Investment Accounts for Kids: Where Credit Unions Fit In

Don’t work at a credit union, but like what you see? Head to UNest to open an investment account for your kids today!

Most of my friends and I are so close to 40 that it looks blurry now. Most of us have kids (I don’t) and multiple app-based investment accounts (I do). Naturally, there’s a growing demand in this demographic for investment apps for kids.

Credit unions, take note!

Offering app-based financial wellness and investing accounts for kids is a member need… in a market segment credit unions typically fail to attract (Millennials and older Gen Zers).

Summary Points

  • Credit unions are losing the battle for younger generations, losing them to banks, fintechs, and competitors with better digital offerings.
  • Saving and investing for their children is a top priority for Millennial parents today.
  • Providing savings and investment accounts for kids will help attract and retain Millennial and Gen Z members.

 

Why Credit Unions Should Care About Investing for Kids

According to a recent Harris Poll, saving for children’s education and other expenses is a top priority for parents of minors. Outside of “saving for emergencies,” that tops any other option in the poll.

Providing such services for tech-savvy parents is a lifeline for credit unions. Consider:

To be blunt, credit unions haven’t been providing relevant financial services to younger members. They’re still offering overdraft protection when banks are canceling fees entirely. They don’t do digital account opening (often).

Younger members want financial stability and digital convenience. Younger parents want that for their kids, too.

If your credit union values the Millennial and Gen Z markets, it must consider investment accounts for kids. Bonus points for including financial education, rewards, and the convenience of an app.

 

How Credit Unions Can Offer Investing for Children

Many credit unions already offer investing accounts for kids (usually 529 plans). If your credit union does this, kudos! But keep reading:

529 plans are not user-friendly. There’s a lot of paperwork… and not much flexibility or control. Though the plans are tax-advantaged, they’re complex and cumbersome enough to deter most Millennials.

Folks our age prefer apps. And the two best investment apps for kids are these:

  1. UNest. UNest was founded by Ksenia Yudina, a financial adviser with a lot of experience setting up college savings plans for kids. She partnered with some of the former team at Acorns to develop the technology. Her team later acquired other major players in the space, such as Kidfund.

UNest offers more than college savings plans. Based on UTMA instead of 529 plans, the platform provides tax-advantaged investing for anything that benefits kids—no early withdrawal penalty. It offers multiple customizable investment plans and can accept gifts/contributions from friends and family.

  1. Acorns is a leading investment fintech in the United States. We love Acorns, and several of us at CU 2.0 have accounts. Recently, Acorns debuted an investment account for kids. Acorns has been around for nearly a decade, and their track record is very clean.

Ultimately, we like UNest a little more than Acorns for credit unions. Here’s why:

Acorns doesn’t play nice with credit unions. Not only are there no integrations, co-branding opportunities, or partnerships… Acorns offers their own digital bank and attractive debit card. They’re your competitor now.

UNest partners with credit unions to provide investment accounts for kids. It will help your members figure out how to invest for kids’ college needs, set up investing for kids, and more. UNest partners with credit unions to promote financial wellness.

(UNest also supports customizable rewards and marketing opportunities. So, credit unions may promote special offers to their users—or even reach nearby prospective members!)

 

Additional Reading

Fintechs like UNest show a lot of promise for credit unions still chasing those elusive younger generations. More importantly, their co-branded app doesn’t integrate with existing credit union tech stacks…

That means they can set up in days (or weeks) with no integration nightmares.

Want to learn more about fintechs like UNest? Join our Fintech Call Program! (It’s free.)

And don’t forget to visit our CU Resource Hub to find the latest white papers, reports, ebooks, and case studies for credit unions.