Those that decide to use Robinhood for their trading and investing needs can expect a number of quality services and features upon getting started. Prospective clients who use Robinhood will be able to take advantage of the following items:

Pricing and Fees

Robinhood charges $0 commission fees for its securities. In an industry known for charging up to $10 for securities and requiring $500 to $2,000 account minimums, Robinhood's pricing structure is fairly shocking. The firm's creators believe that there are millions of investors out there who use brokerage firms, place more than 10 trades per month, and yet end up paying thousands in fees each year. Unlike these firms, Robinhood doesn't charge steep fees for placing trades, doesn't have a mandatory account minimum to start a trading account, and doesn't have the same operational costs as other big name brokerage firms. So, they can afford to keep costs low and increase their clients' savings. Existing brokerage firms claim their services, like research and educational tools, are worth the fees they charge their clients. Robinhood disagrees. It believes that millennial investors-its target audience-don't care for paying money for services they may not use or may find inadequate. Instead, young investors tend to look elsewhere for free resources that'll help them make informed decisions.

Mobile Capabilities

The firm's trading platform is a mobile app available on android and iOS smartphones and tablets. On the platform, users have access to any of the 5,000+ stocks and ETFs listed on the US stock exchange, meaning the firm doesn't put a limit on the number of stocks users can access at the $0 commission rate. The app's sign up process is fairly straightforward and takes a little time to complete. Users have hailed the app for being easy to use and easy to link their bank accounts to. The app doesn't require a routing number nor does it take days to verify users' bank information. Instead, it uses micro-deposits to validate users' accounts.

Scheduling Feature

In addition to its commission-free stocks and ETFs, Robinhood offers scheduled deposits. This is a new feature where users can automatically schedule transfers on a weekly, biweekly, monthly, or quarterly basis. Another one of its new features is its advanced order support tool. Investors can use this feature to enter specific orders as good for the day or good until canceled (GTC). All of these aforementioned perks make Robinhood ideal for investors, especially millennial investors.

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The Bad

Limited trading tools
Looking ahead

The Robinhood service, while convenient and accessible, also comes with a number of limitations. Prospective users should consider the following drawbacks before creating an account and getting started on the platform:

Limited Trading Tools

The firm only offers a mobile app trading platform. While great for millennial investors who are always on their smartphones or tablets, this means the brokerage firm doesn't offer advanced trading tools. Usually, only desktop platforms have these advanced features like charting mechanisms and volatility indicators. Without these tools, the firm lacks critical features to help better inform its investors. Speaking of informing users, the firm also doesn't offer additional resources like education materials or research tools. While its creators believe that millennial investors tend to not use these features, we're pretty sure that investors would enjoy the added benefit of having their educational and research resources under one roof since it will save them time and energy from looking elsewhere.

Looking Ahead

Robinhood doesn't charge its investors any hidden fees, so for now, its users can rest easy knowing they're truly executing commission free trades. However, in the future, Robinhood may need to change its pricing structure to make money and keep its doors open. Eventually, the firm will charge for premium services if their traders decide to use them. The firm will also begin offering margin trading, which will allow its users to borrow money from the brokerage firm to cover a certain percentage of the securities' costs. The firm will then make money off of the interest rates they'll charge on the loans. Potential clients looking to join Robinhood should be aware of these impending fees. Furthermore, the company only offers stock and ETFs trades. Investors currently cannot trade options, bonds, mutual funds, and other securities. For investors who are interested in investing in a variety of securities to diversify their portfolios and mitigate financial risks, this detail is fairly disappointing. Additionally, the firm doesn't offer ACAT transfers, which means traders cannot transfer their existing brokerage assets into Robinhood. Another major downside to the firm is the fact that it's not the first brokerage firm to try out commission free trades. Zecco was a brokerage firm that implemented this model and had to frequently change its pricing structure because of how difficult it was for the company to stay afloat. Eventually, Zecco gave up, determined the model wasn't successful and instead, merged with TradeKing. This story could dissuade users from joining Robinhood since the firm's business model could be unfeasible in the long run.

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The Bottom Line

Robinhood is a great brokerage firm with the commendable goal of democratizing access to financial markets. It's especially ideal for novice and millennial investors looking to dip their feet into the industry without paying high commission rates. The brokerage firm offers thousands of individual stocks and ETFs to invest in, all at the touch of a button. Its mobile app is easy to use and boasts a quick and simple application process. However, the brokerage firm doesn't offer a variety of investment choices so individuals looking to trade the likes of options and bonds will have to look elsewhere. Furthermore, traders currently with another brokerage firm won't be able to transfer their existing account to Robinhood. This detail severely undermines the firm's ability to steal clients away from the big name firms. At the end of the day, our main concern is whether the firm's commission free rates are feasible in the long run, especially since similar firms have had to close their doors. Only time will tell whether Robinhood's business model is, in fact, sustainable.

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jim mckee Rancho Palos Verdes, CA

I'm an experienced trader, yet couldn't resist no trading fees, so i put a small amount of capital to take a test drive, particularly that i trade options, and here is what i found, again, my opinion only.. 1. trading is a clunky experience, at best. They obviously want to keep it simple but do so at the cost of providing obvious navigational tools that all other sites have. 2. They have an option called 'replace', which means to replace an existing order that hasn't been filled. 3 times, the original order wasn't canceled so both the original order AND the replacement order were filled, and because i didn't have any buying power due to previous activity, i couldn't close the additional order. RH, no apology, originally tried to blame ME for the extra order, which they later walked back. The 3rd time it happened, they literally disappeared and wouldn't respond to my issues with their platform not functioning properly. Disappeared. 3. Customer Service..? Non-existent. The numerous interactions i've had with them have shown that their CS people know absolutely nothing about trading, options, or anything else about the site. Have a problem, like site malfunctions, shutdown, etc, which will happen to every site..?? No phone number to call, send an email and wait for a day to get a reply from someone who knows nothing... 4. They recognize etf's that come with higher volatility, such as VXX, and once you sell a holding in it, they limit the amount of available funds in your account to trade due to that higher volatility. Why...? I have absolutely NO clue. I don't need to be babysat. It's my money, don't tell me what i can trade or when. The hallmark of every bad online trading platform is terrible customer service. If that's what you're looking for, you're in the right place.

8 years ago

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Emma Morrill

Robinhood didn’t last very long in our household. We found that we weren’t making any money on it and our investments were either staying the same or going down. My recommendation would be to save your money until you can hire someone who specializes in the stock market.

3 years ago

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J Adams Charlotte, NC

I have not been impressed with Robinhood. I guess you get what you pay for. Since they are a middle-man and not a true broker, their order fills can take longer. This can be detrimental to my fill price.

3 years ago

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Krista Griffith Tulsa, OK

I was given a free stock. It has done nothing but lose money. I know that's not Robinhood's fault, but maybe don't give out the poor performers as an incentive to use your platform.

4 years ago

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Hannah Barth Tallahassee, FL

I do not like that Robinhood does not have investing research and trading tools.

4 years ago