Stay in Touch
Subscribe to our exclusive mailing list and receive great stories from the Greatest Gift team
Oops! Something went wrong while submitting the form
Starting to invest for your child's future can seem daunting.
If you're looking to give your kids a head start, a UTMA account could be just what you need.
With so many options out there, it can be tough to choose the right one.
That's where we come in!
Learn more about Greatest Gift, the platform that makes it easy for loved ones to give money towards a child's savings and investments.
From household names like Fidelity and Vanguard to emerging stars like Acorns and Ally Invest, we've got you covered.
Sit back, grab a cup of coffee, and let's dive in!
Parents looking to invest for their kids with a reputable firm that provides a best-in-class experience all around.
Fidelity’s online robust platform provides a wide range of investment choices and fee-free structure. They have a strong reputation as a consistent industry leader that provides a consistent investment experience.
Fidelity is a top brokerage firm for UTMA accounts.
It brings a combination of breadth, depth, and stability to the UTMA account space.
With a solid reputation, welcoming fee structure, wide range of investment options, and easy to use website and app, Fidelity is the well-rounded choice.
This family-owned, privately held company has been thriving for over 75 years. Fidelity provides a great starting point for new investors looking to invest for the long run. It also has options for more experienced investors and investors looking to perform more complex trades.
The firm's well-designed online platform and mobile app ensure easy account management and access to an impressive range of investment options.
It consistently invests in developing new products and features to stay a leader in the industry.
One example of this is the Fidelity Youth account, an account that lets teens invest on their own, with parental supervision.
Fidelity's wide range of investment options, commitment to education, and strong reputation make it a solid choice for parents seeking to open a custodial account.
Experienced investors looking for a user-friendly online and in-branch experience.
Schwab's UTMA accounts provide a standard investment experience with low fees. The company has been around for more than 50 years and is publicly traded, providing an extra layer of transparency.
The publicly traded Charles Schwab is an excellent option for investors that prefer an in-person experience.
Being publicly traded means added transparency, instilling a greater sense of trust.
With branches spread nationwide, accessibility is a significant perk.
Schwab provides a blend of an easy-to-use platform, robust customer support, and a wide array of investment options.
However, it's worth noting that their managed portfolios come with a higher minimum investment, making it difficult as an option for UTMA accounts that typically have smaller balances.
With a well-earned reputation, Charles Schwab is a solid pick for an UTMA account, especially for parents confident enough to self-trade.
Parents looking to buy and hold investments of low-cost index funds.
Vanguard is renowned for its index funds, mutual funds, and low-cost investment options. Vanguard’s investor-owned model makes it a trusted partner to investors.
Vanguard brings a unique shareholder-owned model to the UTMA account space.
This firm is owned by its fund shareholders, which aligns their interests with those of their investors.
Vanguard is a cherished brand, not only for its dedication to low expense ratios but also for its unwavering commitment to its mission and ownership structure.
Vanguard seems especially suitable for investors who prefer to invest in funds and ETFs, rather than picking individual stocks, making it a user-friendly option for those new to investing.
The brand encourages a passive style of investing, as opposed to active trading. This approach promotes long-term financial growth.
This could be particularly advantageous for parents aiming to grow a steady financial nest egg for their children.
However, there are a few points to consider.
Vanguard's mutual funds come with higher minimums, which may make it less appealing to many parents considering an UTMA account.
There are also certain account management fees to be mindful of. Furthermore, their managed portfolios also come with higher minimums and fees compared to other options.
Nonetheless, Vanguard's investor-friendly approach and emphasis on low costs make it an attractive option.
Bank of America customers looking for an integrated banking and investing experience.
Merrill, owned by Bank of America, one of the four largest banks in the US, offers a seamless integration of banking and investment services. This makes it an excellent choice if you are one of Bank of America’s 68 million customers.
Merrill stands out in the UTMA account arena with its integration into the larger Bank of America ecosystem.
Ownership by one of the largest banks in the US lends credibility and confidence in Merrill's services.
This boost of confidence is much needed following Merrill Lynch’s bad management in the 2008 subprime mortgage crisis, that led to the firm’s sale to BoA.
The integration with BoA can be particularly handy for BoA’s 68 million consumer and small business customers.
This integration is epitomized in Merrill's online platform, which syncs smoothly with BoA's own online services.
Merrill offers actively managed portfolios with a relatively low minimum of $1,000. This options comes with a small 0.45% management fee, providing a more hands-off approach for parents looking for expert guidance in managing their UTMA account.
Overall, Merrill presents a comprehensive solution for parents, especially those who are existing BoA customers, looking for an integrated banking and investing experience with the added advantage of low minimums for managed portfolios.
Busy families looking for an effortless way to integrate investing into their everyday transactions.
Acorns offers a unique "round-up" funding method and an automatic investment feature that makes investing regular, accessible, and affordable.
It offers a tech-forward approach to investing, making it super easy for busy parents to put away money for their child's future.
Acorns brings a unique startup spirit to the UTMA space.
While Acorns may lack the long history and scale of some competitors, they bring a fresh approach to investing and a commitment to financial literacy for kids.
Acorns Early, Acorns’ UTMA product, launched in 2020, and more recently the company acquired family tech startup GoHenry.
With assets under management around $6 billion, Acorns is smaller than other companies reviewed here.
However, they've managed to carve out a niche with their commitment to making investing simple and affordable.
Their unique method of funding accounts through "round-ups" of credit or debit charges helps parents make investing a regular part of their life with no added effort. This feature, combined with robo-investing in ETF portfolios, makes Acorns an excellent choice for parents who want a hands-off investment experience.
Their account fees are on the high side, with UTMA accounts costing $9 per month. Depending on the account balance, this fee could represent a high expense ratio.
For example, if you have an account balance of $1,000, the $108 annual fee would represent an expense ratio of 10.8%, which is extremely high compared to most other investment platforms.
However, the flat fee allows for multiple Acorns Early accounts. If you have multiple kids, this reduces the expense per account.
Overall Acorns remains a player to watch in the investment industry, bringing innovative approaches to a traditionally dull sector.
Tech-savvy parents seeking a user-friendly online banking and investing experience.
Ally's robust, intuitive platform and competitively-priced managed portfolios make it a compelling choice for parents seeking an effortless way to invest for their children's future. Moreover, its high-interest savings accounts set it apart as an all-around online financial solution.
Ally Invest brings a modern, digital-first approach to UTMA accounts.
Despite having a century-long history starting with General Motors, Ally has evolved and adapted to the changing financial landscape, transitioning from automotive financing into a fully online banking and investment platform. This transformation highlights the company's commitment to innovation and customer service.
Ally's user-friendly technology makes navigating investment options a breeze for parents, whether they prefer self-directed trading or managed portfolios. Their online savings accounts are definitely a bonus, with one of the highest interest rates and a seamless integration between banking and investing.
The managed portfolios are cost-effective and offer a degree of automation that is particularly beneficial for those seeking a hands-off investment experience.
However, it's important to note that Ally is an online-only option with no physical branches, which could be a drawback for those who prefer in-person customer service. But with round-the-clock online support, most needs are met virtually.
Despite being a newer player in the UTMA account space, Ally's progressive approach, coupled with its competitive features, make it a compelling choice for an UTMA account.
Parents who prefer an easy-to-navigate online platform backed by a financial giant.
E*TRADE, as a pioneer of online trading and a subsidiary of Morgan Stanley, brings a unique blend of innovation and reliability. Its manageable fees and minimums for managed portfolios make it a compelling choice for parents seeking a hands-off investment strategy.
ETRADE has a unique mix of innovation and stability in the UTMA account space.
It has a deep-rooted online trading expertise and backing of a leading financial institution, Morgan Stanley.
This combination of innovation and stability makes ETRADE a reliable platform for parents seeking a safe and convenient way to invest in their child's future.
The user-friendly interface of the platform simplifies the process of setting up and managing a UTMA account, making it a suitable choice for parents with different levels of investment expertise.
The managed portfolios have a relatively low minimum and a competitive management fee. However, the lack of a strong emphasis on children's financial literacy is a slight drawback.
In summary, E*TRADE is a dependable choice for parents seeking a user-friendly online platform for their child's UTMA account, backed by a reputable financial institution.
While M1 Finance offers custodial accounts, the firm requires an M1 Plus subscription, which costs $10 per month.
Given the objective of our review to find affordable and accessible UTMA account options, we decided not to include M1 in our full review due to this relatively high subscription fee.
TD Ameritrade is currently being integrated into Charles Schwab, a process that will transition all TD Ameritrade accounts to Charles Schwab accounts.
Because of this, we have chosen not to separately review TD Ameritrade.
Since we've already provided a comprehensive review of Charles Schwab's services, we recommend interested readers refer back to that review for a thorough understanding of the offerings.
Betterment, known for its robo-advising services, unfortunately, does not offer UTMA accounts.
Hence, despite its popularity and high-quality services, we couldn't review Betterment for this particular review focusing on UTMA accounts.
Entrusting your child's financial future to a brokerage is a big decision.
Let's look at some factors to consider when choosing a brokerage for your UTMA account:
The reputation and trustworthiness of the brokerage you choose is paramount.
You need to be confident that the company you choose has a solid track record, high levels of customer service, and robust security measures.
Consider the benefits of choosing a public company or a longstanding financial institution.
These entities often come with a reputation built over many years, and their public status requires them to disclose financial information regularly, allowing you to gauge their stability.
Be confident that the company you choose has a solid track record
On the other hand, some parents might lean towards a tech-driven startup for their innovative approach and user-friendly platforms.
However, remember that startups can be more volatile and less proven.
An important consideration is whether the brokerage is a member of the Securities Investor Protection Corporation (SIPC).
The SIPC provides limited protection to customers if a brokerage fails.
For example, if the brokerage goes bankrupt and customer assets are missing, the SIPC can help recover the assets up to a certain limit.
It's important to understand that SIPC protection does not cover investment losses due to market fluctuations, but it does provide a safety net in case of brokerage failure.
As a parent, you're busy enough, so navigating the account shouldn’t be complex.
When choosing the right UTMA brokerage for your child's future, it's crucial that the platform is user-friendly.
Opt for a brokerage that offers a straightforward, intuitive interface.
As a parent, you're busy enough, so navigating the account shouldn’t be complex.
Established online platforms typically offer an array of tools and resources to aid your investment journey, and many even have mobile apps for on-the-go access.
Having reliable customer service can make a big difference when managing your child's UTMA account.
Choose a brokerage that offers readily available support through the channels you prefer, whether that’s phone, email, or live chat.
Consider your comfort level with investing.
Are you an expert who enjoys picking individual stocks, or would you rather let someone else make the decisions?
Brokers offering a wide range of investments can cater to both types of investors.
For those who prefer to keep things simple or are new to investing, look for brokerages with robo-advisors or managed portfolios.
These services manage the investing process for you, keeping the portfolio diversified without needing your constant attention.
Are you an expert who enjoys picking individual stocks, or would you rather let someone else make the decisions?
The size of your initial investment can also factor into your brokerage choice.
If you're starting with a smaller amount for your child’s investments, you'll want a broker that offers fractional shares.
In short, pick a broker that fits your investing style and can grow with your child's financial needs over time.
Paying attention to fees and account minimums is important when selecting a UTMA brokerage.
Different brokerages have varying fee structures.
Some may charge a monthly or annual fee, while others might charge per trade.
Additionally, some might require a minimum investment to open the account.
Some may charge a monthly or annual fee, while others might charge per trade.
Look for a brokerage with a transparent fee structure and reasonable account minimums.
Remember, even small fees can add up over time and reduce the overall return on your child's investment.
While not a top priority, educational resources can be a valuable bonus feature, especially for parents new to investing.
Look for brokerages that provide resources to help you understand investing concepts, financial markets, and the different types of investment products.
In addition, some brokerages also offer financial literacy content specifically tailored for kids.
This can be an excellent tool to introduce your children to the world of investing when they're older.
While not a top priority, educational resources can be a valuable bonus feature, especially for parents new to investing.
It's an extra perk that can help your child develop a sound understanding of financial management, setting them up for a secure financial future.
Remember, the goal is to not only grow your child's funds but also help them become financially savvy individuals.
A brokerage that contributes to this education is worth considering.
A UTMA (Uniform Transfer to Minors Act) account is a custodial investment account that adults open for children.
It allows the custodian, usually an adult such as a parent, to purchase securities like stocks, bonds, and ETFs on behalf of a minor.
Even though the adult manages it, the assets in the account legally belong to the child right away.
Control over the account transfers to the child when they reach the age of majority in their state, which usually ranges between 18 and 21.
UTMA accounts are frequently used by families as a strategy for transferring generational wealth while minimizing tax payments.
The ideal place to open a UTMA account depends on your specific needs and preferences.
Things to consider include fees, reputation and trustworthiness, available investment options, the quality of customer service, and the user interface.
When comparing different institutions, remember that the investments you make within the account, such as stocks, bonds, or ETFs, will have a significant impact on your potential return.
UTMA accounts can be an excellent tool for saving for a child's future expenses while also offering tax benefits.
The first $1,250 of a child's unearned income from a UTMA account isn't taxed, and the next $1,250 is taxed at the child's rate, usually lower than the parents'.
However, it's crucial to understand the implications on taxes and financial aid eligibility.
When the minor reaches the age of majority, they gain complete control over the account and can use the funds for any purpose, not just education.
UTMA accounts are not tax-free.
Any income generated from the investments within the account, like dividends, interest, or capital gains from the sale of assets, is subject to taxes.
The first $2,500 of profit is taxed at the child's tax rate, with the first $1,250 being tax-free
However, due to the account being legally owned by the minor, the first $2,500 of profit is taxed at the child's tax rate, with the first $1,250 being tax-free.
Income over $2,500 falls under the "kiddie tax" rules and is taxed at the parent's rate.
On the tax front, UTMA accounts don't offer the option of tax deferral like some financial accounts, such as IRAs or 529 plans.
The account is funded with after-tax dollars and any income generated by the account's assets is taxed in the year it was earned.
There are no provisions to delay or defer these taxes to a later date.
Withdrawals from a UTMA account do not directly incur taxes.
Instead, taxes are applied to the earnings of the account's assets as they are realized.
This provides more flexibility compared to other account types, like 529 plans or IRA accounts, as there are no additional fees, penalties, or strings attached when looking to withdraw funds
UTMA accounts are great tools for parents and kids.
They help build a child's financial future and teach them about money.
The journey of choosing a first stock for a kid can be a learning experience for everyone involved.
When kids are old enough, they can even help make investment decisions.
This hands-on experience is a great way to learn about investing and money management.
Plus, when kids become adults, they gain full control of the account. This can be their first step towards financial independence.
Learn more about Greatest Gift, the platform that makes it easy for loved ones to give money towards a child's savings and investments.
This way, friends and family members can contribute to growing the child's UTMA account and support their financial journey. Plus, it's a way to teach kids about the power of saving and investing.
Happy gifting!
I love how easy it is to give a meaningful gift to the kids and tots in my life!
It means a lot to me that I can contribute to their future, and Greatest Gift makes the experience seamless and fun.
Alana S.
Our son just turned two. We created his gifting page with Greatest Gift and shared it on the birthday evite. The results were amazing! We received 12 gifts that will be going to his college fund and savings.
Love this platform.
Daniel A.
We have a 2-year-old and another baby on the way, and we love Greatest Gift’s discover section. I look forward to learning about the right financial tools to help build their future and set them up for success financially.
Hillan K.
Oops! Something went wrong while submitting the form
Offers are provided to you as a convenience. Greatest Gift does not endorse, warrant or guarantee the products or services available through the Offers (or any other third-party products or services advertised on or linked from our site), whether or not sponsored. Greatest Gift is not an agent or broker or otherwise responsible for the activities or policies of those websites. Greatest Gift may receive compensation from third parties which may impact the placement and availability of the Offers. If you elect to use or purchase services from third parties, you are subject to their terms and conditions and privacy policy.
