You don't own that Google share. You own a bet on its price.
Fractional investing sounds like democratising wealth. In legal terms, it's something else entirely.
The app told you that you own Google. You paid £4.87, watched a green number go up, and felt like a shareholder. You're not.
What you actually bought is a contractual claim against your broker not against Alphabet Inc. Google doesn't know you exist. You won't find your name anywhere near their shareholder register, because a fraction of a share isn't a share. It's a product designed to feel like one.
This isn't a technicality. If your broker becomes insolvent tomorrow, you won't be treated as a shareholder. You'll join the queue of unsecured creditors the same queue as someone owed a refund on a cancelled holiday.
Now, that might sound extreme. Most brokers don't go bust. And when everything works when markets are up, when you sell and get your money it doesn't matter at all. The exposure is real. The economics are real. But the ownership? That's where it quietly stops.
"Fractional investing is like owning a voucher that tracks the price of a slice of pie not the slice itself."
Consider what happens at the AGM. When Alphabet's shareholders vote on executive pay, board composition, or major acquisitions, you won't vote. Your broker holds the whole share in their own name. Whether they pass your fraction of a vote through is entirely at their discretion and most don't. You have economic exposure to the decision, but no say in it whatsoever.
This is the hidden cost of the democratisation narrative. The pitch is that fractional shares open up expensive stocks to ordinary people and that's genuinely true. But somewhere in that convenience, a bundle of legal rights quietly disappeared: the right to vote, the right to receive dividends directly from the company, the right to a prospectus, and the right to be treated as a partial owner in a wind-up.
None of this means fractional investing is fraudulent or even bad. For a long-term, passive investor tracking an index, these distinctions may never matter in practice. But they're worth knowing. Because the difference between owning something and being exposed to its price is the kind of distinction that only becomes obvious when something goes wrong — and by then, it's far too late to care about the semantics.
