Retail Brokerage and Distribution Report—Canada Summer 2021

Fractional Share Trading—Welcome to Canada!

The attention being directed at fractional share trading and its potential to create a bevy of new opportunities for wealth management has ramped-up over the course of 2021. Enhancing the accessibility to high-priced equities, creating a dollar-based order entry and execution process, and ushering in a new approach to engage and improve the investing experience for the small and younger investors onboarded during the pandemic, are just a few of the promising use cases. Added to this is the potential for advice channels to create micro-personal index or highly customized models for clients across a broad range of financial wealth segments.

Will this functionality help advisors in their quest to deliver highly personalized—but scalable—customer experience, and win the differentiation battle against hungry newcomers and fierce incumbents? While a simple concept to understand, fractional share trading presents a web of complexity both operationally and economically. This research feature investigates the ins and outs of fractional share trading and its potential across the Canadian retail wealth management market. Exploring the operational details, the build-buy-or-partner question, and the challenges involved, make this an important read for all distributors assessing the competitive landscape and for manufacturers who may see downstream impacts from adjacent innovations like direct indexing.