Although the overall account and research amenities are meager in comparison to larger rivals, there are some useful features including cash sweeps and basic charting.
Stock
Screener
Robinhood
does not offer a stock screener.
ETF
and Mutual Fund Screener
Robinhood
does not offer an ETF or mutual fund screener.
Options
Screener
Robinhood
does not offer an options-specific screener.
Fixed
Income Screeners
Robinhood
does not offer a fixed-income screener.
Tools
and Calculators
Robinhood
does not offer any financial tools or calculators.
Trading
Idea Generators
Robinhood
does not offer trade idea generators. However, you can access trusted news
sources for free through the newsfeed.
News
As
a Robinhood customer, you can stay up-to-date with WSJ Markets coverage in-app,
as well as news from Reuters and Barron’s, and video from CNBC Business,
Reuters, and Cheddar. Additionally, Robinhood offers Snacks, a podcast,
newsletter, and video series which delivers the day’s top financial news
stories every weekday.
Third-Party
Research
Robinhood
provides Morningstar analyst ratings to all customers in the stock detail page
in the app. Morningstar provides Robinhood Gold members unlimited access to
their premium, in-depth stock research reports. As a Robinhood Gold member, you
will have access to Nasdaq Level II Market Data powered by NASDAQ Totalview.
These reports are available on 1,700 stocks and are updated frequently to
reflect important company events.
Charting
Both
the web and mobile platforms have charting capabilities, which was built
in-house. While line, candlestick, and volume charts are available on the
mobile app, there are other charts that are only available on the web. As with
all of Robinhood’s functionality, charts are not customizable.
Cash
Sweeps
Robinhood
does not support money market funds. However, its cash management brokerage
feature offers 0.30% on uninvested cash balances to customers enrolled in the
deposit sweep program.
Dividend
Reinvestment Plans
As
a Robinhood user, you will be able to specify dividend reinvestment at the time
you purchase a dividend paying stock.
SRI/ESG
Research Amenities
Although
there are no socially responsible investing (SRI) or environmental, social, and
governance (ESG) screeners per say, Robinhood Lists will enable you to search
and discover various sectors and themes within the market, including companies
focusing on SRI and ESG.
Portfolio
Analysis
Robinhood
offers very little portfolio analysis, especially in comparison to its larger
rivals. You can see real-time balances, margin, and buying power, but that’s
about it. The home screen shows a one-day graph of your portfolio value and you
can click or tap a different time period at the bottom of the graph to see specific
dates and values.
There
is no asset allocation analysis, internal rate of return, or way to estimate
the tax impact of a planned trade. There is also no trading journal. To perform
any kind of portfolio analysis, you'll have to import your transactions into
another program or website.
Education
Robinhood’s
education offerings aren’t as robust as they should be considering they are a
broker whose ideal client is new to investing. Robinhood currently offers
Snacks, a podcast, newsletter, and video series which delivers the day’s top
financial news stories to its customers every weekday. According to the broker,
there were more than 20 million people subscribed to the weekly newsletter and
2 million monthly active podcast listeners as of August 2020. Robinhood has
recently implemented video as a new format for their Snacks content, with an
aim to provide exciting and helpful visuals to make financial news less
intimidating.
Robinhood
has also added a Learn resource, which offers financial information, definitions,
and market explainers to educate you on financial terms and concepts. Robinhood
says it has published more than 650 articles on Learn and saw more than a 250%
increase in average unique daily visitors to their Learn pages since January
2020.
Customer
Service
- All customer service is done
through the app or the website.
- Robinhood has chatbot
capability.
- There is no telephone number so
you cannot call Robinhood for assistance. However, you can enter your own
phone number for a callback. As a customer, you can also contact the
support team on social media.
Security
- Mobile app users can log in
with face or fingerprint recognition or with a custom pin.
- Robinhood encourages users to
enable two-factor authentication.
- New logins from unrecognized
devices also need to be verified with a six digit code that is sent via
text message or email in case two-factor authentication is not enabled.
- Robinhood is a member of SIPC,
which protects securities customers of its members up to $500,000
(including $250,000 for claims for cash). Unlike other brokers, Robinhood
carries no excess Securities Investor Protection Corporation (SIPC)
insurance.
- Robinhood has reported data
breaches within the past 4 years. The most recent was in 2021 impacting an
more than 5 million customer accounts, without financial losses to these
accounts.
Transparency
Robinhood
was once a disruptive fintech player in the brokerage industry helping young
investors get into the market. Now the company’s motives are being questioned
and the issues are centered around data, transparency, and trust. In December
of 2020, the SEC fined Robinhood $65 million for “misleading customers about
revenue sources and failing to satisfy duty of best execution”. The SEC
declared that Robinhood failed to tell customers between 2015 and 2018 that its
largest revenue source was derived from the market makers to which it routed
customer orders. This is a practice that ultimately resulted in trades that
generated less money for customers than they would have gotten at other
brokers. Considering this, it's not a surprise that the broker does not release
statistics on payment for order flow.
Robinhood
also falsely claimed on its website that its execution quality matched or beat
that of its competitors. The SEC concluded that Robinhood’s inferior trading
prices ultimately deprived investors on its platform of $34.1 million.3
Robinhood
was brought into the spotlight again in January 2021, after it decided to
restrict access to certain securities such as GameStop, AMC Entertainment,
Nokia, and others during the market frenzy surrounding the Reddit short squeeze
on the stocks. One of Robinhood's primary market makers, Citadel Clearing, has
ownership in the hedge fund Melvin Capital which was one of the largest short
sellers of GameStop and others. The decision to restrict customer buy orders
for these stocks led many to suspect a conflict of interest, spurring class
action lawsuits and the attention of some members of Congress.
Our
Verdict
If
you’re new to investing and have a small balance to start with, Robinhood could
be the place to get you accustomed to investing. The mobile-first broker sports
a simple app and website, providing a seamless on-ramp to investing in stocks
and ETFs. Although the user experience cannot be customized, the app and
website have all the essentials a new investor would need. The recent
controversies with Robinhood may have tarnished its reputation with some of the
younger investors it craves, but the company still has commission free stocks,
ETFs, options, and cryptocurrencies, and borderline addictive app to trade them
on. New investors should consider the lack of transparency payment for order
flow and other issues before making a decision.
If
you’re an active investor or trader, however, there are much better options on
the market as Robinhood does not support robust charts, screeners, and so on.
Although most brokers charge for options contracts, and some still have ticket
charges for equity trades, you will have access to research, data, trading
tools, customer service, and educational offerings in exchange. Even if you are
a new investor only interested in buying and holding stocks, there are other
zero-fee brokers with more resources that are worth serious consideration.
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