How Fidelity and Robinhood differ as brokers

Fidelity and Robinhood are both brokerages, but they serve different types of investors and charge different fees. Robinhood makes money by selling order flow — your trades go to market makers who pay Robinhood for the right to fill them. Fidelity charges commissions on some trades and makes money through account management fees, advisory services, and interest on cash balances. Neither approach is inherently better; which one fits depends on what you trade, how often, and what tools you need.

Fidelity is a full-service brokerage with 75+ years of history, offering stocks, bonds, mutual funds, options, futures, and retirement accounts. Robinhood is a mobile-first platform focused on stocks, options, and cryptocurrency, designed for frequent traders who want a straightforward interface. If you plan to hold a retirement account like an IRA, Fidelity has more account types and lower fees. If you want to trade individual stocks with no commission and minimal friction, Robinhood's model works for that specific use case.

Key Takeaways

  • Fidelity charges no commission on stock trades but may charge fees for certain mutual funds and advisory services, while Robinhood charges no commission and generates revenue through order flow sales.
  • Fidelity offers traditional IRAs, Roth IRAs, SEP IRAs, and Solo 401(k)s with no account fees, whereas Robinhood does not offer retirement accounts at all.
  • Fidelity provides research tools, educational content, and phone support, while Robinhood emphasizes a streamlined mobile app with minimal features outside of trading.
  • Robinhood allows fractional share purchases starting at $1, while Fidelity requires whole shares for most stock purchases but offers fractional shares on some funds.
  • If you hold cash in either account, Fidelity pays interest on uninvested balances, while Robinhood does not.

Retirement account options: Fidelity has them, Robinhood does not

Fidelity offers traditional IRAs, Roth IRAs, SEP IRAs, and Solo 401(k)s with no annual account maintenance fees. You can hold stocks, mutual funds, bonds, and ETFs inside these accounts. Contribution limits are set by the IRS each year and vary by account type and your income. Fidelity's website shows current limits and lets you calculate how much you can contribute based on your age and filing status.

Robinhood does not offer any retirement accounts. If you want to save for retirement with tax advantages, you cannot use Robinhood. You would need to open a retirement account elsewhere — Fidelity, Vanguard, Charles Schwab, or another brokerage — and then fund it separately. This is a hard boundary: Robinhood is for taxable brokerage accounts only.

If retirement savings are part of your plan, Fidelity is the only choice between these two. If you are already saving for retirement elsewhere and want a separate taxable account for short-term trading, Robinhood's lack of retirement accounts is irrelevant to your decision.

Trading costs and how each platform makes money

Both platforms charge zero commission on stock trades. The difference is how they make money instead. Robinhood sells your order flow to market makers — firms that buy the right to execute your trades. This means Robinhood receives payment when you trade, which is why the service is free to you. Fidelity also accepts payment for order flow on some trades, but it also charges advisory fees, account management fees for certain services, and earns interest on cash you hold.

On a single stock trade, your out-of-pocket cost is the same at both: zero commission. However, the price you receive may differ slightly. When Robinhood sells your order flow, the market maker has an incentive to give you a slightly worse price than the current market rate — that difference is how they profit. Fidelity's execution quality varies by order type and account, but the firm publishes quarterly reports on execution quality that you can review.

For mutual funds, Fidelity charges transaction fees on some third-party funds but waives fees on its own Fidelity mutual funds. Robinhood does not offer mutual funds at all. For options trading, both charge zero commission per contract, though Robinhood charges a $0.65 closing fee per contract while Fidelity does not.

Research tools, education, and customer support

Fidelity provides research reports, stock screeners, charting tools, and educational articles at no extra cost. You can access third-party research from firms like Morningstar and S&P Capital IQ. Fidelity also offers phone support during market hours and has physical branch locations in most major cities where you can speak to an advisor in person. Educational content covers everything from basic investing to advanced options strategies.

Robinhood's platform is intentionally minimal. The app shows stock prices, charts, and basic news, but does not include research reports, screeners, or educational resources. Customer support is available through in-app chat and email, but not by phone. The design philosophy is speed and simplicity over depth — you get what you need to place a trade, nothing more.

If you want to research stocks before buying, read analyst reports, or talk to someone on the phone, Fidelity has those resources built in. If you already know what you want to trade and just need a fast way to execute, Robinhood's stripped-down interface is an advantage, not a limitation.

Account features: fractional shares, cash interest, and account types

Robinhood allows you to buy fractional shares starting at $1. You can own 0.5 shares of a $200 stock if you want. Fidelity offers fractional shares on most ETFs and some mutual funds, but for individual stocks you typically need to buy whole shares. This matters if you have a small amount to invest and want to own a specific stock — Robinhood makes that easier.

Fidelity pays interest on uninvested cash in your account. The rate changes with market conditions, but as of 2024 it ranges from 4% to 5% depending on your account balance. Robinhood does not pay interest on cash. If you hold money in Robinhood waiting for the right trade, that cash earns nothing. If you hold money in Fidelity, it earns interest automatically.

Fidelity offers multiple account types: individual taxable accounts, joint accounts, trust accounts, and retirement accounts. Robinhood offers individual taxable accounts and joint accounts only. If you need to set up a trust account or custodial account for a minor, Fidelity can do it; Robinhood cannot.

Who should choose Fidelity, and who should choose Robinhood

Choose Fidelity if you want to save for retirement with tax-advantaged accounts, need research tools and educational resources, prefer phone support, want to earn interest on cash balances, or plan to hold a mix of stocks, bonds, and mutual funds. Fidelity works for long-term investors, people building retirement savings, and anyone who values depth of tools and support.

Choose Robinhood if you want to trade individual stocks or options with the fastest, simplest interface possible, prefer a mobile-first experience, plan to buy fractional shares with small amounts of money, and do not need retirement accounts or research tools. Robinhood works for active traders focused on execution speed and people who already do their own research elsewhere.

The choice is not about which platform is objectively better — it is about which one matches your actual needs. Someone saving for retirement needs Fidelity. Someone making frequent small trades on their phone might prefer Robinhood. Many investors use both: a retirement account at Fidelity and a taxable trading account at Robinhood.

Frequently Asked Questions

Can I transfer money or stocks between Fidelity and Robinhood?

Yes. You can transfer cash between them using bank transfers. You can also transfer stocks from one account to the other through an ACAT (Automated Customer Account Transfer) process, though this takes several business days. Transferring out of Robinhood may trigger a $75 transfer fee, which Fidelity will sometimes reimburse if you ask.

Which platform has better execution on stock trades?

Execution quality depends on order type, market conditions, and the specific stock. Fidelity publishes quarterly execution quality reports you can review. Robinhood's order flow model may result in slightly worse prices on some trades because market makers profit from the spread. For most retail investors trading liquid stocks, the difference is small — often less than a penny per share.

Does Robinhood offer anything Fidelity does not?

Robinhood offers fractional shares on individual stocks starting at $1, which Fidelity does not. Robinhood also offers cryptocurrency trading (Bitcoin, Ethereum, and others), while Fidelity's crypto offerings are limited. For stock and options trading alone, Fidelity's tools are more comprehensive.

Can I use both Fidelity and Robinhood at the same time?

Yes. Many investors keep a retirement account at Fidelity and a taxable trading account at Robinhood, or vice versa. There is no rule against having accounts at multiple brokerages. You would file taxes based on all your accounts combined, and you would need to track gains and losses across both platforms.

What happens to my money if Fidelity or Robinhood goes out of business?

Both are covered by SIPC (Securities Investor Protection Corporation) insurance up to $500,000 per account. This protects your stocks and cash if the brokerage fails. Fidelity, as a large established firm, is extremely unlikely to fail. Robinhood has faced regulatory scrutiny but remains solvent and insured the same way.