Ally Invest vs. Robinhood vs. TD Ameritrade 2019 Comparison
You’d be hard pressed to assemble a group of three online investment brokers that are more different than Ally Invest, Robinhood and TD Ameritrade. Each offers self-directed investing, but that’s the main thing they have in common. Beyond that, each has its own unique services that will appeal to different investors.
Ally Invest and TD Ameritrade are the most similar. But even they have different services and features that make each unique.
If you’re considering one of these brokers as a place to do your investing, which should you choose? That’s the question we hope to answer in this analysis.
About Ally Invest
Ally Invest is part of Ally Financial, which is the successor organization to General Motors Acceptance Corporation (GMAC). That means the company’s roots go all the way back to 1919. It’s now a diversified financial organization with more than $170 billion in assets. Ally Invest is the online investment arm of the company. In fact, it has no local branches and functions entirely as an online trading platform.
Ally Invest provides self-directed investments with trading fees at the lower end of the industry range. On the platform you can trade stocks, exchange traded funds (ETFs), options, bonds and mutual funds. It even offers dozens of ETFs that can be traded commission-free.
But if you’re not interested in self-directed trading, Ally Invest also offers its own robo advisor, Ally Invest Managed Portfolios. With no more than $100, you can have your portfolio professionally managed, including periodic rebalancing and dividend reinvestment.
And if you prefer to bank where you invest, you can do it through Ally Bank, which is currently providing some of the highest interest earnings on savings products in the market. And as the successor to GMAC, Ally Bank is also the largest auto lender in the nation. It provides some of the most innovative car loans available.
Robinhood is a relatively new investment platform, but it’s making a name for itself as an industry disruptor. Though it began only in 2013, it’s one of the very few trading platforms in the industry offering completely commission-free trading.
There is of course a tradeoff for free trades. Robinhood is a relatively limited trading platform. It offers a limited menu of investment options. For example, while you can trade stocks, options and ETFs, the platform currently doesn’t make mutual funds, bonds or other investments available.
Customer service is also very limited. The platform is really designed for more advanced traders who aren’t likely to need broker assistance. It also lacks many of the investment tools that are routinely available on full-service brokerage platforms like Ally Invest and TD Ameritrade.
Two other missing options with Robinhood are retirement accounts (only taxable brokerage accounts) and a managed portfolio option like a robo advisor. On the other hand, Robinhood does offer the ability to trade cryptocurrencies
About TD Ameritrade
TD Ameritrade is the investment arm of Toronto Dominion Bank, one of the largest banks in Canada. But it operates in the U.S. as an independent entity headquartered in Omaha, Nebraska. It’s also closely affiliated with TD Bank, which operates more than 1,300 branches across the Eastern US.
The connection between TD Ameritrade and TD Bank naturally holds the option to invest with the same company where you bank. But the connection is even closer than that. Each bank branch has staff who can help you with your investments. That means each of TD Bank’s branches also serves as a branch location for TD Ameritrade.
But even apart from the TD Bank connection, TD Ameritrade also offers 360 dedicated branches around the country. That gives you plenty of options for face-to-face customer service.
The investment firm gets high marks as one of the best in the country. And in addition to its self-directed trading platform, it also provides managed options through its Essential Portfolios and Select Portfolios robo advisors. And if that’s not enough, TD Ameritrade offers wealth management for larger accounts through its Personalized Portfolios.
How Are They the Same?
Apart from the fact that all three are investment platforms, there are only a few similarities.
All three investment platforms provide self-directed investment brokerage services.
Both Ally Invest and TD Ameritrade offer managed portfolio options, including robo advisors. Robinhood doesn’t provide this option.
Ally Invest and TD Ameritrade are discount brokers. But Robinhood charges no trading fees at all.
All three platforms provide investor access online. TD Ameritrade and Ally Invest also offer iOS and Android mobile apps, but Robinhood doesn’t.
How Are They Different?
The three services have more differences than anything they might have in common.
All three platforms are designed for self-directed investors. But Ally Invest and TD Ameritrade also offer managed portfolio options, including robo advisors.
Ally Invest and TD Ameritrade offer virtually unlimited investments. Robinhood offers only stocks, options, ETFs and cryptocurrencies. (Ally Invest and TD Ameritrade don’t offer cryptos.)
TD Ameritrade offers the widest variety of investment accounts, including trusts, 529 college savings plans, Coverdell accounts, annuities, money markets and certificates of deposit (CDs). In addition to taxable accounts and IRAs, Ally offers checking and savings accounts. Robinhood is the most limited when it comes to account options.
Ally Invest and TD Ameritrade both charge commissions for trades, but Ally Invest offers discounted fees for frequent traders. Robinhood is a completely commission-free platform.
Ally Invest and TD Ameritrade offer 24/7 customer service by phone, live chat and email. Robinhood restricts customer service to email only.
TD Ameritrade has 360, plus more than 1,300 TD Bank branches. Neither Ally Invest nor Robinhood have any branches.
Ally Invest and TD Ameritrade offer various types of IRAs. Robinhood offers only taxable accounts.
Ally Invest has one of the most diverse financial offerings in the industry, including:
The Ally Invest Managed Portfolios robo advisor
High-interest savings products through Ally Bank
Reduced commissions for high-frequency trading
Robinhood’s most unique feature is the one it’s best known for: commission-free trading. That extends to trading stocks, options and ETFs. Best of all, there are no hidden fees. Commission-free means free in the truest sense.
Robinhood offers something else that the other two platforms don’t (in fact, almost no other investment broker does), and that’s the ability to trade cryptocurrencies. While this may not attract a large number of investors right now, there’s no question interest in cryptocurrencies, especially Bitcoin, is growing. As it does, Robinhood will likely emerge as a go-to platform where you can trade cryptos in addition to other assets.
What also makes Robinhood unique — and not necessarily in a good way — is that it is a limited platform. You won’t be able to trade certain common investments, take advantage of a wealth of investment tools or even get broker assistance.
Like Ally Invest, TD Ameritrade is a full-service online broker. And while its commissions are higher than Ally Invest’s — and certainly not free like Robinhood — TD Ameritrade has the advantage of having an extensive network of physical branches across the country.
Not only does the company offer 360 TD Ameritrade branches across the country, but you can also handle investment activities at any one of the 1,300 TD Bank branches on the East Coast. That’ll be a big advantage if you prefer at least some face-to-face contact with your investment activities.
And much like Ally Invest, TD Ameritrade also offers you the ability to bank where you invest. What’s more, TD Bank is well known for having the most extensive banking hours of any bank in the country.
Ally Invest has no required minimum initial investment or ongoing balance requirements. However, its robo advisor, Ally Invest Managed Portfolios, does have a minimum initial investment requirement of $100.
Robinhood also has no minimum required investment. Nor does it have any ongoing account balance minimum. But you will need to fund your account to begin trading. And that can be as much or as little as you choose.
Like Ally Invest and Robinhood, TD Ameritrade also has no minimum initial investment requirement, at least not for its self-directed investment accounts. But its three managed portfolio options do have minimum initial balance requirements. These range from $5,000 for the Essential Portfolios robo advisor to $25,000 for Select Portfolios and $250,000 for Personalized Portfolios wealth management.
Winner — We’ve got a three-way tie. Ally Invest, Robinhood and TD Ameritrade each having no minimum initial investment requirement.
Ally Invest has a standard commission of $4.95 per trade. But if you’re a frequent trader — defined as 30 or more trades per quarter — the commission drops to $3.95 per trade. Both fee structures also apply to trading options. With options, you’ll also pay a small fee on each contract you trade. The mutual fund trading fee, at $9.95 per trade, is one of the lowest in the industry. For Ally Invest Managed Portfolio, there’s an annual management fee of 0.30%.
Robinhood has no commission fees at all and no fees of any kind for that matter.
TD Ameritrade charges a commission of $6.95 per trade for stocks, options and ETFs. But it charges no fee for mutual funds. Its managed portfolios range from 0.30% to 1.25% per year.
Winner — Robinhood wins for having a completely fee-free platform.
As mentioned, Ally Invest offers discounted commissions for frequent traders. The fee of $3.95 per trade for those who place 30 or more trades per quarter is one of the lowest in the industry.
In addition, the ability to do your banking through Ally Bank offers you an opportunity to earn some of the highest interest on savings available. And it gives you access to some of the most innovative auto loans in the industry.
Robinhood has two simple standout features: no commissions on trading and the ability to trade cryptocurrencies. Commission-free trades have an obvious advantage. But the ability to also trade cryptocurrencies is a major convenience. In most cases, if you want to trade cryptocurrencies, you’ll need to maintain an account at a separate cryptocurrency exchange. Robinhood eliminates the need for dual accounts.
TD Ameritrade’s standout feature has to be the TD Bank connection. It’s not an investment broker with banking. Nor is it a bank with an investing feature. Instead, it’s two completely separate financial operations but closely joined. You can conduct your investment activities in any of TD Bank’s local branches. There, you can also take advantage of full-service banking. It’s a winning combination that few investment firms can match.
Winner — The nod has to go to Robinhood with its combination of commission-free trades and the ability to invest in cryptocurrencies.
Ally Invest customer support is available 24 hours a day, seven days per week, by phone, email and live chat.
Robinhood offers very limited customer service availability. The company can be contacted only by email. There is no phone contact capability, which will be a problem for some investors.
TD Ameritrade is available 24/7 by phone, live chat and email. But you can also get face-to-face customer service at any one of hundreds of TD Ameritrade offices and TD Bank branches.
Winner — TD Ameritrade. Ally Invest also offers 24/7 contact through multiple options, but TD Ameritrade wins for its network of hundreds of branch offices.
All three companies come with SIPC coverage protecting investor’s funds from broker failure for up to $500,000 in securities in cash, including up to $250,000 in cash.
For direct account security, Ally Invest employs both firewalls and secure socket layering (SSL) technology. Sensitive information is encrypted online to safeguard it during transmission. You’ll have a username and password, and access to your account will be blocked after a set number of unsuccessful login attempts.
Robinhood provides the following:
Encryption of sensitive information (like your Social Security number) before storage.
The mobile and web applications securely communicate with servers using transport layer security (TLS) protocols.
No online banking credentials are stored.
You can securely access your mobile app using TouchID, FaceID or custom pin code.
The platform uses two-factor authentication.
TD Ameritrade uses the following security measures:
Advanced firewalls to keep unauthorized parties from accessing your personal information.
Anomaly detection and intrusion detection technology to determine unusual behavior.
128-bit encryption for the transmission of all data between the site and your computer.
If there is an unauthorized disappearance of cash or securities, TD Ameritrade provides its Asset Protection Guarantee. You’ll be reimbursed for any cash or securities lost through unauthorized activity.
Winner — TD Ameritrade. Its Asset Protection Guarantee plan adds a strong additional measure of protection just in case other security measures fail.
Who Are They Best For?
Since each of the three platforms has specializations, each can be the perfect platform based on your own investment preferences.
Ally Invest offers a full-service investment platform for self-directed investors. It provides all the tools and investment options you’ll need. Though the platform can work well for any investor, it may be best for frequent traders who will get the benefit of the discounted trading commissions.
But it’s also a good choice for anyone who wants a mix of self-directed investing and a managed portfolio option. You can keep some of your portfolio available for self-directed trading while holding a portion in Ally Invest Managed Portfolios.
Robinhood is the perfect trading platform for self-directed investors who are looking to completely eliminate fees on trading of stocks, options, ETFs and cryptocurrencies. And it is of course mainly a platform for those who don’t need broker assistance or the many investment tools offered by full-service investment brokers.
Like Ally Invest, TD Ameritrade is a full-service trading platform. But because it lacks discounted commissions for frequent traders, it’s best for those who prefer the buy-and-hold approach to investing. It also charges no commissions on mutual funds, which will be of interest to long-term investors. Trading fees are less of a factor when you don’t trade that often.
It’s also the best choice if you prefer face-to-face contact with someone for your investment activities. Not only can you find that in TD Ameritrade branches but also in hundreds of TD Bank branches if you live in the eastern part of the country.
Which Is the Best?
Since each of these three brokers fills a different niche in the investment universe, it will really come down to which features and benefits are most important to you.
For example, if you’re a self-directed, self-sufficient investor and your primary interest is in commissions, you’ll certainly choose Robinhood. But if you’re frequent trader, who also wants all the tools, benefits and customer service of a full-service brokerage, Ally Invest will likely be your choice.
On the other hand, if you’re not a frequent trader, you like face-to-face customer service and you prefer to invest where you bank, Sign Up will be your choice.
But is there one broker that will stand above the others, at least for the largest number of investors? If there is, our money is on TD Ameritrade.
Much like Ally Invest, TD Ameritrade provides full-service brokerage services including sophisticated investment tools and information and best-in-class customer service. But it also offers multiple levels of managed portfolio options, including wealth management for larger accounts.
When you combine those advantages with the large network of TD Ameritrade and TD Bank branches, you’ve got a really strong product offering. What’s more, the network of bank branches will allow you to take advantage of full-service banking in addition to your investing activities.