I Need an Investment Firm & I'm Open to Both Traditional & Online Ones. Should I Choose Robinhood, Vanguard or Fidelity? (2024)

The individual investor services market is a hotly contested space – so how does a newfangled app like Robinhood compare? Between Gamestop meme stock mania issues and industry criticism, you might wonder how Robinhood stacks up to the competition. Although the company has undergone challenges recently, it also claims to be implementing numerous changes and additional features to extend its reach and earn clients’ trust. In contrast, Vanguard and Fidelity are legacy brokerages that have provided millions of customers a multitude of services over the past several decades. The following is a breakdown of how each company serves investors.

For more help managing your money, consider working with a financial advisor.

Overview of Robinhood vs. Vanguard vs. Fidelity

Robinhood has been in business for almost a decade. Founded on the idea of disrupting legacy investment firms by democratizing investment access, it has experienced more publicity over the last several years for its trading activity. It is currently focused on enhancing its services according to customer feedback. It has no minimums, low fees and limited trade functionality compared to its competitors.

Vanguard has carved out a space in the market through its low fees for exchange-traded funds (ETFs) and mutual funds. In addition, its investment funds are available to clients using other brokerage firms. However, it is less apt for tradingindividual stocks.

Founded in 1946, Fidelity is the longest-standing company of the three. It brings together almost every financial service customers could need under one roof. Plus, it charges low to no fees for a swath of asset types and provides an impressive array of free educational resources.

Robinhood vs. Vanguard vs. Fidelity: Fees

Most investment firms have made concentrated efforts to reduce fees for clients. As a result, you’ll likely experience minimal charges with any company. The three companies in question all offer free stock trading. Options with Robinhood are also free, while Fidelity charges $0.65 and Vanguard charges $1 per option as contract fees.

Investors wanting to trade with margin loans must have a Robinhood Gold subscription for $5 per month. The membership grants access to a margin of $1,000. Amounts above $1,000 incur a 5% interest rate. On the other hand, Fidelity charges 10.575% for margins up to $24,999, with interest rates falling incrementally with higher balances. Its lowest rate is 6.25% for margins of $1 million or more. Similarly, Vanguard charges an effective rate of 10.75% for balances up to $19,999. Its rates fall to 7.5% for balances of $500,000 to $999,999.

Next, Fidelity’s robo-advisor, Fidelity Go, charges nothing for accounts under $10,000, $3 monthly for accounts with $10,000 to $49,999 and 0.35% annually for accounts with at least $50,000. Vanguard’s robo-advisor, Digital Advisor, requires at least $3,000 to get started and charges 0.15% annually. Robinhood does not offer robo-advisor functionality.

Vanguard charges no commissions for newly issued bonds. However, secondary bond trades cost $1 per $1,000 of bonds purchased, plus $25 if a broker assists you with the transaction. Fidelity charges $1 per bond, while Robinhood currently doesn’t support bond trading.

Finally, communicating with customer service at any of the three companies is free, although support functionality varies.

Robinhood vs. Vanguard vs. Fidelity: Services and Features

Although each company offers various services, they focus on different areas. For example, Fidelity offers 401(k)s, individual retirement accounts (IRAs), 529 plansand a robo-advisor account. In addition, its customer service is available at all hours by phone. Its live chat feature is open 8 a.m. to 10 p.m. Monday through Friday and 9 a.m. to 4 p.m. Saturday and Sunday EST. Also, clients can access help from the firm via Twitter, Facebook and Reddit. Lastly, it offers banking through its cash management account.

Vanguard emphasizes passively managed funds with minimal fees. That said, you can take control of trading as you would with other investment accounts or use a robo-advisor. Unlike Fidelity, it does not offer a bank account. However, both companies sport ample, free learning resources. Finally, Vanguard’s customer service is available by phone Monday through Friday, 8 a.m. to 8 p.m. ET.

Robinhood has the most truncated services of the three, with one exception: it allows investors to put money in cryptocurrencies. Vanguard has some access to specific crypto funds and companies, but not the currency itself. Robinhood allows investors to trade stocks with a streamlined app but does not support mutual funds, bonds, many foreign stocks or specific OTC stocks.

In addition, Robinhood has suffered multiple data breaches over the past several years and has less SIPC protection for its customers than Fidelity. Also, users can request a phone call from customer support through the app 24 hours a day, 7 days a week. Lastly, the company provides a financial news and education podcast, Snacks, along with newsletters and videos. It is also beefing up its free online educational resources.

Robinhood vs. Vanguard vs. Fidelity: Online and Mobile Experience

Robinhood offers a sleek, agile mobile and desktop experience that new users can effortlessly use. However, the app may lack the complexity and sophistication that some veteran investors prefer. Robinhood holds a 4.2-star rating on the Apple store and 3.9 stars on Google Play.

The absence of customization stands in contrast to Fidelity, which offers tons of personalized options and plentiful data for curious investors to explore. The app has an excellent balance of complexity and intuitive use. Fidelity has a 4.8-star rating on the Apple store and 4.2 stars on Google Play.

Vanguard has an odd combination of 4.7 stars on the Apple store and 2 stars on Google Play. Apple users praise the app’s fantastic user interface, while Android users have expressed frustration over their version’s limited functionality.

Who Should Use Robinhood, Vanguard and Fidelity?

While all three companies allow customers to trade stocks, their key differences draw varying investor types. Investors looking for a simplified, inexpensive method for stock trading may want to consider Robinhood. Its streamlined app makes trading a snap and keeps costs down. In addition, Robinhood is the only company of the three that gives direct access to cryptocurrencies. However, investors with an eye for mutual funds, bonds, robo-advisors and international stocks may want to look elsewhere.

Although Robinhood can be a great place for new investors to start, Fidelity’s services also have broad appeal. With accessible robo-advisor accounts, excellent user experience on mobile and desktop and minimal fees, someone looking to put their first dollar in the stock market can feel as comfortable as a seasoned investor.

Vanguard promotes an inexpensive set-it-and-forget-it style of investing. Investors wanting passive management should look no further, as Vanguard’s investment funds are so popular that non-client investors often buy into them.

The Bottom Line

As an individual investor, you can ensure your online brokerage account meets your needs by virtue of the sheer amount of options available today. Of the three companies in this article, Robinhood offers inexpensive stock and cryptocurrency trading services and educational resources for new investors. However, Fidelity and Vanguard are more suitable if you’re looking fordiversificationthrough mutual funds and access to more account types.

Fidelity is a financial one-stop shop and offers its clients excellent support, education and low fees. In addition, new and not-so-new investors alike will feel at home in its mobile and desktop apps. Though it is the oldest of the three companies, it has shown itself adaptable and sharp in today’s market.

If the thought of employing a sophisticated investment strategy gives you hives, Vanguard might be the best option for you. It focuses on low-cost passively managed funds that produce returns without requiring you to log on and adjust your portfolio constantly.

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