Advisor working with Fidelity Institutional will have the ability to trade fractional shares in real time under a new program being launched this week, the firm announced.
The new capability enables advisors to build portfolios for their clients based on the amount they want to invest. Offering fractional share trading to advisors is the first step in enabling them to offer proprietary strategies to a much broader set of clients, including the next generation of investors, at lower investment minimums, Fidelity said.
“Fractional share trading also enables advisors to better serve clients with tactical situations; for example, raising cash from a security with a high share price or reducing concentrated low-basis positions in similar stocks,” Fidelity said in a statement.
Fidelity will execute all fractional trades in real-time during market hours, meaning advisors and their clients 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. Fractional share or dollar-based trades, which must be market or limit order types and are good for the day only, are available through Wealthscape.
The new capability for advisors expands on Fidelity’s Stocks by the SliceSM offering for retail investors, which was launched last year.
“With our industry offering more personalization for investors, advisors have been looking for a way to more finely tune investor portfolios when they include securities with high share prices or when they want to include or exclude certain securities from a client’s portfolio,” Ryan Plotner, head of transaction and banking solutions at Fidelity Institutional, said in a statement.