The world has no shortage of online stock brokers. Trise of lean, commission-free online trading options like Robinhood and the proliferation of automated investing platforms (robo-advisors) has only made the space more complicated for both first-timers and more experienced investors looking to make a change.
While we can’t review every single online brokerage here, we can compare two high-quality options: Fidelity Investments and Robinhood. If you’ve done any research on your online investing options, you’ve probably heard of both. Maybe you followed the news about Robinhood’s hand in the Great Short Squeeze of 2021 as well.
Fidelity and Robinhood are popular enough — and different enough — to warrant a detailed side-by-side comparison. Read on for a thorough look at these online brokers’ respective merits and demerits, and get ready to make an informed decision about which is right for you.
Fidelity and Robinhood both operate on a simple premise: Whether you’re investing for the long haul or trading for short-term gain, participating in the market shouldn’t be an expensive proposition.
To that end, both brokerages are built around low-cost trading platforms that make it easy to buy and sell stocks and other equities. But that’s about where the similarities end.
Fidelity has a much more comprehensive array of account types, investment platforms and plans, investment products, and investor resources. It’s powerful enough to serve the most complex financial needs.
Robinhood, by contrast, is a leaner app that distills the investment experience down to its essence but isn’t ideal for full-spectrum financial planning or wealth management.
Available Account and Platform Types
Fidelity offers multiple deposit and investment accounts for its users. For the time being, Robinhood offers only one account type and trading platform, although that could change in the future.
Fidelity’s Account and Platform Types
Fidelity offers several different account types for self-directed investors:
- A taxable brokerage account (The Fidelity Account) with commission-free stock, exchange-traded fund (ETF), and options trading and fractional share investing
- Traditional IRAs
- Roth IRAs
- Rollover IRAs
- Health savings accounts
- 529 education savings accounts
- Cash management accounts that pay interest and provide FDIC insurance on eligible balances
Eligible Fidelity customers can apply for and earn margin trading privileges in the Fidelity Account. Margin rates start at 4.00%, depending on account size and other factors.
For active traders, including day traders, Fidelity offers an advanced desktop trading platform called Active Trader Pro. Like the thinkorswim trading platform from TD Ameritrade, Active Trader Pro adds a slew of features and capabilities critical for gaining and keeping an edge in a fast-moving market:
- Real-time stock analytics and associated real-time alerts for events like new price highs and lows, spikes in intraday volume, and technical crossing
- Trade visualization tools that show the potential upside and downside for any given trade
- A single dashboard showing real-time news, earnings announcements, and other events relevant to your holdings
Robinhood’s Account and Platform Types
Robinhood also has an FDIC-insured cash management account for holding cash balances not invested in the stock market. Robinhood doesn’t offer IRAs at present but may do so in the future.
Plans and Pricing
Both Fidelity and Robinhood offer commission-free trades for self-directed investors. Robinhood adds a premium plan (Robinhood Gold) with exclusive benefits for paying customers. Fidelity, meanwhile, offers several different hybrid and managed investing plans.
Fidelity’s Plans and Pricing
Fidelity’s self-directed account (The Fidelity Account) is available to all eligible users and does not have a sign-up fee or monthly maintenance fee. Certain types of transactions may incur trading fees or transaction fees, however.
Fidelity does have several managed account options that require regular payment as a matter of course. Choose the one that fits your net worth, investing goals, and management preferences:
- Fidelity Go is a pure robo-advisor account with no minimums and a three-tiered advisory fee structure: $0 for balances under $10,000, $3 per month for balances between $10,000 and $49,999, and 0.35% AUM (assets under management, annualized) for balances above $50,000.
- Fidelity Personalized Planning and Advice is a hybrid offering that pairs an investment robo-advisor with personalized financial planning and guidance (including one-on-one financial coaching) from real humans. Fidelity charges 0.50% AUM for Personalized Planning and Advice and requires a $25,000 minimum account balance.
- Portfolio Advisory Services is a human-led wealth management service that creates bespoke, tax-efficient portfolios to serve complex investing goals and objectives. Portfolio Advisory Services relies on a rotating team of financial advisors (not a single dedicated advisor), costs 1.10% AUM, and requires a $50,000 minimum account balance.
- Separately Managed Accounts (Strategic Disciplines) is a multifaceted, strategy-specific service with lower asset management fees (generally under 0.65% AUM, but sometimes up to 1.50% AUM) and account minimums (generally $100,000, but sometimes as high as $350,000). See Fidelity’s Separately Managed Accounts page for more details.
Robinhood’s Plans and Pricing
Most Robinhood features are available in the app at no charge to users. Robinhood does have a paid plan, Robinhood Gold, that offers some premium features for $5 per month:
- Access to Level II market data showing multiple bids and asks for eligible securities
- Bigger instant deposits available for trading immediately — ranging from $5,000 to $50,000 depending on your account balance
- Unlimited access to in-depth Morningstar research reports on about 1,700 stocks
- Access to margin trading at competitive rates — starting at 2.5%, depending on account size and other factors
Available Investment Products
Fidelity has a comprehensive lineup of investment products — one that goes well beyond stocks and ETFs. Robinhood’s lineup is narrower but no less useful for those whose trading or investing objectives can accommodate it.
Fidelity’s Available Investment Products
Fidelity’s available investment products include:
- ETFs (exchange-traded funds)
- Corporate, municipal, and government bonds
- Certificates of deposit (CDs) with FDIC-insured partner banks
- Bond funds
- Money market funds
- Index funds
- Other types of mutual funds, including sector-specific funds
- Annuities (insurance-like products that generally offer fixed, guaranteed rates of return)
Stocks, options, and ETFs trade commission-free at Fidelity. Other instruments may incur transaction fees at the point of purchase or sale. ETFs and mutual funds carry unavoidable fees (expense ratios) that are generally charged annually and deducted from the investment balance.
Robinhood’s Available Investment Products
Robinhood offers access to four types of financial instrument: stocks, ETFs, cryptocurrencies, and options trading. None incur trading fees or commissions.
Investor Research and Analysis Resources
Fidelity has a comprehensive array of market research and analysis resources for investors of all stripes. Robinhood Gold is no slouch in this area either, although its resource library can’t match Fidelity’s.
Fidelity’s Research and Analysis Resources
In addition to the trading tools and capabilities available only to Active Trader Pro users, Fidelity offers some useful research and analysis tools to all users:
- Dozens of calculators and tools for metrics like income in retirement, college savings and costs, IRA distributions, mutual fund returns, and much more
- Stock and ETF screeners for more than 6,000 equities
- A stock dashboard showing detailed price action, fundamental analysis, technical activity, and even social sentiment
- Equity scoring that shows the relative strength or weakness of a given equity at any point in time
- In-house and third-party equity research reports
Robinhood’s Investor Research and Analysis Resources
Robinhood’s research and analysis repertoire is thinner and reserves the choicest resources for Robinhood Gold subscribers. However, all users have access to some basic functions:
- Basic charting and price action tools
- Multiple ways to visualize price activity, such as candlestick views
- An investing knowledge base geared toward novice and intermediate investors
The Verdict: Should You Choose Fidelity or Robinhood?
So, should you choose Fidelity or Robinhood? Your choice will turn on whether you’re content with a user-friendly mobile app that simplifies the trading experience (Robinhood) or a more comprehensive platform that’s suitable for a much wider range of investment use cases (Fidelity) but isn’t quite as user-friendly as the competition.
You Should Use Fidelity If…
Fidelity is a better fit if:
- You Need Advanced Research, Charting, and Analysis Tools. Both Fidelity and Robinhood (for Robinhood Gold subscribers only) make advanced market analysis, research, and charting tools available to their users. However, Fidelity has a clear edge here, as its lineup is far deeper and broader. If you’re looking to gain and maintain an edge in a market landscape dominated by high-frequency traders, Fidelity is your best bet.
- You Want the Option to Use a Robo-Advisor. Only Fidelity offers a robo-advisor alongside its old-fashioned, DIY-friendly self-directed trading setup. Robinhood hasn’t jumped into the robo-advisor game yet, although that could change in the future.
- You Prefer to Work With a Human Wealth Manager. Robinhood also doesn’t have any human wealth management professionals in-house. Fidelity, by contrast, offers multiple levels of wealth management service, including a hybrid configuration that blends the best features of robo-advisors and human advisors at a very fair price.
- You Want Access to the Widest Possible Lineup of Investment Products. Fidelity has a vast array of investment products, from stalwarts like stocks and ETFs to advanced instruments like options. It even offers life insurance and annuities, a rarity among brokerages. By contrast, Robinhood’s investment product lineup is limited to stocks, options, and cryptocurrencies.
You Should Use Robinhood for If…
Robinhood is a better fit if:
- You Want a Lightweight, Mobile-First Trading Experience. Robinhood famously offers a low-friction, “gamified” trading experience that puts the “fun” in “market fundamentals.” Despite valid criticisms of Robinhood’s model, it clearly appeals to market participants seeking a stripped-down investing experience.
- You Seek Cryptocurrency Exposure. Although Fidelity’s investment product lineup is wider overall, it lacks an increasingly popular component: cryptocurrency. If exposure to cryptocurrencies like Bitcoin and Ethereum is an important aspect of your investing strategy, Robinhood is a better bet. And the fact that it’s commission-free — still a rarity in the crypto world, although maybe not for long — is a big incentive to participate.
- You Mainly Plan to Trade Stocks and Options. Both Fidelity and Robinhood offer self-directed stock and option trading. However, because Robinhood’s interface is more user-friendly overall, it’s a better fit for DIY investors and traders who plan to stick exclusively to those instruments rather than branch out into instruments Robinhood doesn’t offer.
Both Are Great If…
Both Fidelity and Robinhood are excellent options if…
- You Want to Use a Cash Management Account. Both Fidelity and Robinhood offer cash management accounts. While there’s some variation between the two with regards to rates, terms, and other details, neither is clearly superior.
- You Prefer Self-Directed Trading. Both Fidelity and Robinhood cater to self-directed traders — Fidelity in part, Robinhood in whole. Neither is inappropriate for DIYers, so your choice will come down to your investing strategy and subjective preference.
- You Don’t Want to Pay Commissions on Stock Trades. Fidelity and Robinhood both offer commission-free stock trading. At this point, they’re not unusual for doing so, but it’s still worth mentioning that you won’t pay out of pocket to buy and sell equities on either platform.
Robinhood and Fidelity are alike in the sense that they both provide everyday traders and investors with access to the stock market (and other asset markets). Otherwise, they don’t have a great deal in common, aside perhaps from a greenish color scheme and a shared penchant for free or low-cost trades.
In fact, Robinhood and Fidelity are distinct enough that it’s entirely plausible to press both into serving your investment goals. You might use one of Fidelity’s wealth management services to grow your retirement or education nest egg, for example, even as you tap Robinhood as your go-to cryptocurrency wallet.
Or you might decide to stick with one platform or the other. In either case, here’s hoping you now have a better handle on the relative merits and demerits of each.