Fidelity lets clients trade fractions of stocks, battling for younger clients in the brokerage wars

  • Fidelity Investments said Wednesday its clients can now trade fractions of stocks and exchange traded funds.
  • “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,” head of Fidelity’s brokerage platform Scott Ignall said in a release.
  • Bigger brokers such as Fidelity and Charles Schwab are bidding for Silicon-Valley start-up Robinhood’s millennial-focused client base.

Fidelity Investments is the latest broker to offer partial stock trades to clients, as online trading platforms bid for investors in a crowded industry.

The largest online broker said Wednesday its clients can now trade fractions of stocks and exchange traded funds.

This “dollar-based trading” option will allow individual investors to own any company they want, regardless of the share price. If a client has $100 to invest, they can still own e-commerce giant Amazon, who’s stock price is around $1,850 per share.

“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,” head of Fidelity’s brokerage platform Scott Ignall said in the release.

Fidelity, with $8.3 trillion in client assets, is not the first company to take a stab at offering partial stock trades. In 2019, competitor Charles Schwab announced it would offer fractional trading sometime this year. Plus, smaller companies like Stockpile, which was founded in 2010, have provided this type of service for 99 cents per trade. Other companies that offer partial trades are M1 Finance, Betterment and Stash.

A major distributor in the online trading industry, Silicon-Valley startup Robinhood, paved the way for brokers dropping commission fees. It started offering fractional trading in December of 2019. The six-year old company told CNBC more than 200,000 Robinhood users were “already in line” for fractional stock trading on the app in the few hours of announcing the service.

Bigger brokers such as Fidelity, with 23 million broker accounts, and Schwab, are bidding for Robinhood’s millennial-focused client base. Robinhood topped 10 million accounts last year.

“Fidelity will execute all fractional trades in real-time during market hours, meaning 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,” the firm said.

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