Fidelity once tried to offset its image as a stodgy retirement-focused investment giant by allowing customers to integrate their crypto holdings into their Fidelity dashboard. But after Robinhood and WeBull attracted millions of millennial customers, Fidelity is finally trying to woo the next generation of investors in an effort to protect its business from shifting generational tastes.
And since younger investors have signaled that they prefer the gamefied, zero-commission speculation free-for-all to contributing a predetermined percentage of their paychecks to a retirement account, Fidelity has decided to give them what they want. As WSJ reports, in an effort to "open the door to a new generation of investors", Fidelity is launching new credit and debit cards, along with investing and savings accounts, to teenagers aged 13 to 17. Like Robinhood and its other competitors, Fidelity won't charge account fees or commissions for online trading.
Fidelity already operates one of the largest online brokerages in the country and offers $0 trading fees like Charles Schwab, E-Trade and the other big discount brokerages. But competition for the next generation of customers has grown particularly fierce over the past year. And after lagging its competitors on earlier innovations like zero-fee stock trading, the firm is angling to get a jump start on getting more teenagers addicted to day trading. In the case of Fidelity's new offering, a parent must open the account and agree to backstop their child's trading. But after that, the teenager will have complete control over all trades. Parents can sign up for alerts for the child's transactions, and step in to close the account if things get out of hand, but that's not required. And with so many other things to keep track of, including their child's activities on social media, parents can easily lose track of their child's trading.
In a press release, Fidelity also said it would offer even more "financial literacy" tools including "a library of tailored educational content."
Now the next generation can get a leg up on day trading, the new engine of investment gains in the US.
The company insists that its plans for offering brokerage accounts to teenagers predates the current trading frenzy, and that this is in no way an opportunistic crackdown.
Fidelity’s plans for its Youth Account program predate the recent trading frenzy, said David Dintenfass, chief marketing officer and head of experience design.
The firm launched a pilot program last year, drawing nearly 1,000 teen accounts, he said. Those participants tended to trade in larger securities, often no more than once or twice a month, and used accounts to help track their spending habits. In most cases, the accounts provoked conversations about money between the teens and their parents or guardians, he said.
Fidelity has high expectations for the new offering. There are some 27 million teens in the U.S., and several million households already have a Fidelity account.
"There’s been more interest, so we expect demand might be high,” Mr. Dintenfass said.
Fidelity also won't allow teenagers to trade options or trade on margin, meaning it will rein in some of the riskiest behavior associated with the retail trading boom. But as soon as they turn 18, those restrictions will be lifted (or they can simply convince their parents to set up a Robinhood account for them, like hundreds of thousands of American teenagers already have).
While we're sure Fidelity won't ever cave to offering altcoins or other risky products (though they didn't say anything about 3x leveraged ETFs), the adventurous nature of teenagers suggests that they will find some way to ratchet up the risks.