Fidelity Investments announced this week in a press release that it has launched a partial stock and exchange-traded funds initiative. The move is one of the latest by financial institutions and brokerage firms to entice younger clients to their platform. Charles Schwab recently announced its own initiative to steer millennial clients away from the Silicon-Valley startup, Robinhood.
Scott Ignall, Fidelity’s head of retail brokerage, said: “Customers can now own a piece of their favorite companies and ETFs based on how much they want to invest, independent of the share price.”
The industry is becoming more crowded with brokerage firms recognizing newer investment models created to attract millennials.
The new option is known as “real-time fractional shares trading,” or “dollar-based investing.” The company hopes to offer a simpler way for investors to build a diversified portfolio of ETFs and stocks that allow them to invest the dollar amount they want to.
The largest online brokerage firm also offers a $0 commission for its online trading. Customers will be able to trade as little as 0.001 of a share when using Fidelity’s mobile app. Fractional trades will be executed in real-time during market hours. The advantage is that customers will have full knowledge of the share price and can own shares of any company that’s on their radar, regardless of the market price.
For instance, if a client wants an interest in Amazon, whose stock price averages around the $1,800 mark, the client can still invest in the e-commerce giant even though they may only have $200 to do so.
Fidelity said, “customers will always know the share price, unlike some firms that execute fractional trades at the end of a trading day or wait for multiple orders to add up to full shares.”
Schwab announced in 2019 that it would also begin to offer fractional trading during 2020. Currently, Robinhood, Betterment, Stash, and M1 Finance offer partial-trading options.
Robinhood, in particular, has seen great success with fractional stock trading. Last year, the startup gained 10 million accounts.
Fidelity has $8.3 trillion in client assets.