Fidelity Investments vs. Robinhood 2019

When Robinhood launched, the key selling point was that they would not charge commissions. But they're not a charity--they have to make money somewhere. And if you're not paying them for the services you're using, you're not the customer--you're the product being sold. In Robinhood's case, it appears that they are generating most of their revenue by selling their order flow to market makers and pocketing the payments. Fidelity, however, prides itself on how much price improvement it attains for its clients, routing their orders in a way that beats the current best bid or offer.

That doesn't matter if you're trading just a few shares at a time, but once you get into larger lots, you'll make more in price improvement at Fidelity than you pay in commission. And you'll get research, education, planning tools, and help along the way, along with real time data and customizable charts.

In our 2019 Best Online Brokers Awards, Fidelity Investments received awards for Best Overall Online Brokers, Best for Beginners, Best Stock Trading Apps, Best for ETFs, Best for Penny Stocks Best for Roth IRAs, Best for IRAs, Best for International Stock Trading, and Best Web Trading Platforms.

Robinhood received an award for Best for Low Costs.

Fidelity's trade execution engine gives its clients a high rate of price improvement. Active Trader Pro, Fidelity's advanced platform, offers streaming data and customizable charting. There is always an order ticket on display, and contextual help has been added to guide you through the process.

Robinhood's overall simplicity makes the app and website very simple to use, and charging zero commissions is appealing to extremely cost-conscious investors who trade small quantities. Trade tickets are very simple for equities – just fill in the number of shares you want to trade. Both the app and the website default to sending market orders, though you can change that with some tapping or clicking. Options trading capabilities are fairly simple, and there is little help for choosing a strategy. Quotes are delayed unless you are in the process of entering an order. To update the current pricing, you have to refresh the screen -- quotes do not stream.

Fidelity

• Streamlined trade ticket with contextual help available
• Streaming real time data on Active Trader Pro platform
• Excellent order executions that generate price improvement

Robinhood

• No streaming quotes
• No complex options
• Robinhood Instant gives you immediate access to buying power when you initiate a deposit or sell a long position

Fidelity's mobile apps are much fresher and easier to use than the website, which is reflected in the 50% increase in trades placed on mobile devices between 2017 and 2018. The startup screen can be customized, and contextual help has been added to the trade ticket. Watchlists you generate on the website can be viewed on mobile devices as well, and the full range of offerings can be traded on your phone or tablet. 

Robinhood was launched as an easy-to-use mobile app. Click on the search icon to view collections of stocks if you are looking for trading ideas. Watchlists are synched between the app and the website. Quotes are, however, delayed.

Fidelity

• Streaming data and customizable news feed
• Customizable landing page
• Watchlists synch across platforms

Robinhood

• Very simple app, native to both iOS and Android
• Watchlists synch from web to app
• No streaming quotes

Fidelity's screening tools can be used to narrow down your investment choices across a wide array of asset classes, including stocks, ETFs, options, mutual funds and fixed income. Their proprietary charting packing is augmented by Recognia’s technical patterns and events. On Active Trader Pro, you can set up streaming news feeds and video from Bloomberg TV. The stock snapshot pages include environmental, social and governance (ESG) ratings from MSCI. 

Robinhood's news feed includes stories from Yahoo Finance, Seeking Alpha, Associated Press, Marketwatch and several other sources. Clicking on a news headline on the website opens a new window. Research capabilities are on the light side -- there are no screeners at all -- but since you're not paying commissions, you can look for research elsewhere. Charting is extremely basic, and there are only 5 years of price history available.

Fidelity

• Stocks, ETFs, options, mutual funds and fixed income screeners available
• Stock snapshot pages include data for socially responsible investing
• Customizable charting package includes technical events from Recognia

Robinhood

• News feeds from Yahoo Finance, Seeking Alpha, AP, and a few others
• No screeners, though you can view "collections" of stocks
• Extremely basic charting with just 5 years of data

Fidelity’s online Learning Center contains articles, videos, webinars and infographics that offer education for many investing-related topics such as options trading, fixed income selection, fundamental and technical analysis, and retirement planning. The firm offers webinars frequently, and online coaching sessions for more advanced topics. There are learning programs aimed at beginning investors in the mobile apps. Fidelity conducts a risk assessment when a client logs in, and based on certain criteria, may challenge the client with a two-factor authentication process, or with a security question.  

There are limited education offerings in Robinhood's Help center. Most of the content is dedicated to using the app or website, with little to say about learning to trade. The firm does not hold live events and has no plans for webinars. The Robinhood app supports all major third-party security apps, including Google Authenticator.

Fidelity

• Online learning center contains articles, videos, and other media for a wide range of investing and trading topics
• Learning programs for those new to investing can be accessed from mobile apps
• At logon, a risk assessment is performed

Robinhood

• Limited education offerings, mostly devoted to how to use the app or website
• No live events or plans for webinars
• Mobile app supports all major third-party authenticators

Fidelity’s commissions are in the middle of the pack, for the most part. Their margin rates are slightly higher than average. For mutual funds that are not on the no transaction fee list, there is a $49.95 charge for an initial purchase, which is higher than average. Their bond transaction fees are just $1 per bond, and they do not mark up the secondary market bonds, which lowers the yield. Very frequent traders can work out their own commission schedule.

Robinhood's main claim to fame is free trades, but you will pay a monthly fee to trade on margin in a Robinhood Gold account. Paying in advance for margin trading is an unusual offering. If you're not using the margin you're paying for, the cost can be quite high. Most brokers charge a percentage of the actual amount you are borrowing.

Fidelity

• Stocks/ETF trade fees: $4.95
• Options fees: $4.95 per leg plus $0.65 per contract
• Futures fees: Futures trading not enabled

Robinhood

• Stocks/ETF trade fees: $0
• Options fees: $0
• Futures fees: Futures trading not enabled