Envestnet CEO Bill Crager says the firm is working to offer investors the ability to buy and sell fractional stock shares.
During the technology and turnkey asset management platform’s recent second-quarter earnings call, Crager disclosed the news while talking about plans to expand its business.
“I think the trick will be … how do we bring those solutions more down market so that more investors can take advantage of it,” he said, when asked about adding new innovations. Those solutions “would include fractional shares and other capabilities that we’re working to introduce over time.”
Crager didn’t elaborate on Envestnet’s development of a fractional share program on Thursday, and the company declined to comment further on the matter on Monday.
The CEO did, though, describe the economics of rolling out such offerings: “It’s just harder to execute and provide the diversification that we’d want to as you get too far down market. But for a typical $150,000 portfolio, we can achieve that … ,” he explained.
A Competitive Field
In May, Charles Schwab said it would soon let retail investor clients buy partial shares of S&P companies’ stock. That news came almost seven months after Schwab said it planned to move into fractional shares.
Schwab Stock Slices became available in June for as little as $5 each. The firm is set to complete its $26 billion merger with TD Ameritrade by year-end.
Fidelity introduced the option for its investor clients in late January — for both stocks and ETFs — while Robinhood did so in mid-December. Folio Investing, though, started selling fractional shares in 2000.
Although Envestnet won’t be the first firm to offer fractional shares, a large number of advisors use its wealth technology platform — more than 103,000, according to Crager.