Teen Investing Accounts Compared:
Fidelity, Schwab, and the Traditional Custodial Route

The case for opening a brokerage account for your teenager has never been stronger. Research from Charles Schwab — based on a survey of 1,000 teens and 1,000 parents — found that 70% of teenagers ages 13 to 17 are very or extremely interested in investing — and 87% of those teens want their parents involved in the process. And NPR reported this week that even in a tighter summer job market, a first paycheck remains one of the most powerful financial teaching moments a family can create for a child.

The question most parents get stuck on is not whether to open an account — it is which one. In 2026 there are more options than ever, and they differ from each other in ways that matter: who legally owns the account, how much the parent can do in it, what happens when the teen turns 18, and how investment gains are taxed. Getting this right from the start saves real headaches later.

This post compares the two major teen-specific brokerage accounts — the Fidelity Youth Account and the Schwab Teen Investor Account — alongside the traditional custodial (UTMA/UGMA) brokerage account offered at virtually every major brokerage. The investment capabilities of all three are similar enough that the real decision comes down to ownership, control, and what you want the account to look like once your teen becomes an adult.

Two Categories of Teen Accounts

Before comparing specific institutions, it helps to understand the two structural categories these accounts fall into.

Teen-specific branded accounts (Fidelity Youth, Schwab Teen Investor) are purpose-built for 13-to-17-year-olds. They feature education resources, age-appropriate interfaces, and built-in guardrails that restrict access to higher-risk products like margin, options, and futures. They are designed to be used by the teen with a parent involved, and they convert automatically to standard adult brokerage accounts when the teen turns 18.

Traditional custodial accounts (UTMA/UGMA) are the original approach to investing for minors and have been available at every major brokerage for decades. The parent opens the account, controls all investment decisions, and the account transfers to the child at the age of majority — typically 18 or 21 depending on state law. There is no minimum age for the child, and contributions can come from anyone. Fidelity has published a detailed guide on UTMA/UGMA accounts that is worth reading before you open one.

Fidelity Youth Account vs. Schwab Teen Investor: The Key Difference

Fidelity launched its Youth Account over five years ago, and Schwab responded in March 2026 with its own teen brokerage account. Both are excellent. Both are free. But they make a fundamentally different assumption about who should control the account day-to-day — and that difference matters more than any feature comparison.

Ownership and Control

The Fidelity Youth Account is owned entirely by the teen. The teen is the account holder and the sole investment decision-maker. The parent or guardian is listed as an “Interested Party,” which gives them view-only access: they can see statements, trade confirmations, and debit card activity, but they cannot place trades, move money, or withdraw funds. The account is the teen’s to manage.

The Schwab Teen Investor Account is a joint brokerage account. The teen and parent are co-owners with equal capability: both can place trades, fund the account, and move money. The parent has full transactional access, not just view access. This is a meaningful difference if you want to actively manage the account alongside your teen, or if you want the safety net of being able to step in.

The choice between Fidelity and Schwab is really a question about philosophy: do you want to give your teen the wheel, or do you want your hands on it too?

Educational Incentives

Schwab currently offers a notable educational incentive: teens who complete an online “Quick Start to Stock Investing” course within 45 days of opening the account receive $50 in fractional shares split across the top five S&P 500 stocks. That is a meaningful first position — and the course itself covers the foundational concepts behind what the teen is doing with their money. Fidelity offers educational resources but does not currently have an equivalent cash incentive for course completion.

What Happens at Age 18

For the Fidelity Youth Account, when the teen turns 18 the account converts to a standard Fidelity brokerage account with expanded features available to adults, including options trading. Ownership stays entirely with the young adult.

For the Schwab Teen Investor Account, the joint structure continues until both account holders agree to separate it or convert it. There is no automatic forced transition at 18 the way custodial state-law rules operate. The family decides together how to handle the account going forward. In practice, this means a parent can stay involved in the child’s investment account well beyond the point where a UTMA/UGMA account would have transferred fully to the child.

Side-by-Side: Fidelity Youth vs. Schwab Teen Investor

Traditional Custodial Accounts (UTMA/UGMA): The Parent-Controlled Path

If you want full control over the account until your child reaches adulthood — meaning you make every investment decision, you can withdraw funds for the child’s benefit, and the teen cannot transact without you — a traditional custodial account under UTMA (Uniform Transfers to Minors Act) or UGMA (Uniform Gifts to Minors Act) is the right structure.

Virtually every major brokerage offers one. The investment capabilities are identical to what you get in the teen-specific accounts — stocks, ETFs, mutual funds, fractional shares. What differs is control and the legal framework around when and how the account transfers to the child. The trade-off: custodial accounts give the parent the wheel, but they lack the age-appropriate education resources and teen-friendly interface built into the Fidelity and Schwab teen accounts.

How Custodial Accounts Work

In a custodial account, the parent (or grandparent, or other adult) serves as the custodian and manages the account on behalf of the minor. The account is considered the child’s asset — which has financial aid implications discussed below — but the custodian controls all trading and withdrawal decisions. Contributions are irrevocable gifts: once money goes in, it legally belongs to the child. You cannot move it back to your own accounts.

When the child reaches the age of majority defined by state law — typically 18 in most states, 21 in others, and as high as 25 in a small number of states under specific UTMA provisions — the custodian is required to transfer full control of the account to the child. The parent cannot choose to delay this. The child receives the account, the full balance, and complete discretion over what to do with it.

This is the feature that gives some parents pause. A custodial account is an excellent wealth-building tool for a child, but the transfer at the age of majority is not optional. If your child is financially responsible at 18, this is a non-issue. If you are concerned about a large sum transferring to an 18-year-old unconditionally, the teen-specific joint accounts offered by Schwab — where the structure can be extended past 18 by mutual agreement — may be a better fit.

Major Brokerages That Offer Custodial Accounts

The practical differences between these custodial accounts are relatively small for most families. If you already bank or invest at one of these firms, opening a custodial account at the same institution is the simplest path — you manage everything from one login and transfers between accounts are immediate.

The Ownership Question: Which Structure Fits Your Family?

After reviewing all three structures, the decision usually comes down to one question: how much control do you want to retain, and for how long?

Tax Considerations: The Kiddie Tax Applies to All Three

A common misconception is that teen-specific accounts are taxed differently than custodial accounts. They are not — the same kiddie tax rules apply across all three structures.

For 2026, the first $1,350 in unearned income (dividends, capital gains) in any account held by a minor under 19 (or under 24 if a full-time student) is exempt from federal income tax. The next $1,350 is taxed at the child’s own rate, which is typically very low. Any unearned income above $2,700 is taxed at the parent’s marginal tax rate — that is the kiddie tax. Fidelity has published a clear explanation of how the kiddie tax works that is worth reading before you start making large contributions.

For most families starting with modest contributions, the kiddie tax is not a significant concern. A portfolio earning under $2,700 annually in dividends and realized gains will not trigger the parent’s rate. But if you are making large lump-sum gifts into a custodial account, this threshold is worth keeping in mind.

One additional note: custodial accounts are counted as the child’s asset on the FAFSA for college financial aid purposes, at a rate of up to 20% of the account value. A 529 plan owned by a parent is assessed at a lower rate (5.64%). If college financial aid is a significant consideration, factor this into your account selection decision.

Where ELI Goes Further

Most financial advisors suggest directing 15% of household income toward retirement investing, prioritizing Roth IRAs and good growth stock mutual funds. It is sound advice for adults. What it does not address is the parallel track for your children — the custodial Roth IRA for a teen with earned income, the teen brokerage account for hands-on education, or the custodial account for long-term wealth building funded by family gifts — and the extended timeline they have to grow their wealth.

The Bottom Line

The investment capabilities across Fidelity Youth, Schwab Teen Investor, and a traditional custodial account are broadly similar. All are free. All give access to stocks, ETFs, and mutual funds. All are appropriate vehicles for building long-term wealth for a young person.

The real decision is about ownership and control:

• If you want the teen to own and drive the account with you watching: Fidelity Youth
• If you want to co-own and co-manage with your teen: Schwab Teen Investor
• If you want full parental control until the age of majority, or your child is under 13: UTMA/UGMA custodial account at whichever brokerage you already use

The most important decision is not which account you pick — it is that you open one. The books that have shaped how our family thinks about this, and that we use to give kids a concrete framework for why investing matters, are collected in our book reviews. A readable book your teenager actually finishes often does more to build lasting financial habits than any account-structure decision.

References & Disclosures

1. Charles Schwab. Introducing the Schwab Teen Investor Account (March 26, 2026). Read the release →
2. Fidelity. Fidelity Youth Account overview and FAQs. Read the overview →
3. Fidelity. UGMA & UTMA Custodial Accounts guide. Read the guide →
4. Fidelity. Understanding the Kiddie Tax. Read the explainer →
5. The College Investor. Teen Brokerages vs. UGMA/UTMA: The Ownership Question Most Parents Get Wrong. Read the article →
6. NPR. Despite a competitive market, finding a summer job is highly beneficial for teens (June 6, 2026). Read the article →
7. CNBC. Trump Accounts don’t ‘rule’ child investments, advisor says (June 5, 2026). Read the article →
8. Early Life Investments is not affiliated with, endorsed by, or sponsored by Charles Schwab, Fidelity, Vanguard, E*TRADE, Merrill Edge, Amazon, or any of their affiliated entities. Account features, fees, and incentives are accurate as of June 2026 and subject to change — confirm current terms with the provider before opening an account.