Fidelity announced today that it is offering fractional shares trading for stocks and ETFs to its 23 million customers.
Fractional trading, or what Fidelity calls "dollar based investing," allows customers to buy and sell as little as 0.001 of a share using Fidelity’s mobile app for iOS and Android. Fidelity is among the first of the major online brokers to offer fractional shares, which comes on the heels of a move by Fidelity and its competitors to offer zero trading commissions on stocks and ETFs.
According to the firm, Fidelity will make it possible to offer all fractional trades in real-time during market hours, which will provide its customers the ability to know the share price of the security they are trading, rather than having to wait until the end of the day for multiple orders to add up to full shares. Fractional share trades must be market or limit order types and are only good for the day they are traded.
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CEO Ron Kruszewski received praise for leading the firm's wealth management unit to a record for revenue, despite costly legal setbacks.
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As Vice President, Underwriting Research and Development, Jackie Waas is involved in investigating and developing underwriting innovations, with an emphasis on concept development, research, presenting new ideas, and participating in concept validation activities.
She started her career with RGA in 2018 as Director of Underwriting Services, where she supported direct-to-consumer accelerated offerings, including assisting with the auditing of the e-underwriting program and helping develop digital health scores while supporting the Digital Health Data team.
Prior to joining RGA, Jackie was an Underwriting Business Consultant and automated underwriting systems subject matter expert with Legal & General America for four years after working in an underwriting capacity with the company for nine years. She also had five years of underwriting experience with AXA Equitable and formerly worked as a marketing manager for Steele Rubber Products.
Jackie received a Bachelor of Arts with a major in communications and a minor in psychology from Lenoir-Rhyne University in North Carolina. She is a Certified Fellow of the Academy of Life Underwriting, a Fellow of the Life Management Institute, and a Fellow of the Financial Services Institute. She is also an Associate, Reinsurance Administration; Associate, Insurance Agency Administration; and an Associate, Insurance Regulatory Compliance. Jackie also holds the Professional, Customer Service Institute designation, and she is a member of the Association of Home Office Underwriters.
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Guizhou Hu is Vice President, VP, Head of Risk Analytics at RGA, where he supports global RGA underwriting initiatives and produces internal and external thought leadership pieces based on RGA's in-depth risk analytics. Before joining RGA in 2018, Guizhou served as Vice President, Chief Decision Analytics, for Gen Re and as a Senior Vice President for BioSignia Inc. Guizhou holds a medical degree from Beijing Medical University and a Ph.D. in Philosophy from Cornell University.
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Though all transactions of fractional shares must be placed on mobile devices, the fractional shares will be displayed on a client's Positions page on the website and in its downloadable platform, Active Trader Pro.
Scott Ignall, Fidelity's head of the retail brokerage business, said in a statement, "... 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." Fidelity is offering fractional share trading in customer accounts including brokerage, HSAs, IRAs, and self-directed brokerage accounts via a workplace retirement plan like a 401(k).
Offering fractional shares allows Fidelity to bring account minimums down for customers who either can't or don't want to buy entire shares of high-priced stocks like Amazon or Google, but want exposure to those securities in their portfolio.
Fidelity's move into offering fractional shares lines up with investor interest in high market cap stocks. According to Investopedia's analysis of search trends on Google, investors have shown a high level of interest in searching for the share price of the most popular and highest market cap stocks in the S&P 500, including Amazon, Apple, Google and TSLA.
Steady gains made in equity markets last year were "clearly a tailwind,” an expert says.
Other brokers, like Schwab, are planning to offer fractional share trading in 2020, according to Shana Weber, head of strategy and asset management. Interactive Brokers has been offering fractional shares since November and Robinhood started rolling out fractional share trading in December. E-Trade and TD Ameritrade offer fractional shares on their robo-advisor platforms.
