Fidelity vs. Robinhood | SmartAsset (2024)

Fidelity and Robinhood are about as different as two trading platforms can get.Fidelity is a full-service brokeragefirm. You can trade most securities through its platform, either on your own or with the help of an advisor, and there’s lots of information available about whatever security you’re considering. Robinhood, on the other hand, is a stripped-down trading platform that emphasizes ease of use and includes fewer types of securities for trading and less information about them.Here’s a look at both of them.

If you’re looking for a hands-on approach to investing, a financial advisor can help you create a financial plan for your needs and goals.

Fidelity vs. Robinhood: Fees

One of the first and most important things to consider is how much you’ll be charged to use the platform and make investments. There are largely four types of fees to look out for when choosing a trading platform:

Robinhood does not charge commissions. The company in many ways defined the modern fee structure for online trading platforms, as it was one of the first and largest companies to move to a no-commission model. Since Robinhood entered the market most other firms have moved to catch up with this pricing model.

While the company does not charge any commissions or inactivity fees, it does pass on certain regulatory fees to its users. You can read more about Robinhood’s fee structure here.

Also, the Securities and Exchange Commission said in December 2020 that one of “Robinhood’s selling points to customers [between 2015 and late 2018] was that trading was ‘commission free,’ but due in large part to its unusually high payment for order flow rates, Robinhood customers’ orders were executed at prices that were inferior to other brokers’ prices.” Without admitting or denying the SEC findings, Robinhood agreed to a cease-and-desist order and agreed to pay a $65 million civil penalty.

While there’s no fee to use the basic Robinhood option, customers can sign up for Robinhood Gold. This For a relatively modest fee of $5 per month, customers will have access to margin trading that starts at an interest rate of 8% and earn 5% APY on idle cash.

Fidelity’s fee structure is somewhat different, as this platform offers significantly more products and services than Robinhood.Fidelity doesn’t charge trading fees or commissions on stocks and ETFs.

However, unlike Robinhood, it does charge $0.65 per contract to trade most options. It costs $1 per bond to trade most bonds on Fidelity’s site, and except for a defined list of no-fee funds Fidelity charges $50 to trade most mutual funds. Robinhood offers neither bonds nor mutual funds at all. As of April 2024, margin interest rates at Fidelity start at 13.575% on debit balances of up to $24,999 and progressively decrease on higher debit balances. The firm charges a 9.25% margin interest rate on debit balances of more than $1 million.

Fidelity charges no inactivity fees, nor does it charge for basic services such as depositing and withdrawing money from your account. Making a trade by telephone will typically incur a $5 charge and broker-assisted trades cost $33. Again, neither of these latter options is offered through Robinhood.

The upshot is that Robinhood and Fidelity are mostly comparable in price. In the areas where they offer overlapping services, both platforms are mostly free of charge. The only significant difference is that Fidelity charges to trade options, whereas Robinhood does not, and Fidelity has somewhat higher rates on margin trading. Beyond that, the areas where Fidelity adds trading fees and charges are primary features that Robinhood does not offer.

Fidelity vs. Robinhood: Services & Features

Robinhood is a simple, streamlined trading platform focused on its app. The company has released a web interface, but it is clear that the app takes priority in terms of design and development.

The platform’s goal appears to be to bring in new and novice investors, and it does so by presenting a trading interface designed to be as clear and uncluttered as possible. This has the upside of making Robinhood far less intimidating than a standard trading platform.

Robinhood offers basic trading data such as current price, trading volume and price history over the past five years. The platform supports some complex trades such as stop-loss orders, and it offers a comparably stripped-down list of asset types to trade – no bondor mutual fund trading. Using Robinhood investors can trade stocks, ETFs, ADRs and options contracts. Users can also trade some cryptocurrencies.

Fidelity, on the other hand, has designed its trading platform to meet the needs of just about any investor. Through its app and website, you can access virtually any form of trading data and technical indicator available to retail traders.

Investors can trade almost any mainstream asset on Fidelity’s trading platform, including bonds, mutual funds and currencies. The most conspicuous exception is that Fidelity does not support trading futures contracts at the time of writing. However, Fidelity now allows you to directly purchase cryptocurrencies like Bitcoin and Ethereum.

Fidelity has a full range of customer service options. Users can e-mail, call, chat live or even visit a Fidelity branch in person. Robinhood now offers 24-hour support for users with accounts.

Fidelity vs. Robinhood: Online & Mobile Experience

Fidelity and Robinhood both operate a single platform and both operate that platform through a website and a mobile app. This is different than some brokerages, which offer multiple trading platforms for varying levels of investor sophistication. The Fidelity platform strikes a balance between access and complexity. Users can relatively quickly find the assets they want to trade, and the most important information is easy to access within each given asset’s trading screen.

Basic functions, such as how to buy, sell or check your portfolio, are also laid out well. While the app’s basic layout may present a learning curve for someone who may not have much to invest and is still learning, most users will have no problem with the broadest functions of the Fidelity platform.

Ultimately, though, as a full-service brokerage Fidelity offers a dizzying array of technical information, data and sophisticated trading products alongside its more standard options. Users who want to check stock prices and buy or sell stocks will find little trouble navigating the app, but once they begin to explore the various tabs and options available they quickly may find the system intimidating. Features such as the platform’s automatic reliance on candlestick charts may confuse newcomers and will require some time to learn.

Robinhood, on the other hand, is designed to elide this learning curve almost altogether. Itsinterface has been compared to Twitch gameplay or the marriage of investing and Tinder dating. The app lays out its investments with intuitive lists and tables, allowing users to quickly search through its equities and options by name, market and category. Robinhood groups assets together with tags, and users can see similarly situated products by scrolling through these groups.

Asset screens are straightforward, with information laid out in quick, easy-to-digest tables and charts.

Fidelity vs. Robinhood: Who Should Use It

For the experienced investor, Robinhood offers too few options and perhaps less technical data, meaning that serious investors may quickly bump up against its limitations. It also doesn’t offer some of the most popular asset classes on the market – notably bonds and mutual funds – which could limit experienced investors. Investors who know what they’re doing will know that they need more than this stripped-down platform has to offer.

Robinhood is geared toward new and inexperienced investors. Its “gamification” of investing has been criticized for allegedly obscuring the very real risks involved with the market. The platform also lets userstrade particularly risky securities like options, the risks of which may not be clear to newbies. In other words, with Robinhood it’s imperative to be careful.

Fidelity offers an excellent trading platform and one that is particularly well-designed for new and inexperienced investors. Indeed, while highly experienced investors might be marginally better served with TD Ameritrade or E*TRADE, Fidelity offers a platform that is very well designed for both seasoned investors and new investors willing to learn the ropes without getting into trouble.

Bottom Line

Robinhood may be too limited for experienced investors. Inexperienced investors, on the other hand, could end up taking risks they’re likely not yet ready to take in part because of Robinhood’s ease of use and intuitive display. Fidelity, meanwhile, presents the novice with a slightly higher learning curve than Robinhood and yet has all the features and information you need to make smart, informed choices as your knowledge and skill evolve.

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