In the world of brokerage firms, Robinhood, Charles Schwab and Fidelity loom large as three of the most prominent. As competing firms in the financial services industry, these firms naturally share several things in common, offering many similar products and services to their customers. However, they are not identical and differences in history, fees and experience mean that each firm may not be appropriate for every investor. If you’re looking for a uniquely tailored approach to your finances, you may benefit from working with a financial advisor.
Overview of Robinhood vs. Schwab vs. Fidelity
Since Robinhood, Schwab and Fidelity are among the largest brokerage firms in the industry, investors have access to a wide range of investment products at all three firms. Where the firms differ is more in the realm of the typical customer experience, as well as things like fees.
Founded in 2014 by two Stanford graduates, Robinhood is the new kid on the block relative to its two contemporaries covered in this article. With a distinct focus on the mobile experience, Robinhood’s appeal is mostly geared toward self-sufficient investors who’d rather manage their brokerage account from their phone than sit across the desk from a professional.
The oldest firm of the three, Fidelity has been providing customers with a range of financial services since 1946. While the firm is primarily known for its trading account in which individual investors can buy and sell individual securities, Fidelity also offers all kinds of other products such as annuities, trusts, 529 plans and investment research tools. The firm has also capitalized on the robo-advisor trend with two products: a fully automated robo-advisor called FidelityGo and a hybrid product called Fidelity Personalized Planning and Advice.
Charles Schwab, often shortened to just Schwab, is a full-service firm that has assisted tens of millions of customers since its founding in the early 1970s. With an immense range of offerings, from robo-advisor services to proprietary investment research, you won’t be short on options.
Robinhood vs. Schwab vs. Fidelity: Fees
None of the three firms covered in this article assess transaction fees, also called trading fees, as part of their overall fee schedule. This practice is in keeping with an overall industry trend in recent years. As with most fee policies at firms like these, however, there are exceptions to keep in mind for investors with more unconventional circumstances. Here are some highlights of each firm’s fee and commission structure.
Robinhood does not charge fees or commissions to trade, and there are no inactivity fees, no fees for moving money in or out of your account and very few non-trading fees. Instead, Robinhood makes money by pocketing the small difference between the buying and selling price of an asset. This generates very little money, typically only pennies or less per share traded, but over millions of transactions those pennies add up. Robinhood Gold also offers margin trading to subscribers who pay a $5 monthly fee, which allows margin trading at 7.5% interest rate and – as of April 2023 – 4.4% APY on idle cash.
Schwab collects no commissions for online trades of stocks and exchange-traded funds (ETFs). Options trades are commission free, but there’s a fee of $0.65 per options contract. OTC trades are free. Schwab’s robo-advisor accounts have a $5,000 minimum with no fees. Investors with a minimum of $25,000 will incur a $300 charge upon opening an account plus a $30 monthly advisory fee. Schwab charges no commissions for bonds, but futures cost $1.50 per contract. Customer service is free.
Fidelity lets customers trade stocks, ETFs and bonds free of charge. There are several thousand no-fee mutual funds. Fidelity charges $49.95 to trade funds that aren’t on its no-fee list. Options trading costs $0.65 per contract. There is a zero expense ratio for four Fidelity funds. The Depository Foreign Trust Company foreign settlement fee is $50 per trade. If you purchase a Fidelity mutual fund with your Fidelity brokerage account, you won’t have to pay a fee.
Robinhood vs. Schwab vs. Fidelity: Services and Features
The suite of financial services and products available at each of the three firms varies significantly, as Schwab’s Fidelity’s offerings are a good deal more exhaustive than that of Robinhood. In addition to standard brokerage accounts, both Schwab and Fidelity offer individual retirement accounts (IRAs), 529 plans and custodial accounts, among other products.
Robinhood’s offerings may be less wide-ranging, but that isn’t to say they don’t comprise more than enough to satisfy most individual investors. In addition to the standard brokerage account, the firm also offers a margin account program known as Robinhood Gold, which empowers participants with premium features like increased trading hours and buying power, for an additional fee.
Both Schwab and Fidelity have gotten in on the robo-investing trend. Fidelity’s offering, called Fidelity Go, is available with no minimum balance requirement and a $3 monthly fee if your balance is less than $50,000. Schwab’s robo-investing service is called Schwab Intelligent Portfolios, and it provides a bit more of a customized approach. After taking a short quiz, the service will tailor the portfolio it creates for you in accordance with your answers.
Robinhood vs. Schwab vs. Fidelity: Online and Mobile
For all three of these firms, investors are able to access their trading accounts on both desktop and mobile platforms. While it’s also possible to speak with a human broker at all three firms, it’s more difficult to do so with a Robinhood account, as the firm is structured without any physical locations.
In terms of the mobile experience, it’s no surprise that Robinhood shines the brightest, seeing as the firm originated as a mobile app. The Robinhood has a 4.8-star and 4.7-star rating on the Apple and Android app stores, respectively and the firm has received critical acclaim for the app’s design.
Both Schwab and Fidelity have popular mobile apps as well, although each app lacks all the functionality that’s possible on the firms’ websites. Schwab mobile has a 4.8-star rating in the Apple App Store, whereas the star rating for the Fidelity mobile app is 4.7.
Who Should Use Robinhood, Schwab and Fidelity?
If you’re an independent investor who’s looking to get up and running right from your smartphone, Robinhood’s sales pitch will likely resonate with you. While both Schwab and Fidelity also have robust online presences as discussed above, Robinhood has the advantage of being completely digital-native.
If, however, you are a bit earlier on in your investing journey and don’t have a firm idea of what products or services you’re most interested in, you might have a better experience with Schwab or Fidelity. You’ll have more options when it comes to the services offered, and you’ll have an easier time contacting a professional if that’s something you want.
Between Schwab and Fidelity, both firms offer a lot of services, and they’re more similar to each other than either is to Robinhood. If you want a more conventional brokerage experience and the idea of a customized robo-investing program appeals to you, Schwab may be more up your alley.
Robinhood, Schwab and Fidelity are three of the most well-known brokerage firms for a reason, as they each have offerings that make them the best choice for certain investors. While they may differ on the margins when it comes to educational resources, broker availability or mobile app features, each has proven capable of helping you achieve your investing goals.
Tips for Investing
- If you’re looking for a way to make trades on your own then one of the options above might be a great fit. However, many people prefer enlisting a financial advisor to get more hands-on help. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three 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.
- Before making any investments on your own, you should make sure you have a plan and are able to make investment decisions that abide by your plan. You can use SmartAsset’s investment calculator to help.
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