Fidelity vs Robinhood: Which Broker Should You Choose?

Fidelity is ideal for advanced investors looking for various asset classes and account types, while Robinhood is geared toward the younger retail crowd looking for easy trading and low fees.

Choosing a broker is like choosing a car. Some of the basics will be included in each model, so you’ll need to decide between the perks and features that are most personally appealing. When deciding, consider your investment goals, timeline and risk tolerance.

Robinhood vs. Fidelity: What’s the Difference?

Robinhood and Fidelity are both reputable and safe platforms for investors to trade on, so the decision will depend on what features and practices are most important to you. In this article, we’ll compare and contrast the different options at both brokers to make the choice as easy as possible.

Account Types and Features

Fidelity brokerage accounts come in a wide array. Individual investors can open cash or margin accounts along with traditional, Roth, SEP and rollover IRAs, 529 College Savings accounts, cash management accounts, managed accounts handled by investment pros or robo-advisors, custodial accounts for children, Health Savings Accounts (HSAs) and estate planning accounts like trusts and inherited IRAs. 

Business owners can also open 401(k) retirement plans for their workers and specialized company investment accounts. Additionally, Fidelity’s banking and investment features make it a stop-one finance shop if you want to connect your savings, checking and investment accounts.

Robinhood’s account type range is far smaller but more targeted at the retail crowd. Robinhood clients can open cash or margin accounts and traditional and Roth IRAs for retirement. Cash management accounts are also available.

Investors looking for added perks may appreciate Robinhood Gold, the broker’s premium service option that charges a monthly fee but opens your account to a number of benefits. Robinhood Gold costs $5 per month and offers clients 4.5% interest on uninvested cash, a 3% match on eligible IRA contributions and extra buying power on deposits.

The Better Platform: The difference here depends on your goals. Robinhood has features aimed at retail traders (including the Robinhood Roth IRA), while Fidelity has more diverse offerings that may benefit a broader range of traders.

Commissions and Fees

Robinhood and Fidelity are both deep into the mentality of affordable trading. Stocks and ETFs are free to trade on both platforms and neither broker requires a minimum balance. However, one of the most crucial differences comes with options trading. Robinhood offers 100% commission-free options trading, while Fidelity tags a 65-cent fee on each option contract. Robinhood fees also have lower margin rates on borrowed cash, so consult each broker’s schedule before investing capital.

Robinhood offers a 6.25% rate on a margin balance of up to $50,000, with rates continuing to decrease as you borrow more. For investors with over $1 million on margin, the rate is 5.5%. Fidelity’s margin rates are significantly higher, even if you don’t purchase Robinhood’s premium Gold package. Additionally, Robinhood offers free options trading with no per-contract fee. Fidelity doesn’t charge commission on options trade, but the per-contract fee is 65 cents.

The Better Platform: ROBINHOOD. While both platforms have free stock and ETF trading, Fidelity still charges a per-contract fee on options and significantly higher margin rates. You can borrow $50,000 from Robinhood at a lower rate than you can borrow $1 million from Fidelity.

Investments Available

On Fidelity’s platforms, you can purchase the following investment products:

• Stocks and ETFs
• Mutual funds 
• Bonds and CDs
• Stock options
• Precious metals futures
• Cryptocurrency (Bitcoin, ethereum and Litecoin only)
• Annuities 
• Insurance

Robinhood has expanded its asset base recently, but the available investments still pale compared to Fidelity. At Robinhood, clients can purchase:

• Stocks and ETFs
• Options
• Cryptocurrency

You cannot trade mutual funds, fixed-income securities, futures or annuities/insurance through your Robinhood account.

The Better Platform: FIDELITY. Unless you want to buy and sell smaller cryptocurrencies like DOGE, SHIB or ETC, you’ll find Fidelity’s asset offerings far more robust than Robinhood’s.

Ease of Use

Robinhood is often praised for its simplicity and intuitive interface, making it a popular choice for new investors. Its app has a clean, minimalist design and a straightforward trading process for easy navigation. However, this simplicity can be a limitation as it may lack the advanced features and educational resources that more experienced investors value, such as charting tools and technical trading signals.

While still user-friendly, Fidelity offers a more comprehensive platform with a wider range of tools and features. It provides more in-depth research and educational resources, making it suitable for investors at all levels. While Fidelity's interface may be slightly more complex than Robinhood's, it offers greater customization and flexibility.

Key Differences

• Simplicity: Robinhood online broker is generally considered more accessible for beginners due to its minimalist design and straightforward interface.

• Customization: Fidelity offers more customization, allowing users to tailor their experience to their specific needs through multiple trading platforms. Users can trade on mobile devices, web browsers or the Active Trader Pro desktop program.

• Features: Fidelity provides a wider range of features, including advanced charting tools, research reports and educational resources.

• Target Investor Class: Robinhood is often favored by younger investors and those new to investing, while Fidelity appeals to a broader range of investors, including more experienced traders.

The Better Platform: If you're a beginner looking for a simple and easy-to-use platform, Robinhood might be a good option. However, Fidelity trading platform could be better if you seek a more comprehensive platform with advanced features and educational resources. The better choice here depends on your goals and needs as an investor.

Trade Execution

While small and primarily unnoticeable, some differences exist in Fidelity and Robinhood’s trade execution capabilities. For example, Robinhood offers a limited range of order types, mainly focusing on market, limit and stop orders. This simplicity is suitable for beginners but may not meet the needs of advanced traders. Fidelity provides a broader range of order types, including more complex options like trailing stops, bracket orders and after-hours trading. This offers greater flexibility for experienced traders.

Robinhood is generally known for its fast trade execution, especially on mobile devices. Fidelity's trade execution is still considered reliable and efficient but not as renowned as Robinhood's. Regarding order routing, Fidelity offers more transparency and allows users to choose their exchanges, which can provide more control over trade execution. Robinhood sends orders to various exchanges to seek the best price, although its payment for order flow practices have raised concerns in the past.

The Better Platform: FIDELITY. Robinhood is generally the faster platform, but Fidelity has more trade transparency and advanced order types.

Customer Support

Fidelity is known for its comprehensive customer support, offering live phone support, online chat and email assistance. Its website also includes a vast knowledge base and FAQ section.

Robinhood’s customer service options are less robust. They have been criticized for long response times and difficulty reaching a true representative.

The Better Platform: FIDELITY. Robinhood’s customer service is generally considered a weakness, while Fidelity’s services are more helpful and faster.

Educational Resources

Robinhood’s library of educational tools and investment research has grown recently, but Fidelity is still one of the top brokers in the market for producing actionable research. You’ll find a more comprehensive range of options, from webinars to videos to detailed walk-throughs.

The Better Platform: FIDELITY. Robinhood has a long way to go before it can compare its library of resources to Fidelity’s.

Fidelity is Superior for Sophisticated Traders, But Robinhood is Simple, Intuitive and Less Expensive

Fidelity is the choice if you’re looking for a robust and comprehensive stock trading platform. They have a more comprehensive range of account types, tools for advanced trading like charting and technical indicators and a greater breadth of available assets. But if you want simplified and inexpensive trading (especially with margin or options contracts), Robinhood is worth consideration.

Frequently Asked Questions