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In the world of brokerage firms, Robinhood, Charles Schwab and Fidelity loom large as three of the most prominent. These competing financial services firms 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. When choosing between Robinhood vs. Schwab vs. Fidelity, these are some key considerations to help with your decision.
If you are 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 several types 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 2013 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 prefer to manage their brokerage account from their phone rather than sit across the desk from a professional.
The oldest 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 that allows individual investors to buy and sell individual securities, Fidelity also offers several 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 1971. With an immense range of offerings, from robo-advisor services to proprietary investment research, you will not be short on options.
Robinhood vs. Schwab vs. Fidelity: Fees
None of the three firms covered in this article assesses trading fees keeping with an overall industry trend in recent years. However, as with most firms like these, there are exceptions to keep in mind for investors with more unconventional circumstances.
These are the important highlights of each firm’s fee and commission structure.
Robinhood
Robinhood does not charge fees or commissions to trade. There also are no inactivity fees, no transfer fees for deposits 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 those pennies add up over millions of transactions.
Robinhood Gold also offers margin trading to subscribers who pay a $5 monthly fee. This allows margin trading at an interest rate of 4.7% to 5.75%, depending on your balance, with 4% APY on idle cash.
Schwab
Schwab collects no commissions for online trades of stocks and exchange-traded funds (ETFs). However, other fees apply:
- Options trades are commission-free, but a fee of $0.65 per options contract applies. OTC trades are also 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 $2.25 per contract.
Customer service is free.
Fidelity
- There are several thousand no-fee mutual funds, with others costing $49.95 to trade.
- 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 will not have to pay a fee.
Robinhood vs. Schwab vs. Fidelity: Services and Features
The suite of financial services and products available at each firm varies significantly, as Schwab’s and Fidelity’s offerings are a good deal more exhaustive than those of Robinhood.
In addition to standard brokerage accounts, both Schwab and Fidelity offer individual retirement accounts (IRAs), 529 plans and custodial accounts, among other accounts.
Robinhood’s offerings may be less wide-ranging, but they are still 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. This provides access to premium features, like increased trading hours and buying power, for an additional fee.
Both Schwab and Fidelity have joined the robo-investing trend. Fidelity’s offering, called Fidelity Go, is available with no minimum balance requirement and a 0.35% annual advisory fee if your balance is less than $25,000. Schwab’s robo-investing service is called Schwab Intelligent Portfolios, and it provides a more customized approach. After taking a short quiz, the service will tailor the portfolio it creates for you based on 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 is also possible to speak with a human broker at all three firms, it is 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 is no surprise that Robinhood shines the brightest, seeing as the firm originated as an investment app. The Robinhood app has a 4.3-star and 4.2-star rating on the App Store and Google Play, 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 is possible on the firms’ websites. Schwab mobile has a 4.8-star rating in the Apple App Store but only a 2.7 rating on Google Play. Meanwhile, the Fidelity mobile app earns a more impressive 4.6 rating on Google Play, with a 4.8 rating on the App Store.
Robinhood vs. Schwab vs. Fidelity: Account Types and Minimums
When choosing a brokerage, it is important to know what types of accounts are available and how much money you need to get started. When comparing Robinhood vs. Schwab vs. Fidelity, they all offer standard taxable brokerage accounts, but they differ significantly when it comes to retirement accounts, custodial options and support for more advanced financial strategies.
Robinhood focuses on simplicity, offering individual taxable brokerage accounts and IRAs, both traditional and Roth. Robinhood IRAs come with a unique feature: a 1% match on eligible contributions or 3% matching if you are a Robinhood Gold member. There is no minimum balance required to open an account. However, Robinhood does not support many types of accounts that Charles Schwab and Fidelity offer, with none of the following available:
Charles Schwab provides a broad selection of account types to suit a wide range of investors. In addition to taxable brokerage accounts, it offers:
- IRAs (traditional, Roth and rollover)
- Custodial accounts
- Solo 401(k)s
- SEP and SIMPLE IRAs
- Trust and estate accounts
It even offers checking accounts integrated with brokerage services. Most Schwab accounts have no minimum to open, although some managed accounts may require at least $5,000 to $25,000 to get started.
Fidelity also offers a wide array of account types, including:
- Taxable brokerage accounts
- Traditional and Roth IRAs
- Rollover IRAs
- SEP and SIMPLE IRAs
- Solo 401(k)s
- Custodial accounts
- Trust and estate accounts.
Like Schwab, Fidelity has no minimum requirement for most accounts, although some managed solutions and certain funds may impose investment minimums.
If you want to build a comprehensive financial strategy, including retirement planning, estate management or education savings, Schwab and Fidelity offer more flexibility than Robinhood. On the other hand, if your needs are limited to individual investing through a mobile-first platform, Robinhood may provide the low-barrier entry point you are seeking.
Who Should Use Robinhood, Schwab and Fidelity?
If you are an independent investor wanting 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, Robinhood has the added advantage of being completely digital-native.
If, however, you are a beginner investor and do not yet know which products or services you need, you might have a better experience with Schwab or Fidelity. They will provide more options when it comes to services, and you will have an easier time contacting a professional if you need support.
Between Schwab and Fidelity, both firms offer a lot of services, and they are 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.
Bottom Line
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 when it comes to certain factors like broker availability or mobile app features, each has proven capable of helping you achieve your investing goals.
A financial advisor can help you create an investment portfolio based on your investment needs, savings goals and risk tolerance.
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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