- Financial company Charles Schwab has announced a new feature called Stock Slices, which will be launching on June 9
Financial company Charles Schwab [Charles Schwab Corporation Common Stock (NYSE: SCHW)] has announced a new feature called Stock Slices, which enables investors to own shares in leading companies from the S&P 500 for as little as $5 even if their shares cost more. With Schwab Slices — which is launching for clients on June 9 — investors can buy a single stock slice or up to 10 different Stock Slices at once commission-free just like the regular online stock trades at Schwab.
Schwab Stock Slices is going to give investors the ability to sort and search companies by ticker, company name, and sector. And the service will also give investors the opportunity to create and buy their own bundles of stocks based on their needs and interests. All of the Schwab clients also have access to a range of educational resources and research such as stock screeners and Schwab Equity Ratings — which is the firm’s proprietary method for rating stock performance.
How Is It Different Than Fractional Shares On Other Platforms?
After someone selects the single stock or collection of stocks they want to purchase, the total dollar amount invested is split evenly across each stock.
And the slices of shares can round as narrowly as four decimal places. So a $50 investment across five stocks would show up as a $10 purchase of each stock. And the order would show the number of shares or fraction of shares that $10 would buy based on stock prices during the time of execution.
This process is much more automated. On other stock platforms, you would need to execute each of those transactions individually.
After a trade order is executed via Schwab Stock Slices, each stock fraction will appear in a client’s brokerage account to be held or sold individually going forward. And investors will also be able to choose to automatically reinvest cash dividends into the purchase of additional shares (or fractional shares) of those stocks.
Schwab Stock Slices is going to be available in retail Schwab brokerage, custodial, and individual retirement accounts (IRAs). And clients using the service will be able to trade shares in real-time throughout the trading day using market orders.
Stock Ownership Gifts
Since Schwab custodial accounts are eligible, investors are able to use Schwab Stock Slices to get their children or grandchildren engaged with investing in an accessible and educational way. And once a Schwab custodial account is open and funded, the custodian can purchase stocks in small dollar amounts in the same way they would in a traditional brokerage account. Plus a downloadable certificate of stock ownership can be personalized and given to a minor to inform them of the stock purchase.
Charles Schwab [Charles Schwab Corporation Common Stock (NYSE: SCHW)] also revealed it currently has over 360 offices and 12.7 million active brokerage accounts, 1.7 million corporate retirement plan participants, 1.4 million banking accounts, and $3.50 trillion in client assets as of March 31, 2020.
Key Quotes:
“At Schwab we believe stock ownership should be accessible – this is the premise on which Chuck founded our company, and it remains true today. But getting started as an investor can be overwhelming, and often those stocks that are most relevant and appealing are also the most expensive, and out of reach for many. With the introduction of Schwab Stock Slices we’re leveling the playing field – across all retail channels that clients can trade stocks, they can now buy slices of stock.”
– Jonathan Craig, senior executive vice president and head of Schwab Investor Services
“Even with the recent volatility, we’re seeing high levels of engagement from many who see this as an opportunity to get into the market, and fractional shares trading through Schwab Stock Slices will provide an easy platform to do that. Whether it’s a new investor who simply wants to get started or someone more experienced who still finds the stock price of some companies daunting, giving investors the opportunity to buy small slices of stocks is an extremely powerful tool to help people get engaged.”
“We developed Schwab Stock Slices to meet two important needs we heard from clients – newer investors who want the ability to buy multiple stocks in small dollar amounts and older more affluent investors who want to more easily gift stock ownership to younger generations. This is our first use of fractional shares, and we’re looking forward to exploring additional ways we can use the functionality to improve how clients invest.”
– Neesha Hathi, executive vice president and head of Schwab Digital Services
Disclosure: I own a small number of SCHW shares
