Investment Accounts for Babies Are Coming. Wall Street Can’t Wait.

Speaker 1 Last week, Michael Dell, the CEO of Dell Technologies, made a big announcement.

Speaker 2 Thank you, Mr. President.
It's a great honor to be with you here in the White House.

Speaker 1 Dell and his wife, Susan, revealed that they would be donating more than $6 billion towards a new government program.

Speaker 2 Susan and I are super excited to announce our $6.25 billion gift to 25 million American children,

Speaker 2 10 and under.

Speaker 1 The contribution would dramatically expand a new tax-advantaged account for minors known as Trump Accounts.

Speaker 1 Trump accounts. Trump accounts.

Speaker 3 Trump accounts. The families that opt in will receive a one-time payment of $1,000.

Speaker 1 They must invest in diversified, low-cost U.S. stock index funds.
I talked to our colleague Alexander Saidi about this. What is a Trump account?

Speaker 4 It's an IRA for babies through a very small seed investment of $1,000 for any child born, you know, between the beginning of 2025 and the end of 2028.

Speaker 1 Babies who are U.S. citizens born between 2025 and 2028 are eligible for a $1,000 grant from the federal government.
to be invested in a tax-advantaged account for their future.

Speaker 1 The program was signed into law last summer as part of Trump's big beautiful bill, and it's set to launch in early 2026. Alex says that from the jump, corporate America wanted to be a part of it.

Speaker 1 Not just philanthropist billionaires like Michael Dell, but also banks and brokerages that see a major opportunity in participating in the program.

Speaker 4 The idea is to have multiple private institutions offering Trump account rollovers. So you can keep your money with the financial institution of your choosing.

Speaker 4 And so with the Trump account, the business world is excited about, specifically on Wall Street, about being a part of it.

Speaker 1 Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza.
It's Wednesday, December 10th.

Speaker 1 Coming up on the show, why Wall Street is all in on Trump accounts.

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Speaker 1 The idea to create better investment tools for young people has been around for a while, but one venture capitalist has taken it up as his mission.

Speaker 1 His name is Brad Gerstner, and he's been working on the idea since at least 2021. And he'd gotten support from some Democrats, but he was having trouble getting it off the ground.

Speaker 4 He had wanted to get President Joe Biden to buy in on the idea, but just like couldn't successfully get an audience with him.

Speaker 1 Then last year, a friend of Gerstner's happened to be playing a late-night poker game at the Bellagio Hotel in Las Vegas.

Speaker 4 And

Speaker 4 he was near Senator Ted Cruz,

Speaker 4 and he told Cruz that Gerstner wanted to bring stock investment accounts to young Americans through an outfit he has called Invest America.

Speaker 4 And days later, he was in Senator Cruz's office talking about how can we make this a reality

Speaker 4 for young Americans.

Speaker 1 By June, Gerstner was at the White House for a roundtable event on the initiative.

Speaker 1 With him was President Trump, along with Michael Dell, Goldman Sachs CEO David Solomon, Robin Hood's Vlad Tenev, and other big names in finance.

Speaker 1 At the event, Trump called the idea, which by then had been named Trump Accounts, one of the most exciting parts of the tax bill he would sign into law in July.

Speaker 5 I also want to thank you for being here as we discuss one of the most exciting parts of the one big beautiful bill. It is indeed a big, beautiful bill, and it's doing very well.

Speaker 5 The Trump Accounts, as they call it.

Speaker 4 Can you just walk me through how a Trump account would work?

Speaker 4 This is all like being worked up in real time. There's still a lot of details that aren't fully fleshed fleshed out.

Speaker 4 But more or less, what we know is that families will be able to sign up for the accounts and get access to $1,000 with the Treasury Department.

Speaker 4 But what they'll allow you to do is to roll it over into a financial institution of your choosing.

Speaker 1 That $1,000 becomes a kind of seed fund for eligible children. Once the account is open, parents, relatives, friends, really anyone can contribute up to $5,000 a year.

Speaker 1 Contributions can be made starting on July 4th, 2026.

Speaker 1 So how does this investment work? What happens to this money?

Speaker 4 You're very limited in what you can invest in. You have to essentially invest any money in a Trump account into an ETF or mutual fund that tracks the broader U.S.
stock market.

Speaker 4 We'll see what is defined as eligible or not. It's designed that the fees on the fund you invest in are very low, potentially free.

Speaker 4 They don't want you investing in like, you know, a private equity fund. It's really meant to be like the 401k that you don't touch.

Speaker 4 When the child turns 18, the Trump account automatically converts into an IRA.

Speaker 4 And then

Speaker 4 the money is essentially yours to use

Speaker 4 as you see fit, subject to regular IRA rules.

Speaker 1 Trump accounts have two big advantages. Some get seed money from the government and they're allowed to grow tax-free.
But they're also less flexible.

Speaker 1 Because the Trump account works like an IRA, it means beneficiaries, for the most part, can't withdraw the money till they're 59 and a half without paying hefty penalties.

Speaker 1 And why is the Trump administration doing this? What is the problem it is trying to solve?

Speaker 4 So, I think it's trying to do many things at once. The administration is really focused on the, the,

Speaker 4 I would say, financial literacy angle the most.

Speaker 4 This is an affordable way to teach people at a very young age about the value of saving money and investing money through a very small seed investment.

Speaker 4 You know, in theory, the administration is saying if you take full advantage of the program, you could grow that initial 1,000 seed into as much as $2 million.

Speaker 4 And there's obviously a really big asterisk on that because that means you need to do the maximum amount of private donations

Speaker 4 year over year.

Speaker 4 But I think the idea is let's find a way to like teach kids the value of money and it could change people's lives.

Speaker 1 But financial literacy is just one piece of it. Fertility rates in the U.S.
are lower than ever.

Speaker 1 And one reason is that people are delaying having kids because they're concerned about the cost of living.

Speaker 1 The Trump accounts come at a time when many on the right are trying to motivate young people to start families.

Speaker 4 This is essentially a type of incentive to have a child.

Speaker 4 If you have a baby, you get $1,000.

Speaker 4 You know,

Speaker 4 why not?

Speaker 4 That's literally it.

Speaker 4 And this is a very relevant thing because

Speaker 4 we've reported at length on how

Speaker 4 one thing that seems to be holding up family formation in the United States, or certainly, you know, the choice to have kids or get married, is

Speaker 4 affordability and the perception that I'm not going to be able to afford to have kids. So even though this is small and just like a seed,

Speaker 4 this in a way sort of is like, look, like, you know, we, the government, will help you out.

Speaker 1 When it announced the program, the White House didn't address declining birth rates, instead, focusing on helping children achieve economic stability as adults.

Speaker 1 President Trump said the accounts would give children, quote, a shot at the American dream. Still, the policy supporters say the accounts could shift the thinking around starting families.

Speaker 1 Some of the most visible proponents of the Trump accounts come from Wall Street. That's because participating families can roll that initial $1,000 seed money into banks and brokerages.

Speaker 1 Financial institutions see that as a huge opportunity, both to build relationships with customers and to show support for Trump's policies. That's after the break.

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Speaker 1 The Trump accounts are projected to cost the government around $15 billion through 2034.

Speaker 1 If parents actually apply for and take the $1,000, that means all that money will get invested into the American financial system.

Speaker 1 That's good news for Wall Street because it means tons of new investors and tons of money flowing to invest in American companies. And it's specifically good news for financial institutions.

Speaker 1 Everyone from banks like JPMorgan Chase to brokerages like Charles Schwab and Robin Hood Markets are vying for a role in the program.

Speaker 1 What is the benefit for these financial institutions, you know, to participate in Trump accounts?

Speaker 4 Just the work of administering the program or offering the Trump accounts in the lifetime of the account probably won't actually make them money in and of itself.

Speaker 4 So

Speaker 4 the kind of investment management fees you'll get off of a Trump account is going to be very low, probably zero. What banks get, though, is a relationship with a child and their family.
And

Speaker 4 you could, in a way, like structure the Trump account into a broader package that you offer young families that include like mortgage,

Speaker 4 maybe an auto loan, basic financial planning, checking accounts, credit cards.

Speaker 1 A bundle.

Speaker 4 And

Speaker 4 exactly. And the Trump account is like the seed that gets you in the door.

Speaker 4 And then they start to cross-sell you on all these other products that do actually make them money. And

Speaker 4 then when the child turns 18, their account will be rolled over

Speaker 4 into another investment account at this same shop.

Speaker 1 According to people familiar with the matter, many of the largest banks, brokers, and asset managers say they plan to make pitches to the Treasury Department.

Speaker 1 Robinhood CEO Vladimir Tenev even created a mock-up of what the Trump accounts might look like and posted it on X, adding that the platform was, quote, ready to go.

Speaker 1 Besides the administration and Wall Street, there's another group of people hyped about this program, big donors, like Michael Dell.

Speaker 4 The Michael and Susan Dell gift is meant to be the like biggest example of and a catalyst for more outside money to come in and help finance it. So that gift, it's a huge philanthropic donation.

Speaker 4 You know, probably the biggest private gift that's going directly

Speaker 4 to kids in American history. It's $6.25 billion,

Speaker 4 which is just a staggering amount of money by any stretch of the imagination.

Speaker 1 Because the seed money is only for babies born from 2025 to 2028, the Dells wanted to expand the pool of children who could receive some kind of funding.

Speaker 1 Their donation will provide $250 for kids aged 10 or under who were born before January 1st, 2025. And it'll target children in zip codes with a median income of $150,000 or less.

Speaker 1 The Dell's donation to the Trump accounts could be the first of many.

Speaker 1 Dell said that he spoke with other philanthropists ahead of his announcement last week, and he's expecting others to make gifts as well.

Speaker 1 And Alex says this is part of a broader move that has been on the rise in the second Trump administration. Philanthropists and executives trying to cultivate a good relationship with the president.

Speaker 4 What we're seeing here is like just another iteration of,

Speaker 4 you know, wealthy corporate executives continuing to like try and, you know, do things that are aligned with the administration. Donating to various Trump causes has been a big theme of the year.

Speaker 4 I think what's been a very common scene is business executives gathering

Speaker 4 in the White House to like talk about a business initiative that they're working on that also aligns with the administration's own strategic priorities.

Speaker 1 Over the last year, companies from NVIDIA to Intel to U.S. Steel have been working to build closer ties with Trump.

Speaker 4 And that's a bigger story that's been playing out this year is the sort of proximity of business executives to the White House and the kind of game of influence they have to play to,

Speaker 4 you know, protect their own interests and stay on the good side of the White House, which has shown a willingness to

Speaker 4 go against business leaders they don't like or thought leaders that they don't like.

Speaker 1 Some of these efforts to get close to the administration have drawn criticism.

Speaker 1 In letters to corporate executives, Democratic lawmakers pointed to the $250 million ballroom under construction at the White House, noting that many of the donors supporting the project have active business before the federal government.

Speaker 1 Alex says helping to fund the Trump Account Initiative could be an easy way to signal support for the administration while also being charitable.

Speaker 4 This at least is a form of clear philanthropy. Like this is direct giving to

Speaker 4 you know, children, right? But at the same time, you get to like put your seal of approval on it alongside the Trump administration. This program is called the Trump Accounts.

Speaker 4 So any donation to it is sort of therefore linked with the president.

Speaker 4 So all of these things are kind of playing together at once.

Speaker 1 And for the Trump accounts specifically, how helpful could these donations be?

Speaker 4 So if we see more and more of these types of donations, then what looks like a $1,200 roughly seed,

Speaker 4 could that grow into $2,000, $3,000?

Speaker 4 And that, you know, like the compounding effects of that get more and more powerful. So we really have to see how much more the sort of top 1%

Speaker 4 and, you know, even the upper echelons of that group pitch into this, because that will give it even more firepower. So this is all very much like still in progress.

Speaker 1 What are you looking for to know whether or not these Trump accounts work?

Speaker 4 That's going to take a long time. It's going to take a long time to know.
And I think you need to see like how many families at least contribute something, right?

Speaker 4 I think, you know, on the macro level,

Speaker 4 it will have a modest impact.

Speaker 4 You know, but it's at the micro level where it's like, what does each individual family choose to do with it? that will make a difference.

Speaker 4 Also, I mean, I think it's fair to say that because this is a blanket target, right?

Speaker 4 There's no income basis for how the Trump administration is giving out the funds, the people who are going to benefit from it the most are the ones who have the most to contribute.

Speaker 1 That's all for today, Wednesday, December 10th. The journal is a co-production of Spotify and the Wall Street Journal.
Additional reporting in this episode by Gunjan Banerjee and Hannah Aaron Lang.

Speaker 1 Thanks for listening. See you tomorrow.