Battle of the Brokerages: Robinhood vs. TD Ameritrade – Unmasked & Unbiased Review
|Overview||A full-service brokerage providing trading, retirement, and investment tools and services.||A discount brokerage for beginner traders offering a user-friendly investing app|
|Account Minimum||No minimum||No minimum|
|Trading Fees||No fees for stocks and options||No fees for stocks & options|
Options -US Equities only
|Account Types||Taxable brokerage|
|Research & Tools||Market news|
What is TD Ameritrade?
TD Ameritrade is a full-service brokerage providing trading and investing services for over 11 million customers with over $1 trillion in assets.
The company’s roots go back to 1975, and it is now one of the most popular brokerages for everyday and high-net-worth investors.
There is no minimum investment required to open an account with TD Ameritrade.
What is Robinhood?
Robinhood is a mobile-first discount brokerage that offers commission-free stock and options trading with an account minimum of just $1.
Robinhood aims to democratize trading by becoming one of the first brokerages to offer commission-free trading. Robinhood caters to active traders and only offers taxable brokerage accounts.
Through Robinhood, investors can trade stocks, options, ETFs, and cryptocurrencies on a whole or fractional share basis.
The company is publicly traded on the NASDAQ and has 31 million users.
Robinhood is headquartered in San Francisco, CA.
TD Ameritrade vs. Robinhood: Comparison
Let’s look at some key features between TD Ameritrade vs. Robinhood and where each company stands out.
Winner: TD Ameritrade
TD Ameritrade is the clear winner if you are looking for the full spectrum of investment options.
TD Ameritrade offers a wider range of investment options, from individual stock trading to municipal bonds, forex, options trading, and even brokered CDs. TD also provides futures & futures options trading through its Thinkorswim platform.
TD Ameritrade Investment Options:
- Fixed Income
- Futures & Futures Options
- Municipal bonds
- Mutual Funds
Meanwhile, Robinhood’s investment options are limited to equity, Exchange Traded Funds (ETFs), cryptocurrency, and options trading, but only for U.S. Equities. Robinhood does not offer fixed-income investments, mutual funds, commodities or forex trading like TD Ameritrade.
Robinhood Investment Options:
- Exchange Traded Funds (ETFs)
- Options Trading (U.S. Equities only)
Winner: TD Ameritrade
As a full-service brokerage, TD offers a wide range of accounts such as taxable brokerages, IRA accounts (Roth, Traditional, and Roll-Over), Education Accounts (529 Plans, tax-free Coverdell, or UGMA/UTMA accounts), specialty accounts for business owners, and margin accounts.
Meanwhile, Robinhood only offers a taxable brokerage account and a margin account. Still, margin accounts are only available to customers who have a Robinhood Gold account, which is their premium level account for $5 a month.
The wide range of accounts TD Ameritrade offers makes it a one-stop shop for managing your investment accounts in one place.
Research & Tools
Winner: TD Ameritrade
Regarding research and tools, TD Ameritrade is the clear winner. TD has market news, investment insight, and technical tools. Meanwhile, Robinhood only offers Morningstar Research to its Robinhood Gold customers, who pay $5 a month for access.
TD Ameritrade Research & Tools:
- Market News: Pre-market conditions, significant stock moves, overnight activity
- Technical Analysis: Quantitative and technical information, including stock charts, to technical commentary, to evaluate trading strategies for different market conditions.
- Stocks Overview: Stocks overview helps you find stocks of interest and discover potential trade ideas. You can use it to monitor volume, view the day’s highs and lows, and see which stocks and sectors are on the move—all in one place.
- Paper Trading: Through TD’s ThinkorSwim platform, you can access paper trading to test out your trading strategies.
Robinhood Research & Tools:
Compared to TD, Robinhood’s tools are limited. However, they do offer advanced charting tools providing all customers with customizable, quick, simple and in-depth analysis right in the app.
Robinhood also offers research reports through its partnership with Morningstar providing Robinhood Gold members access to approximately 1,700 in-depth stock research reports.
The simplicity of Robinhood’s mobile app is one of its most appealing features. While TD Ameritrade has a robust mobile app, it’s not nearly as simple as Robinhood’s mobile experience and is a bit cumbersome and crowded.
Both trading platforms offer commission-free trading for stocks and ETF trades, but Robinhood does not charge fees to buy or sell options, while TD charges $0.65 for options trades and $2.25 for futures and futures options (Robinhood does not offer futures).
TD Ameritrade Fees:
- Stocks & ETF Fees: None
- Options Trades: $0.65
- Futures & Futures Options: $2.25
- Margin Trading: Starts at 11.25%
- Trading Fees: None
- Margin Trading: 9.75%, 5.75% with Robinhood Gold
- Inactivity Fees: None
- Miscellaneous Fees: ACATs (Outgoing): $75, Domestic overnight check delivery: $20, Paper Statements: $5, Paper Confirms: $2
Winner: TD Ameritrade
TD Ameritrade has a far more robust customer service experience compared to Robinhood.
TD offers help by phone, chat and secure message. I use TD Ameritrade for my personal investing and never had to wait longer than 1 or 2 minutes to get an agent on the phone.
Meanwhile, Robinhood is known to have notoriously poor customer service. The company came under intense scrutiny in 2021 due to unresolved customer issues.
However, this was largely due to the company’s rapid growth during that time, and Robinhood appears to have gotten its act together, and they now have 24/7 phone support.
Both TD Ameritrade and Robinhood have industry-standard security features and customer protections.
They both have Two-Factor Authentication (2FA), and encryption to keep the transmission of your personal data safe.
Plus, both trading platforms are SIPC members. This means customer cash and securities are protected up to $500,000 (including $250,000 for cash claims).
Keep in Mind: SIPC insurance does not provide coverage against a loss in the market value of your investments. Cryptocurrency investments are not protected by SIPC.
PROS and CONs
- Advanced Tools: Offers thinkorswim, an advanced trading platform
- Wide Investment Selection: Supports trading a variety of assets
- No Minimum Deposit: No required initial deposit to open an account
- Quality Research: Provides comprehensive research resources
- Excellent Customer Service: Offers 24/7 support and physical branches
- Certain Trade Fees: Broker-assisted trades and no-load mutual funds carry fees
- Complex Platform: The advanced platform may be overwhelming for beginners
- No Fractional Shares: Doesn’t offer the ability to buy fractional shares
- Commission-Free Trading: Allows you to trade stocks, ETFs, options, and even cryptocurrency without paying a fee each time you buy or sell
- User-Friendly Interface: The app and web platforms are intuitive and easy to use, especially for beginners
- No Minimum Balance: No minimum amount to open an account. This lowers the barrier to entry for those new to investing
- Fractional Shares: You can buy a piece of stock or ETF, even if you can’t afford a full share. This is particularly useful for high-priced stocks
- Extended Trading Hours: Extended hours trading, which includes pre-market (9:00 AM to 9:30 AM ET) and after-hours (4:00 PM to 6:00 PM ET)
- Poor Customer Service: Historically criticized for its lack of live customer service. It primarily uses email for customer inquiries, which can lead to slower response times
- Limited Investment Types: Doesn’t allow you to invest in mutual funds or bonds. It also doesn’t offer retirement accounts
- Limited Research Tools: Compared to some other brokers, Robinhood’s research capabilities may be limited. It offers basic stats, news, and a price chart, but it may not be enough for more advanced traders
- Controversies and Legal Issues: Robinhood has faced regulatory scrutiny and lawsuits over its practices, such as the 2020 halt on trading certain “meme stocks” which led to significant criticism.
- No DRIP: Doesn’t offer a Dividend Reinvestment Plan (DRIP), which could be a con for long-term, income-focused investors
Who Should Use These Brokerages?
TD Ameritrade is good for…
- Active Traders: The advanced thinkorswim platform supports frequent and complex trading.
- Long-Term & Retirement Investors: Its diverse investment options and retirement accounts are perfect for long-term strategies.
- Research-Oriented Investors: It offers extensive, in-depth market research tools.
- Educational Savers: 529 plans and custodial accounts are available for education savings.
Robinhood is good for…
- Beginners: The Robinhood app is known for its simplicity and user-friendly design, making it a great place for novice investors to start.
- Cost-Conscious Traders: Robinhood offers commission-free trades, which can be a major benefit for those who trade frequently or with smaller amounts.
- Mobile Users: Robinhood’s mobile app is highly rated and offers a seamless trading experience on the go, making it ideal for those who prefer managing their investments via mobile devices.
- Cryptocurrency Traders: As of my knowledge cutoff in September 2021, Robinhood supports trading of a selection of cryptocurrencies, a feature not universally offered among other brokerages.
- Casual Investors: Those who are looking to invest a little money on the side, without getting too deeply into complex investment strategies, might find Robinhood’s simple, straightforward platform appealing.
Which Investing Platform is Better?
TD Ameritrade appeals to a more sophisticated level of investor, while Robinhood’s niche is on beginner investors who do not need advanced trading tools and access to all types of investments.
If you are a beginner investor who only needs a taxable brokerage account, Robinhood is probably a better option.
But if you are an intermediate to an advanced trader who needs advanced analytical tools and research, TD Ameritrade is the right choice.
However, neither of these online trading platforms offers a guided approach to investing like the online platform M1 Finance, which is a hybrid of DIY investing and a robo advisor. Either way, before you start investing, it’s critical to perform your due diligence before opening an online brokerage.