Best Custodial Accounts
A custodial account is a savings or investment account an adult opens and administrates on behalf of a minor. The best custodial accounts offer features that matter most to both child and adult account owners: low fees, investment education and strong customer support.
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Looking for a way to set a minor with an investment account, but aren't sure where to start? You likely want a custodial account.
A custodial account is a common way for adults to start an investment account for a child, whether their own child, a grandchild or another minor. With a custodial account, the adult — also known as the account custodian — manages and maintains ownership of the account until the child reaches the age of majority, which varies by state. At that point, the child is generally able to take control of the account and funds, though in some cases you may be able to continue to apply restrictions.
You may also see custodial accounts described as UGMA/UTMA accounts. This is based on the Uniform Gifts to Minors Act or the Uniform Transfers to Minors Act — the legislature that allowed for the formation of these custodial accounts.
To arrive at our list of the best custodial accounts, we looked at factors that matter most to both the adult who started the account, as well as the child who will eventually take control of it. These factors include the range of accounts offered and how robust a broker's educational materials are.
Why trust NerdWallet
Looking for a way to set a minor with an investment account, but aren't sure where to start? You likely want a custodial account.
A custodial account is a common way for adults to start an investment account for a child, whether their own child, a grandchild or another minor. With a custodial account, the adult — also known as the account custodian — manages and maintains ownership of the account until the child reaches the age of majority, which varies by state. At that point, the child is generally able to take control of the account and funds, though in some cases you may be able to continue to apply restrictions.
You may also see custodial accounts described as UGMA/UTMA accounts. This is based on the Uniform Gifts to Minors Act or the Uniform Transfers to Minors Act — the legislature that allowed for the formation of these custodial accounts.
To arrive at our list of the best custodial accounts, we looked at factors that matter most to both the adult who started the account, as well as the child who will eventually take control of it. These factors include the range of accounts offered and how robust a broker's educational materials are.
Best Custodial Accounts
| Broker | NerdWallet rating | Fees | Account minimum | Promotion | Learn more |
|---|---|---|---|---|---|
 Charles Schwab Learn more on Charles Schwab's website | $0 per online equity trade | $0 | None no promotion available at this time | Learn more on Charles Schwab's website | |
 Interactive Brokers IBKR Lite Learn more on Interactive Brokers' website | $0 per trade | $0 | None no promotion available at this time | Learn more on Interactive Brokers' website | |
 E*TRADE Learn more on E*TRADE's website | $0 per trade. Other fees apply. | $0 | Get up to $1,000 when you open and fund an E*TRADE account | Learn more on E*TRADE's website | |
 Vanguard Learn more on Vanguard's website | $0 per trade | $0 | None no promotion available at this time | Learn more on Vanguard's website | |
 Ally Invest | $0 per trade (on eligible US securities) | $0 | None no promotion available at this time | Read review |
$0
per online equity trade
$0
None
no promotion available at this time
Pros
Commission-free stock, options and ETF trades.
Five trading platforms with no minimums or fees.
Access to thinkorswim platforms.
Extensive research offerings.
Large fund selection.
Cons
Low interest rate on uninvested cash.
Why We Like It
Charles Schwab has earned its strong reputation: The broker offers high-quality customer service, four free trading platforms, a wide selection of no-transaction-fee mutual funds and $0 commissions for stocks, ETFs and options.
Best Online Broker for Advanced Traders 2024
$0
per trade
$0
None
no promotion available at this time
Pros
Commission-free stock, options and ETF trades.
Large investment selection.
Strong research and tools.
Huge selection of no-transaction-fee mutual funds.
High order execution quality.
Cons
High minimum to earn interest on uninvested cash.
Website can be difficult to navigate.
Why We Like It
Don't let the name fool you: IBKR Lite offers commission-free stock trading (including international trade capabilities), more than 19,000 mutual funds, and a well-featured platform.
$0
per trade
$0
None
no promotion available at this time
Pros
Commission-free stock, options and ETF trades.
Leader in low-cost mutual, index and exchange-traded funds.
High interest rate on uninvested cash.
High order execution quality.
Cons
Basic trading platform only.
Limited research and data.
No fractional shares for stocks.
Why We Like It
Vanguard is the king of low-cost investing, making it ideal for buy-and-hold and retirement investors. It offers a top-notch selection of proprietary, low-cost mutual funds, including many ESG options. Despite its $0 trade commission, active traders will find the broker falls short due to the lack of a strong trading platform.
4.6
/5Reviewed in: Oct. 2024
Period considered: Aug. - Oct. 2024
on Acorns' website
AD
Paid non-client promotion
$3 - $12
per month
$0
$10 sign-up bonus
Pros
Automatically invests spare change.
Cash back at select retailers.
Educational content available.
No account minimum ($5 required to start investing).
IRA match at some service tiers.
High interest rate on checking and savings at some service tiers.
Cons
Monthly fees can be significant for small balances.
$35 per ETF to transfer funds to another broker.
No tax-loss harvesting.
Why We Like It
Acorns is known for its automatic roundups that make saving and investing easy. The downside? At small account balances, Acorns' fees can cut into investment returns. Acorns has great tools for kids at the most expensive tier, such as a bank account and debit card designed to help them learn about all things money. But Acorns has zero financial advisor access or tax tools and higher than average transfer fees.
4.4
/5Reviewed in: Oct. 2024
Period considered: Aug. - Oct. 2024
on Stash's website
AD
Paid non-client promotion
$3 or $9
per month, depending on selected plan
$0
Get $25
when you open a personal brokerage account and deposit at least $5. Subject to T&Cs.
Pros
Both DIY and automated investing options.
Fractional shares available.
Values-based investment offerings.
No account minimum ($5 required to start investing through Smart Portfolios).
Option to round-up purchases and invest the change.
Cons
Smart Portfolios don't offer tax-loss harvesting.
No automated IRA management.
Monthly fees can be significant for small balances.
Why We Like It
Stash offers both DIY and automated investing, meaning it's a good option if you're looking for more customization. Keep in mind that only a standard brokerage account can be managed automatically. If you want an IRA managed as a robo-advisor, you'll need to look elsewhere. Stash also has no tax strategy or human advisor access.
Want to compare more options? Here are our other top picks:
Last updated on December 3, 2024
Methodology
NerdWallet’s comprehensive review process evaluates and ranks the largest U.S. brokers by assets under management, along with emerging industry players. Our aim is to provide an independent assessment of providers to help arm you with information to make sound, informed judgements on which ones will best meet your needs. We adhere to strict guidelines for editorial integrity.
We collect data directly from providers through detailed questionnaires, and conduct first-hand testing and observation through provider demonstrations. The questionnaire answers, combined with demonstrations, interviews of personnel at the providers and our specialists’ hands-on research, fuel our proprietary assessment process that scores each provider’s performance across more than 20 factors. The final output produces star ratings from poor (one star) to excellent (five stars).
For more details about the categories considered when rating brokers and our process, read our full methodology.
To recap our selections...
