Robinhood Trading rating

Robin Hood Review (Brokerage Firm Investing Account)

Overview of Robinhood

The brokerage industry鈥檚 lowest-cost services will be found at Robinhood (member of SIPC), which, living up to its name, has brought securities investing to the masses. It has plans to offer more than securities in the future as well. Let鈥檚 check out the broker-dealer and see how it performs and see complaints in important categories.

Robinhood Investments and Pricing

Stocks and ETFs $0
Stocks and ETFs broker assisted $10
Listed Foreign Securities $50
Euroclear $35
Canadian Stocks $35
Options $0
Mutual funds not offered
Treasury Bills, Notes, Municipal and Agency Bonds, Zeros & Strips not offered

Robinhood Investments stocks, options, crypto currencies, ETFs
Minimum deposit to open account $0 for cash account, $2,000 for margin account
FeesRobinhood fees
Promotion Robinhood promotions

Customer Service

Robinhood Service Rating

While Robinhood emphasizes low fees, it does not put much importance on customer service. The broker鈥檚 representatives are available over the phone only during market hours, which are from 9:30 am till 4:00 pm, EST. Strangely, its phone number isn鈥檛 toll free. The brokerage firm does not offer any branch locations, either.

Robinhood has a fax number and a snail mail address. The brokerage firm has two Twitter accounts, neither of which is very active. A messaging service is available on the Robinhood site, and a login is not required to use it. It is not a live chat service, however. Finally, an e-mail address can be used to contact the company. A test e-mail from us took two days to receive a response.

Compared to many of Robinhood鈥檚 competitors, including some low-cost brokerage firms, the customer service options with the broker are awful. Firstrade provides an on-line chat service, virtually all brokers have toll-free numbers, Fidelity is open 24/7, and Schwab has many brick-and-mortar locations. Robinhood traders must be able to manage their accounts and financial needs without much assistance. Investors who need more help than this have no choice but to find another broker.

Robinhood Commissions, Fees, and Account Requirements

Robinhood Cost Rating

In exchange for the broker鈥檚 rather disappointing customer service, Robinhood customers receive the best pricing schedule possible. Stock and ETF trades are absolutely free. Yes, they really cost $0. (The only other broker offering free investing is higher rated Firstrade). On top of that, there is no minimum hold period for these securities, which, when compared to industry standards, is really amazing. Placing a trade over the phone with a live rep is available and costs $10 per transaction.

Robinhood claims it can survive with such a minimal pricing schedule by charging for paper statements ($5 per month) and hard-copy trade confirmations ($2 each). Electronic versions are available, and they are free of charge. Regulatory and exchange fees are passed onto the customer, although these tend to be very small amounts.

Robinhood also makes money from its unique margin service, which charges a flat fee based on the amount of the buying power a customer needs. For example, signing up for a $2,000 credit line costs $10 per month. There is no APR charged for this service, which makes Robinhood different from other brokers yet again. A larger credit line results in a higher monthly fee. Customers who want an $8,000 line of credit pay $40 every month.

Borrowing above $50,000 will result in Robinhood imposing an APR of 5.0%, which is very low by industry standards. Fidelity customers, for instance, pay 7.375% for the same loan.

A trading account at Robinhood can be opened with zero deposit, and the brokerage firm does not charge any on-going fees for a funded or unfunded account. There are no annual, inactivity, maintenance, or low-balance charges. Transferring an account to another broker via the ACAT system does cost $75, although this fee is in line with what other firms charge. Transferring an account into Robinhood is always free.

Mutual and Exchange-traded Funds

Robinhood ETFs Rating

All US-listed exchange-traded funds are available for trading at Robinhood, and that unfortunately is the only good thing we can say in this category. Mutual fund investors will be disappointed here, because the broker simply doesn鈥檛 offer any. None are available, even with a transaction fee.

Obviously, there are no mutual fund resources such as screeners or profile pages. Moreover, Robinhood does not provide much information on ETF鈥檚. Apparently, ETF traders need to obtain their security data from another service, make an investment decision, and then place the trade at Robinhood.

Compared to several other low-cost brokers, Robinhood鈥檚 offerings in this category are a disappointment. Schwab offers more than 5,700 mutual funds, for example, with over 3,400 having neither load nor transaction fee. TD Ameritrade has more than 13,000 mutual funds. Obviously, in some areas, other brokerage firms do a better job of offering free than Robinhood does.

While it鈥檚 true that all ETF transactions at Robinhood are free, Firstrade also offers free stocks, ETFs as well as mutual funds, which Robinhood does not offer.

Banking Features

Robinhood Banking Rating

Going from bad to worse, we now come to cash management services, which simply aren鈥檛 offered. There are no checks or Robinhood debit card. This deficiency will surely be an inconvenience to the broker鈥檚 customers who need such tools.

Robinhood鈥檚 failure in this category also puts it at a disadvantage compared to some of its rivals, who do offer such tools. TD Ameritrade, who charges $6.95 for equity trades, offers checks and a Visa debit card free of charge. The brokerage firm even refunds ATM charges incurred by its customers when using its debit card. Check reorders are free, and TD Ameritrade鈥檚 mobile app has a convenient check deposit feature. Because all these items are free of charge, TDA is a better value for customers who need banking functions.

In addition to not offering checks and a debit card, Robinhood also fails to provide FDIC insurance for uninvested cash. Several brokers do this by using a cash sweep program where they deposit cash with program banks. Merrill Edge is one example. In addition to not offering FDIC protection, Robinhood also does not pay interest on free cash balances. Several brokers do offer this added bonus, although the APR鈥檚 are usually pretty low.

Because Robinhood doesn鈥檛 offering trading in mutual funds, using a money market mutual fund as a core account is not possible.

Financial Advice & Managed Accounts

Robinhood Account Rating

On top of not offering any decent banking features, Robinhood also doesn鈥檛 provide managed accounts or investment advice. While this new-generation broker is supposed to be a high-tech company, it does not have a robo investment advisory service. This is a significant failure because many of its rivals do have one. Schwab, for example, offers Intelligent Portfolios, which invests in low-cost ETF鈥檚. The brokerage house manages to offer this robo service for free. Once again, Robinhood proves that it鈥檚 not always the cheapest option.

Investors who need investment advice will obviously be better off with a company like Vanguard or Fidelity. The latter broker has even been known to give limited investment advice to its customers over the phone free of charge.

Trading Tools

Robinhood Tools Rating

The Robinhood website is used mostly for promoting the broker鈥檚 investment services, which, as we have already seen, are pretty limited. The website itself has only limited functions.

This puts Robinhood at a major disadvantage when compared to many of its low-cost rivals. Firstrade customers, for example, can use a very nice trade bar that sits inside the browsing window or place trades on simple web pages. A host of account management features are available to them as well.

Unlike TradeStation, who charges just $5 per equity trade, Robinhood doesn鈥檛 have a desktop platform or browser-based platform. In addition to offering these software programs free of charge, TradeStation also provides a simulated trading option on each one.

Robinhood Investing Review

Mobile App

Robinhood App Rating

Now we come to the broker鈥檚 mobile app, which is where all the action takes place. Funds transfer occurs here along with charting, security research, and order placement. Robinhood has added a simple 4-digit PIN as a login to the app. This is more convenient than using a longer password.

After logging in, the app displays the prices of popular stocks, like Facebook, Netflix, and GE. A handy search box appears in the upper-right corner. Typing in a ticker symbol or company name produces a drop-down menu of close matches. Tapping on a result generates the stock鈥檚 profile page.

Robinhood brokerage review

The security鈥檚 profile page is where all available information that Robinhood provides can be found. Unfortunately, there鈥檚 not very much. At the top of the app page is a plus sign, which when tapped will add the stock to a watchlist. Below the very top is the last trade price, and below that is a very simple graph. Below the graph is market news. These resources are in article format and come from a variety of sources, such as CNBC and MarketWatch.

Below the news articles is a small section devoted to trading data. These numbers include such figures as volume, market cap, and dividend yield. Next is a short earnings history, which is conveniently displayed in an easy-to-read format showing both expected and actual earnings.

Robinhood trading review

A chart unfortunately doesn鈥檛 rotate horizontally, and there are no charting tools or technical indicators available. A stock鈥檚 price history can be displayed up to 5 years. Other low-cost brokers, such as TradeStation, have better mobile charting tools.

Despite the app鈥檚 weaknesses, there are some nice strengths. For example, Siri can be enabled on Apple devices. Doing so allows the user to ask questions such as, 鈥淗ey Siri, what is my Robinhood account balance?鈥

The Robinhood app conveniently displays the icons of various banks to make linking a deposit account quick and easy. Tapping on one of these links automatically generates the bank鈥檚 routing number, so all you need to do is add your account number. Stocks can also be transferred to a Robinhood account using the app, and Robinhood will even cover any fees the old brokerage firm charges.

There is also a Robinhood app for Apple Watch. It can perform a variety of functions, including order entry.

Investment Education and Research

Robinhood Research Rating

There isn鈥檛 much in terms of financial education on Robinhood鈥檚 site or mobile platforms. Many other low-cost brokerage houses have large amounts of learning materials on their sites so that self-directed customers can learn the ropes of securities trading.

The amount of information on stocks and ETF鈥檚 that appears on Robinhood鈥檚 mobile app is very brief compared to some of Robinhood鈥檚 rivals. Schwab, for example, provides very detailed facts about a stock or ETF, including multiple third-party reports in pdf format free of charge. Robinhood does not supply these important pamphlets at any price.


Robinhood IRA Rating

Robinhood does not offer any type of retirement account. There are no self-employed 401(k)鈥檚, nor are there any IRA鈥檚. This is a disappointing failure as these accounts are tax advantaged, and some of Robinhood鈥檚 customers could benefit from them.

Most of Robinhood鈥檚 competitors do offer nontaxable accounts. E*Trade and WellsTrade do, although there are some fees attached. TD Ameritrade offers retirement accounts without any special charges.

Because Robinhood doesn鈥檛 provide any financial advice, there is no assistance for retirement savers, either. Betterment rovides investment advice and a robo-advisory service for a low annual fee. There are no commissions charged for the trades within the broker鈥檚 robo service, and IRA鈥檚 can be used with the automated trading system.

Alternative Investments

Robinhood Investments Rating

In addition to not offering mutual funds, Robinhood does not provide access to fixed-income products, forex, or futures. It does offer options trading as well as cryptocurrency trading service that lets its clients buy and sell bitcoin and other digital currencies. This service many of the broker鈥檚 competitors don鈥檛 offer.

Robinhood Review Summary

Robinhood has been offering $0 commissions for more than four years now. Miraculously, it has managed to stay in business and is even expanding some of its operations. Despite the company鈥檚 growth, many investment services are still very deficient, and better values can be found elsewhere.

Robinhood Promotion

Get free stock with $3-$7 value when you open an account.

Open Robinhood Account

Robin Hood Investing reviewed by Rating: 3