Choosing a brokerage for a 13 to 17 year old usually starts with a comparison of fees and app design. Those matter, but they come second. The first decision is the account type, because it determines who legally owns the money, what your teen is allowed to do, and what happens on the day they become an adult. If you work through those three points first, you can compare providers quickly. This guide covers how to choose a custodial brokerage account for a teenager, and when a different structure fits better.
Rules differ by country and, in some places, by state or province. Where this article names specifics, treat them as the questions to ask, and confirm the answers with the provider and, for tax or legal matters, a qualified professional.
Start with the account type, because it decides who owns the money
Most first accounts for minors fall into one of three structures.
A custodial account. The minor is the legal owner of everything in it. An adult, usually a parent, is the custodian and makes the decisions until the account is handed over. In the United States these are typically set up under UGMA or UTMA rules, and other countries have their own versions. Money put in generally cannot be taken back for the adult’s own use. It has to be used for the child’s benefit.
An account you own, with your teen as a participant. Some parents open a regular brokerage account in their own name and treat part of it as the teen’s. Legally, the money is yours. You keep full control and can change your mind, but your teen has no legal claim to it. You also owe the tax on it.
A teen account with supervised access. Some providers offer accounts where the teen has their own login and the parent approves activity. The label varies, and so does the legal structure underneath. One of these may be a custodial account with a friendly interface, or it may be a parent-owned account. Ask which one it is.
The difference matters for teaching as much as for law. In a custodial account, your teen is learning that the money is really theirs and that decisions have lasting consequences. In a parent-owned account, they are learning to invest alongside you, with a safety net. Both are reasonable. The mistake is picking one while believing you picked the other.
If your teen has a job or other earned income, a custodial retirement account may also be an option in some countries. It has its own eligibility rules, so ask a provider or tax adviser before assuming it applies.
What a custodial account means once your teen turns of legal age
At the age of majority for that account, the custodian’s authority ends and the assets belong to the young adult outright. They can keep investing, sell everything, or spend it all. There is no requirement that it go to college, and you cannot veto the decision.
The age is not the same everywhere. In the United States, it varies by state and by account type, and some states set it above 18. In other countries it differs again. Ask the provider for the exact age that applies to your location, and do not rely on the age at which your teen can vote or sign a lease.
Three practical consequences follow:
- The account does not always carry on automatically. Some providers convert it to a regular individual account for the young adult. Others require the new owner to open one and transfer the holdings. Ask which happens and whether there is a fee or a gap.
- Tax treatment can change. Investment income in a minor’s name is sometimes taxed under special rules, and the account’s size can affect other things, such as how a family is assessed for financial aid. A tax professional can tell you how this applies to you.
- Your teen’s habits at 17 become the habits of the person who owns the money at 18 or 21. Talking about the handover while you still have a say is the most useful lesson the account offers.
The five questions that matter more than the brand name
Ask these of any provider you are considering. If the answers are hard to find on the website, ask support in writing and keep the reply.
- Who is the legal owner, and at what exact age does ownership transfer? You want a specific age and a specific account type, not “when your child is an adult.”
- What can my teen see and do on their own login, if they have one? Options range from no access at all to view-only to the ability to submit trade requests.
- Who approves trades? Find out whether the custodian must approve each one, or whether your teen can trade freely once the account is funded.
- What does it cost in total? Include account fees, trading costs, fund expenses, inactivity fees, and fees for closing the account or moving it elsewhere.
- What happens at transfer? Ask whether holdings stay in place, whether the account is converted or closed, and whether any fee applies.
A provider that answers all five clearly in its own documentation is usually easier to live with than one with a better-looking app and vague answers.
Fees and minimums: where a small balance gets quietly eaten
A teen’s first account is often small, and a small balance is where fees do the most damage. A flat fee that is trivial on a large portfolio can take a visible share of a few hundred dollars.
Here is a hypothetical to show the arithmetic, not a real provider’s price. A flat fee of $3 a month on a $300 balance is $36 a year, which is 12 percent of the balance before any investment gain. An investment would have to grow by more than that just to break even.
When you read a fee schedule, look for:
- Monthly or annual account fees, and whether they are waived above a certain balance.
- Minimums to open the account or to buy a particular fund. A fund with a high minimum may be out of reach for a small first deposit.
- Whether fractional shares are available, which lets a small amount buy part of an expensive share or fund.
- Fund expense ratios. These are charged inside the fund and never show up as a line on a statement, but they reduce returns every year.
- Uninvested cash. Find out whether cash sitting in the account earns anything, since new deposits often wait there until your teen buys something.
- Transfer-out and closing fees. These apply if you later move the account, or if the account has to be moved at the age of majority.
Write the numbers down. A fee you can state in one sentence is a fee you will notice if it changes.
What your teen can actually see and do inside the app
Access is the part of the account that shapes what your teen learns day to day. Think of it as a ladder with four levels:
- No access. The parent runs everything and shows the teen the results. This teaches little about decisions.
- View-only. Your teen can see holdings, balances, and history, and learns how prices move.
- Request and approve. Your teen proposes a trade with a reason, and you approve it. This teaches the most for most teens, because it forces them to put the idea into words.
- Independent trading. Your teen places trades directly. This builds responsibility quickly and mistakes just as fast.
Look at the app itself before you open anything. Some apps make trading feel like a game, with prompts, animations, and constant alerts that encourage frequent activity. Others present information more quietly. Whether a design suits your teen is a judgment you can make by looking at screens, demos, or the provider’s help pages. Check whether you can turn notifications off, and whether you as the custodian can see everything your teen sees.
Which investments suit a first account, and which to switch off
For most first accounts, broad diversified funds, such as a low-cost index fund or ETF that holds many companies, give a teen exposure to the market without requiring them to pick winners. Their value still moves up and down, which is the lesson. For a deeper walk through what to teach at each age, see how to teach kids about investing at every age.
If you want your teen to own a single company they are excited about, you can set aside a small, agreed share of the account for it. Ask them to write down why they picked it and what would make them sell. Reviewing that note a year later teaches more than the price chart does.
If the provider allows them, consider switching off or avoiding:
- Margin or borrowed money, which can create losses larger than the amount invested.
- Options trading, which is complex and where a whole position can expire worthless.
- Leveraged or inverse funds, which are built for short-term trading and behave in ways that surprise people who hold them for long.
- Cryptocurrency or other highly volatile assets, if offered, until your teen can explain why they would hold them.
Many custodial accounts restrict some of these by default. Ask the provider what is blocked and what you can restrict yourself.
Is your teen ready? A quick check before you open anything
An investing account suits a teen who already handles ordinary money reasonably well. If you are unsure, the signs in when to open a youth bank account apply here too. A quick check:
- Can your teen explain the difference between saving and investing in their own words?
- Do they understand that a falling price is a paper loss until something is sold?
- Do they already save toward something, such as a purchase, without being reminded?
- Can they leave money untouched for a year or more without wanting to spend it?
- Are they interested in how companies make money, or only in making money quickly?
If most answers are no, a savings account and a few conversations will serve your teen better for now. If most are yes, you are ready to compare providers.
A side by side worksheet to compare any two providers and set the ground rules with your teen
Copy this table and fill it in for each provider from their own documents and support replies.
Question Provider A Provider B Account type and legal owner Exact age of transfer for my location What happens at transfer (converted, closed, moved) Teen access level (none, view, request, independent) Who approves trades Monthly or annual account fee Trading costs Minimum to open and to invest Fractional shares available Fund expense ratios for the funds we would use Transfer-out or closing fee Investments available, and which I can block Notifications I can turn off
Once you have picked a provider, sit down with your teen and agree on ground rules in writing. One page is enough:
- Who decides what to buy, and how a trade gets approved.
- How much goes in and when, such as a fixed amount from birthday money or from a part-time job.
- What the account is for, such as long-term growth, and what it is not for, such as quick trades.
- How often you review it together, for example once a month, with the previous month’s notes.
- What happens at the transfer age. Say plainly that the money becomes theirs, and discuss what you hope they will do with it.
Put the date for your first review in the calendar the day you open the account. That review, with your teen explaining what they own and why, is the part of the account that does the teaching.