits. The accounts will also be free from subscription or account fees, as well as domestic ATM fees.

There won't be any minimum investment amounts, allowing potential investors to start trading with whatever funds they wish to commit. While there isn't a set investment maximum, Fidelity does withhold the right to restrict deposits.

Unlike a traditional joint or custodial account -- often known as Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA) accounts -- the Fidelity® Youth Account is owned by the teen. This means they make all the decisions about what, when, and how much to trade. They'll also be responsible for any tax implications, including any necessary tax filings.

Parent/guardian must be a Fidelity customer

Of course, the parent or guardian won't be entirely without say in the matter. For one thing, accounts are only available to teens who have a parent/guardian with an existing Fidelity Investments account.

Furthermore, while the teen account holder will activate and manage their own account in the mobile app, the parent must initiate and approve the account opening. The parent/guardian will also have the ability to cancel the debit card or close the account entirely at any time.

You'll also be able to keep an eye on your teen's account, debit card statements, and trade confirmations as an Interested Party with inquiry access. And Fidelity will consider the parent to be the "trusted contact" on the account.

Make sure to explore the Youth Learning Center

Since it's hardly a good idea to allow teens to blindly blunder around the stock market, Fidelity has provided an array of educational resources in their Youth Learning Center. The curated content will include beginner-level primers on the basics of brokerages and trading, which will be available from within the mobile app.

Fidelity also hopes the account will help open a money dialogue between parents and teens; the broker even produced a series of articles around the topic of talking to family about money. This will hopefully help parents start the conversation with their children. Ideally, these conversations -- and the first-hand experience in the market -- will allow teens to make smart investment decisions when they hit legal age.

Once teens turn 18, the account will be eligible to be transitioned into a standard brokerage account wholly under the control of the young account holder. At that time, the parent will lose the ability to monitor or close the account.