Masters in Business · Friday, July 17, 2026
Jason Wenk argues that custodians' reluctance to enable fractional shares costs investors significant money, limits tax benefits, and increases average account size. He suggests this may be a strategy to protect revenue from cash spreads or to disintermediate packaged products like mutual funds, which generate substantial distribution fees.
“What if they are not allowing fractional shares because they really don't want to disintermediate packaged products in general. Right, So make things like direct securities more accessible to more people.”
“I mean, I just went down this rabbit hole. But the end result is it costs investors a ton of money. You end up limiting the amount of tax benefits, you end up increasing the average client account size.”
“So if you really want to have great efficacy kind of investment outcomes, you'd have to have tens of millions of dollars. And if you had fractional shares as just one example, all of a sudden, you know, a ton of that entrenched you know, kind of history goes away completely.”