Fidelity Investments vs. Robinhood

If you’re deciding between Fidelity Investments and Robinhood, it’s important to consider what you need from a broker.

Fidelity is a full-service brokerage with a wide range of investment options, powerful research tools and extensive educational resources, making it ideal for both beginners and seasoned investors.

On the other hand, Robinhood is celebrated for its straightforward mobile app that offers commission-free trades and easy access to stocks, exchange-traded funds (ETFs), options and cryptocurrencies.

While Fidelity’s advanced features and comprehensive services might attract more serious investors, Robinhood’s simplicity can be useful to those just starting.

Here’s a comparison to help you choose the best platform for you.

Fidelity Investments vs Robinhood: A quick comparison

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How features compare

Use this table to explore the features of Fidelity and Robinhood and how they compare.

	Fidelity Investments	Robinhood
Robo-advisor	Yes	No
Human financial advisor	Yes	No
Fractional shares	Yes	Yes
IRA match	No	3% year-round match but requires a $5 monthly Gold membership, or get a 1% match without Gold
Cash sweep rate	Earn a 7-day yield of 4.96% as of August 22, 2024, with SPAXX or 2.72% APY with the FDIC program	4.5% APY, but requires a $5 monthly Gold subscription
IPO access	Yes	Yes
Instant buying power	Yes	Yes
Paper trading	No	No
24/5 trading	No	Yes
Educational resources	Yes	Yes

How the trading platforms compare

Fidelity Investments and Robinhood offer distinct trading platforms tailored to different types of investors. Take a look at how the two compare.

Fidelity Investments is more advanced but still user-friendly

Fidelity’s extensive resources make it a great choice for people of all experience levels.

Beginners will enjoy its easy-to-use app, while more serious traders may gravitate toward Fidelity’s desktop platform, which offers features such as research tools and customizable dashboards.

Additionally, it offers fractional shares and a no-cost robo-advisor, Fidelity Go, for portfolios under $25,000.

Robinhood is a highly intuitive platform

Robinhood’s engaging and intuitive platform is especially appealing to new traders. The mobile app is quick to download, set up and fund, allowing you to start trading almost immediately.

The platform offers basic trading tools such as price alerts and watchlists, as well as advanced features such as charts with indicators, analyst ratings, earnings info and a Trading Trends indicators that shows trading activity for Robinhood users, hedge funds and company insiders.

Subscribe to Robinhood for $5 per month to get Morningstar research and Level 2 market data.

The similarities

Both Fidelity and Robinhood offer commission-free trading for stocks, ETFs and options, as well as crypto trading.

Neither broker has minimum balance requirements, nor do they charge account opening fees or inactivity fees. They each provide 24/7 customer support, fractional shares, high-yield cash sweep programs and comprehensive educational resources.

When it comes to their apps, both are top-notch, but for different reasons. Robinhood’s app is designed for simplicity, while Fidelity’s app offers more advanced features and has won awards for its quality. Both provide real-time price quotes and access to Level 2 market data.

Both brokers also support after-hours trading and margin trading and offer cash management accounts that pay interest on uninvested cash.

Which broker is better for beginners?

It’s close, but Fidelity wins. Fidelity offers features aimed at newer investors, such as expense-ratio-free index funds and access to a variety of research providers. In fact, Fidelity’s fees are among the most competitive in the industry. Beginners wanting to learn and grow can find extensive educational resources on Fidelity’s platform.

It’s worth noting that Robinhood is known to be beginner-friendly, too. It has a mobile-first design and a user-friendly web portal that makes it easy to navigate through the main menu to sections like investing, crypto, cash card, educational resources and support. Its 3% IRA match program is also a great incentive for new investors, and there are no account minimums.

While Robinhood is a good choice for new investors, Fidelity still wins as it offers even more resources for beginners.

Which broker is better for advanced traders?

Fidelity is a better choice for advanced traders interested in complex trading strategies and making long-term investments in index funds. It offers a range of investment options and access to professional financial advisors and educational resources to help investors learn and grow.

While Robinhood does have advanced charting, it can’t match the capabilities of Fidelity’s Active Trader Pro desktop platform, which includes trading and research tools like charting, third-party research, portfolio analysis and stock screeners.

Additionally, Fidelity offers advanced features such as heat mapping, the ability to trade OTC penny stocks and short selling — capabilities that Robinhood doesn’t provide.

Which one’s safer and more reliable?

Fidelity and Robinhood both meet industry security standards, but those with larger assets will be safer with Fidelity as it has more securities in place.

Both brokers offer FDIC insurance for cash accounts and SIPC insurance for investment accounts. Both offer two-factor authentication, biometric recognition and extra security for unfamiliar devices. Both also offer encryption, secure email and continuous system monitoring.

Cash sweep insurance

Fidelity provides FDIC coverage up to $6.25 million on cash swept to program banks.⁽¹⁾

Robinhood offers FDIC insurance via its cash sweep program, providing up to $2 million in coverage across a network of partner banks.⁽²⁾

A cash sweep program, like the ones used by Fidelity and Robinhood, automatically transfers unused cash into deposits at partner banks, giving customers strong FDIC protection and the opportunity to earn interest.

Cryptocurrency

Robinhood stands out in the crypto arena by offering a non-custodial web3 cryptocurrency wallet, giving customers full control and ownership of their crypto with the ability to move it to external wallets.

While Fidelity offers direct trading in crypto and is one of the only big brokers to do so, it has limitations. Fidelity does not allow you to transfer crypto from your account or to an external crypto wallet.

Both platforms use cold storage for most of their cryptocurrency holdings and provide two-factor authentication for security. They are registered with FinCEN and have crime insurance to protect against asset loss.

Fines

Robinhood was fined $70 million by the Financial Industry Regulatory Authority (FINRA) in June 2021 for ” ‘systemic’ failures, including systems outages, providing ‘false or misleading’ information and weak options trading controls, saying those factors combined harmed millions of the app’s customers,” reported Reuters.

“The fine… reflects the scope and seriousness of Robinhood’s violations, including FINRA’s finding that Robinhood communicated false and misleading information to millions of its customers,” said Jessica Hopper, Head of Enforcement at FINRA.

Fidelity has also been fined by FINRA, but not for nearly as much. In 2023, Fidelity Brokerage Services agreed to pay a $900,000 penalty “regarding alleged due diligence failures caused by errors in the firm’s automated screening system,” according to Compliance Week.

Fidelity Investments vs. Robinhood: Which one’s better?

Overall, Fidelity is the better choice for almost any investor, from beginner to advanced. When compared to Robinhood, it offers a more comprehensive range of services, advanced tools and better reliability.

It has a broad array of products, including a wealth of educational materials and a dedicated desktop trading platform for advanced traders. Not to mention, you can get 24/7 support and in-person help with Fidelity.

Robinhood’s simplicity and no-cost approach may appeal to new investors and those interested in crypto as it offers free cryptocurrency trading and a Web3 wallet.

But ultimately, it doesn’t hold a candle to Fidelity and all its offerings. Robinhood’s basic stock, ETF, options trading platform and IRA match end up feeling a bit basic compared to Fidelity.

For these reasons, Fidelity wins.

Alternatives to Fidelity and Robinhood

If neither Fidelity nor Robinhood are right for you, consider these alternatives.

• Webull: Webull targets seasoned traders by offering sophisticated charting tools, technical indicators and highly customizable charts. It also features paper trading for strategy practice with virtual funds and supplies comprehensive market data, real-time quotes, Level 2 market data (at a cost), financial calendars, news feeds and robust screeners to identify investment opportunities.
• Public: Public offers commission-free stock, ETF and options trading, and distinctive assets such as cryptocurrency, collectibles and music royalties. Its app, which is better-reviewed than Robinhood’s, includes a social networking feature for users to connect and learn from each other, and Public doesn’t use Payment for Order Flow for stocks and ETFs.

See how even more brokers stack up

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• Public vs. Robinhood
• SoFi® vs. Robinhood
• Webull vs. Robinhood

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