Robinhood vs. Fidelity Which One is Better

Robinhood vs. Fidelity
The Money Venture

In some of my previous articles, we looked at one of my favorite legacy brokerages, Fidelity. And in those articles, I briefly touched on the many differences between an old-school brokerage account like Fidelity any more modern sleep platform like Robinhood. So today do a proper comparison of these two platforms and also take a broader look at the industry differences between an old-school brokerage and a newer brokerage.

Alright, let’s jump right into it. What is going on everyone I hope you are all having a fantastic day. So I’ll say right out of the gate that Robinhood and Fidelity are both great platforms that in many ways have sheep the industry. I should also mention that I am not being paid by either of these companies and I have used both of them for a long time so let’s get into my fully impartial comparison of Fidelity and Robinhood.

User Experience

User Experience
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Given that it was founded in 1946 and has changed significantly since then, Fidelity is clearly the legacy brokerage in today’s comparison. Robinhood, on the other hand, founded in 2013, truly pioneered the concept of commission-free trading and is largely responsible for platforms such as Fidelity moving in that direction. Both platforms have desktop and mobile usability, but Robinhood is clearly more mobile-focused, providing investors with a sleek and simple way to invest from their smartphone.

In overall, I’d say the Robinhood platform is considerably easier to use and will offer you with that slick and modern design that many other platforms have subsequently emulated, but more experienced investors and aggressive traders may complain that the Robinhood app lacks a lot of analytical capabilities. Unlike Robinhood, fidelity has a terrific mobile app with millions of favorable ratings. However, they are certainly more desktop-focused, offering a normal online platform as well as their more powerful Active Trader Pro, which is entirely customizable.

So, if you’re new to investing and are used to doing things on your phone, you’ll enjoy the Robinhood platform, but if you want a more full user experience on a computer, Fidelity is the way to go. In terms of account settings and investment categories, Fidelity clearly outperforms Robinhood.

Fidelity offers 401(k) rollovers, 529 college savings plans, youth accounts, custodial accounts, health savings accounts, trust and estate account alternatives, and a plethora of other situation-specific account options that are just not accessible on Robinhood. Additionally, Fidelity allows you to invest in not only individual stocks but also mutual funds, ETFs, index funds, bonds, single and multi-leg options contracts, Forex, fractional shares, and the list goes on.

Now Robinhood does offer many of those asset types at least on the stock side of things but the biggest differentiator is that Robinhood does not currently offer any kind of mutual funds however you can buy certain ETFs and Robinhood does not currently offer bonds or any kind of Robo advisory service like Fidelity’s Fidelity Go Robo advisor.

Crypto Investing Options

Crypto Investing Options
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That being said while you are now able to invest in cryptocurrency with fidelity through very specific digital asset accounts, Robinhood obviously leans heavily on cryptocurrency and allows you to actively buy and sell tons of different digital assets. So again that one is going to depend on what you need from your investment account but in general, Fidelity definitely has more account options and more types of investments.

Another big differentiator that isn’t nearly as why they talked about is actually the execution strategy and technology that each of these platforms is using. That probably sounds super boring but Fidelity actually uses a proprietary routing system that is seeking the best available price and with over 87% of orders seeing an improved share price, their average 1000 share order saves nearly $20 when compared to the quote of the original order.

I know that’s getting really in the weeds but for comparison, Robinhood doesn’t even publish their trading statistics and that’s a large part of the reason why they have received so much negative publicity over the past several years since many users wonder whether or not Robin Hood‘s technology is actually seeking the best price. If you’re buying and holding for decades then it really doesn’t matter but if you’re actively trading that could make a huge difference.

Cost Comparison

Cost Comparison
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Now as I mentioned earlier in the post, both of these platforms are largely free across the board however there are some fees associated with certain trades that you wanna be aware of. Trading for stocks and ETFs is completely free on both platforms and there are no account fees or minimum investment requirements for either platform.

You also have free domestic wires however Robinhood does charge $75 if you want to transfer your investment account off the platform while Fidelity does not charge anything for that. Additionally, trading on margin which I would never recommend does require the premium Robinhood gold subscription which is five dollars per month but anything beyond your first thousand dollars of margin will be charged 3.5% interest.

Fidelity’s margin on the other hand is 9.075% for your first $10,000 and 7.575% up to $100,000. Both of those platforms are well below the industry average but again I would not recommend trading margin so it really doesn’t matter.

When it comes to educational resources, both platforms are actually fairly comparable with Robinhood offering their snacks newsletter, podcast, educational video series, and daily updates on market conditions. I think all of these are really important resources, especially for new investors but Fidelity offers a very robust learning center as well that includes articles, videos, webinars, and the ability to ask live questions to a real coach using the trading strategy desk.

That being said while the educational resources are similar when it comes to the analysis of your own portfolio, Robinhood does leave a little bit to be desired. Beyond your real-time balances, margin, and buying power, you really don’t get much else. Now in fairness there’s only so much you can display on a smartphone and seeing that Robinhood is a largely mobile-based platform, this is to be expected.

But there are certain features like asset allocation, your internal rate of return, and even a basic way to estimate tax implications that simply leave a lot to be desired with Robinhood. Unsurprisingly with a desktop-focused platform, Fidelity has a number of portfolio analysis tools that can help you keep your portfolio on track, see unrealized and realized gains and losses, account balances, internal rate of return, and all of this information is displayed to you in real-time.

Not everyone needs to know all of those numbers and if you’re brand new to investing then that could actually be overwhelming but if you’re a little bit more proficient then not having a piece of information could be a little bit frustrating.

The Biggest Difference

customer service
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Okay, here’s a significant differential that will be the last nail in the coffin for me: the disparities in customer care. If you’ve seen any of the headlines about Robinhood in the news in recent years, you may be aware that their customer service is virtually non-existent. There is no phone number to call, and while you can submit your phone number for a call back and get support through their chat bot, I find this extremely frustrating. If you need help quickly and your money is on the line, not being able to talk to a real person quickly could honestly be a dealbreaker.

Compare that to Fidelity’s 24/7 phone line as well as their web-based support and chatbot and the customer service category clearly goes to Fidelity. I feel like it’s fairly obvious where this one is headed at this point but the last thing I feel is really important to talk about is security.

Nowadays every platform is going to have your standard two-factor authentication and biometric recognition but that’s the bare minimum you’d expect. Robinhood does have the standard SIPC coverage up to $500,000 including $250,000 for cash claims but they do not carry any type of insurance beyond that for their members.

If you have less than $500,000 in your investment account then that doesn’t really matter but Fidelity does carry excess SIPC insurance all the way up to $1.9 million in uninvested cash limits and according to Fidelity that is the maximum that is currently available within the industry.

Over the past several years Robinhood has had several data breaches with the most recent one occurring last year which impacted millions of customers that coupled the lacking ability to talk to a real person definitely concerns me a bit.

Final Thoughts

We could sit here for days comparing the fine details of these two platforms to each other, and while I strongly believe that platforms like Robinhood serve a purpose, I don’t want to dismiss the fact that they did help move the industry in an entirely new direction, they simply leave a lot to be desired overall. Yes, Robinhood has an amazingly beautiful and contemporary site, and yes, they have made investing accessible and inexpensive to the public, which was not the case only a few years ago.

Add on top of that the fact that I am incredibly grateful that they move the industry in a commission-free direction and overall I do enjoy the Robinhood platform. However, when compared to one of these legacy brokerages, it’s just not even close and if you’re like me and you’re looking to invest for decades and decades then you want to make sure that you’re going with a brokerage account that has that proven track record it isn’t going to throw a wrench into your investing goals years down the road because they had improper security protocols or lacked features that you need in the future.

I’m sure I’ll get a lot of interesting comments for this one but obviously, in today’s comparison, I will personally be going with Fidelity for all of the reasons that we talked about in this article. But that is just my opinion and I understand a lot if you really love Robinhood and similar to me it may have been one of your first experiences with investing.

So I’d love to know your thoughts on this comparison down in the comment section below and if you prefer Fidelity in those old-school brokerages or if you prefer platforms like Robinhood delight to do everything from your phone

Disclaimer: The comprehensive minds and their writers are not investment advisors or financial experts, but rather independent publications. The examples are imaginary, and we advise you to obtain specific financial advice from competent specialists.

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