Fidelity vs. Robinhood: Which Is Best for You?

Fidelity and Robinhood are about as different as the two trading platforms can get. Fidelity is a full-service brokerage firm. 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 about whatever security you’re considering available. Robinhood, on the other hand, offers a stripped-down trading platform that emphasizes ease of use and includes fewer types of securities for trade 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:

Trading Fees: Any fixed charge attached to each trade that you make. This can come in the form of a flat fee or what’s known as the “spread.” This is when your broker charges you based on the difference, if any, between the buying and the selling price of an asset.
Trading Commissions: This is when a broker will charge you a percentage based on the volume or value of each trade.
Inactivity Fees: Any fees that the broker charges you for not trading, such as for keeping money in a brokerage account.
Non-Trading/Other Fees: Any form of fee for trading on this platform not covered above. For example, a brokerage might charge you for making deposits into your brokerage account, taking money out of it or signing up for additional services.

Robinhood charges no fees for most services. 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 zero-trading-fee model. Since Robinhood entered the market most other firms have moved to catch up with this pricing model.

The company says there are no fees or charges associated with using any of its basic services, meaning customers don’t pay transaction fees, commissions, inactivity fees, etc.

Fees have been an issue with Robinhood. In December 2020 the Securities and Exchange Commission said 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.” Robinhood agreed, without admitting or denying the SEC findings, to a cease-and-desist order and to pay a $65 million civil penalty.

Customers who want to engage in margin trading (trading with borrowed money) must sign up for Robinhood Gold. This service costs a relatively modest $5 per month, and margin trading starts at an interest rate of 7.5%. Fidelity’s fee structure is somewhat different, as this platform offers significantly more products and services than Robinhood. Like Robinhood, Fidelity also charges no trading fees or commissions for 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. Margin rates through Fidelity start at 8.75% at the time of writing.

Fidelity charges no inactivity fees, nor fees 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.

Gone are the candlestick charts and spreadsheets of technical analysis, replaced with a single-line graph charting an asset’s price history. However, this has the downside of offering investors relatively little information with which to make decisions.

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 bond or mutual fund trading. Using Robinhood investors can trade stocks, ETFs, ADRs and options contracts. Through its affiliated brand Robinhood Crypto, 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. You can create custom data sets, compare different pieces of information about various assets, and can access information going back for the lifetime of an asset, not just five years.

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, nor does Fidelity allow you to directly purchase cryptocurrencies across its platform. (Readers should note that this may change, as Fidelity had already launched Bitcoin-based funds at the time of writing.)

This comes with the drawback of complexity, discussed further below. However, on a pure features-to-features comparison, Fidelity offers everything which Robinhood has, except for cryptocurrency, and more.

Finally, it is important to note customer service. Robinhood offers relatively little. Users get an FAQ section and an e-mail address. Fidelity has a full range of customer service options. Users can e-mail, call, chat live or even visit a Fidelity branch in person.

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 as opposed to 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. Its interface 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. Price histories are shown with simple line charts, rather than candlestick graphs, and you can give trading orders through clearly marked buttons on each screen.

Fidelity vs. Robinhood: Who Should Use It

For the experienced investor, Robinhood offers far too few options and little in the way of information or 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 users trade 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.

Tips for Investing

Consider talking to a financial advisor about which online trading platform is best for you. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Now that you know the highlights it’s time to get into the weeds. In our dedicated brokerage reviews we go into detail on how exactly Robinhood and Fidelity differ.