This week, two announcements from opposite sides of the Atlantic caught our attention.
In the UK, the Government launched a taskforce to help reunite more than 750,000 young adults with around £1.6 billion sitting in unclaimed Child Trust Funds.
At the same time, the first "Trump Accounts" – a new initiative designed to encourage long-term investing by giving children an investment account from birth – were launched in the United States.
Seeing those stories together, it struck us that Britain has already run the experiment America is about to begin.
A successful idea... with an unexpected challenge
When Child Trust Funds were introduced in 2005, the idea was simple: give every child a financial head start and allow time and compound growth to do the heavy lifting. In many respects, it worked. Millions of young people have reached adulthood with savings and investments they may never otherwise have had.
But eighteen years is a long time. Families move. Addresses change. Phone numbers are replaced. Providers merge. Life moves on. Many young adults simply don't know where their Child Trust Fund is held, or even that they have one. That's why the Government has launched a taskforce to help reconnect them with money that's already theirs.
It's worth remembering that Child Trust Funds were launched before online applications and servicing were normal and 5 years before the first iPhone ushered in the smartphone era. Applications were often made on paper forms and most interaction happened through annual statements and occasional letters.
Technology is changing children's investing
Parents now expect to manage almost every aspect of their financial lives from their phone.
Checking a balance, making a contribution, updating contact details or sharing an account with grandparents should take seconds, not paperwork. That might sound like a convenience feature, but it's much more important than that.
The easier it is for families to stay engaged with an account, the less likely it is to become something they have to rediscover years later. No app can guarantee an account will never be forgotten. But regular interaction dramatically improves the chances that it won't. That’s why we’re surprised many cash Junior ISAs are still largely branch based products. See our guide on transferring a CTF or Junior ISA.
If your child had a Child Trust Fund, check today
If your child was born between 1 September 2002 and 2 January 2011, they may have a Child Trust Fund. Many parents actively chose a provider. Others didn't, in which case an account was opened automatically on their child's behalf. If you're unsure where the account is held, the Government provides a free tracing service.
Looking ahead
The launch of Trump Accounts shows that governments continue to recognise the value of helping children start investing as early as possible. Britain's experience suggests that's a worthwhile ambition.
But after twenty years, we've learned something else. Creating millions of investment accounts is relatively straightforward. Helping families stay connected to them for the next eighteen years is the harder challenge.
At Beanstalk, that's one of the reasons we've always believed children's investing should be digital-first. Not because an app is more fashionable than a paper statement, but because long-term investing works best when families remain engaged throughout the journey.