Fidelity vs Robinhood

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Fidelity and Robinhood are two popular regulated online brokers. 

Fidelity has a long history. Fidelity Investments was founded in 1946 – 50 years before it launched its online platform. 

Robinhood was founded in 2013, and it was able to establish itself in the market because of it easy account creation process and its competitive fees and commissions. 

Both are valuable online brokers, able to meet the needs of different traders and investors, but they are significantly different. 

The goal of this article is to provide information about these brokers, including their features, investment options, trading platforms, security levels and quality of customer service. 

It is important to remember that intuitiveness and competitive costs are only some of the parameters investors and traders should evaluate. Investing and trading remain risky activities, and it’s up to users to choose the broker they feel most comfortable with.

Overview of Fidelity & Robinhood

Fees and Commissions

Fees and commissions are an important aspect for traders and investors. High fees and commissions might significantly impact their funds over time. 

This is why traders and investors usually look for online brokers that offer competitive fees and commissions – but without giving up on the quality of services.

Following this need, now it is not so unusual for online brokers to offer investment products for little to no cost. 

Also, Fidelity and Robinhood are competitive in terms of fees and commissions, even if costs differ according to the type of product. 

Fidelity aims at lowering costs and actually offers stock trading at 0% commission. The same applies to ETF trading and investing, as well as CDs and bonds (but $1 is charged for secondary bond issues). 

Fees and commissions on options are competitive if considered market average: $0.65 is charged for each contract, and traders and investors should take into account regulatory fees ($0.02 – $0.04). 

Non-Fidelity mutual funds can cost up to $49.95, while fees on foreign exchange wires can be applied (up to 3%), as well as settlement fees for the Depositary Foreign Trust Company, up to $50 per trade. 

Users might not notice the fees charged by Robinhood. The online broker can earn is money from the difference between the bid and ask prices, so there are no fees and commissions directly seen by customers. 

Moreover, the broker offers paid subscriptions. Margin trading is the most expensive service offered by Robinhood: the broker charges 11.25% on leveraged funds. 

After analyzing the fees and commissions of both brokers, Robinhood might seem less expensive – but it’s also important to note that the broker doesn’t offer as many investment products as Fidelity, and that its fees are pulled from the opaque bid-asked spread.

Trading Platforms

Fidelity offers different trading platforms for different users. They all include detailed information about the different assets, prices, and news. 

From Fidelity trading platforms, users can open different types of orders – according to the level of complexity they need. 

The broker offers three different platforms: an online trading platform and a desktop trading platform – the difference between the two is that the desktop platform is downloadable. 

Fidelity also provides a mobile trading platform – which has the same features of the online and desktop platforms, but it’s specifically designed for mobile devices. 

On the other hand, Robinhood specifically focuses on the mobile experience. 

It offers a basic trading platform and a platform included with its Gold account – the paid subscription we mentioned before. 

The basic platform includes charts and allows people to manage their trades and investments, but for more advanced tools, users need to subscribe. 

This might be considered a limit of Robinhood when compared to Fidelity, which offers its proprietary technology for free. Moreover, Fidelity is better able to meet the needs of a varied range of traders and investors – from beginners to experienced professionals.

Investment Options

The two online brokers offer different investment options. Fidelity offers a wide variety of investment products, while Robinhood is more limited. 

To be more specific, Fidelity offers the opportunity to invest in and trade retirement products (IRAs and annuities), stocks, mutual funds, cryptocurrencies (only in certain states in the United States), fixed-income investment products, options, exchange-traded funds, savings products for specific purposes (like college savings or health), and life insurance. 

Fidelity can be used internationally, while Robinhood is for US citizens. 

Robinhood has a more limited offer in terms of investment products. These are the products available on Robinhood: 

1. Cryptocurrencies,
2. Securities, 
3. ETFs, 
4. Stocks, 
5. Options,
6. Retirement investment products.

So, comparing Fidelity and Robinhood, Fidelity is more complete, with a larger range of products, international access, and tools for more and less sophisticated users.

Customer Service

Both brokers offer valuable customer service. Robinhood allows customers to reach out to the broker in different ways: 

1. Via chat;
2. Via phone call. Users can schedule a call and customer service will provide the number that will be used to call the customer, along with a notification to inform the user – the average waiting time is around 30 minutes. 

Fidelity offers more means to communicate with customer service. The online broker provides three different means of communication: 

1. Phone call, 
2. Live chat – with one of the members of the customer care team,
3. A virtual assistant, which is available 24/7. 

Moreover, users can find information autonomously by navigating the help pages provided by both online brokers on their official websites. 

From a customer service point of view, there are no significant differences between the two brokers, but Fidelity seems to be slightly more complete.

Security

Both Robinhood and Fidelity use security measures to give users a safer experience, for both data and funds. 

Robinhood uses a high level of encryption to store users’ data, to guarantee security. It also provides two-factor authentication, to allow customers to add another level of security to their accounts. It’s also important to mention that Robinhood is a SIPC member: this allows the online broker to insure users’ funds up to $500,000. 

Fidelity, according to the higher complexity of the broker and the type of investment products provided, takes additional measures to protect funds and data. 

Its proprietary technology allows the broker to provide biometrics verification, including innovative voice authentication – provided both via phone or the microphones included in users’ devices. 

Fidelity’s Customer Protection program allows users to further protect their funds. Moreover, part of the broker’s workforce works to constantly monitor users’ accounts to detect any possible unauthorised activity – and send real-time alerts. 

Despite the high levels of security, both brokers have been hacked – Fidelity in 2014 and Robinhood in 2021.

Conclusion

Both Fidelity and Robinhood are widely known as online brokers that were able to establish themselves as popular tools despite competition. 

Being online brokers, they don’t only have to prove themselves reliable in terms of funds protection, but also reliable for data security and privacy. 

Unfortunately, despite the efforts of both online brokers to keep all the necessary security measures updated and in line with tech advancement, both brokers were hacked. This is not something uncommon for huge online businesses, and both brokers work on constantly improving not only security, but also the different services offered and investment options available. 

Fidelity is a completer and more competitive online broker for several reasons. First, it facilitates access to its trading platforms to non-US users and therefore benefits from international regulation. 

Robinhood is more limited in this sense, because even if it gives access to cross-border assets like cryptocurrencies, the broker is available only to US citizens. 

Fidelity offers a larger selection of financial assets and types of investing and trading – like forex, something for which Fidelity is particularly appreciated. 

The customer service of Fidelity seems to be more complete compared to the one offered by Robinhood, especially because of the high tech level of its support and the extensiveness of information provided – which can be used by customers to solve any issue autonomously. 

The brokers have in common the fact that they offer competitive fees and commissions, and trading platforms that don’t give up on intuitiveness, but that can simultaneously meet the needs of different types of investors and traders. In fact, they offer most of their products for little to no cost, and provide different trading platforms that can work on any type of device. 

Overall, Fidelity seems to be a more complete online broker, but since every trader and investor is different, it is always pivotal to conduct your own research and choose a broker that can fully meet your specific needs. 

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