E*TRADE vs. TD Ameritrade vs. Robinhood: Which is the Best?
E*TRADE, TD Ameritrade and Robinhood are all online investment brokers with an emphasis specifically on self-directed investing. But that’s where the similarities end. Each broker has its own features and benefits that make it unique from the others. And while E*TRADE and TD Ameritrade do have certain similarities, the details between each make all the difference. Meanwhile, Robinhood is virtually its own “thing” in the investment industry.
Let’s compare the three to help you decide which might work best for your investing activities.
Founded in 1982, E*TRADE was launched specifically as an online trading platform. The company now has more than $65 billion in assets under management, and while it’s not one of the larger brokerage firms, it’s rapidly growing into one of the most popular.
Part of the reason for this popularity is that it has one of the best trading platforms in the industry. Investment options are also almost unlimited, allowing you to invest in individual stocks, bonds, mutual funds, exchange-traded funds (ETFs), options, futures and FOREX.
E*TRADE also offers four managed investment options, including its Core Portfolios robo advisor. And for more hands-on wealth management, it offers its Blend Portfolios, Dedicated Portfolios and Fixed Income Portfolios. These three include active management and the ability to work directly with a financial consultant.
E*TRADE’s commission structure also favors frequent traders. You can get reduced trading fees if you make at least 30 trades per quarter. And the company offers its own online banking unit, enabling you to bank where you invest.
About TD Ameritrade
Founded in 1971 and based in Omaha, Nebraska, TD Ameritrade is part of the Toronto Dominion Bank, which is the source of the abbreviation “TD.” TD Ameritrade is of course affiliated with TD Bank, which operates more than 1,300 branches in 15 East Coast states plus Washington, D.C. With $384 billion in total assets, TD Bank is the ninth largest bank in the United States.
The connection between TD Ameritrade and TD Bank is more than incidental. While TD Ameritrade provides full-service investment brokerage services, you can also bank through TD Bank. There are bank-based financial professionals available at branches, giving you a wider face-to-face capability for your investments.
TD Ameritrade itself has approximately 360 branches around the country. It also has one of the top investment platforms in the industry and consistently ranks among the best brokerage firms available. It provides full-service investing for self-directed investors. It also offers its Essential Portfolios robo advisor and its Select Portfolios actively managed portfolio for larger accounts. And its Personalized Portfolios offer wealth management for investment accounts with at least $250,000.
Robinhood is a relative newcomer on the investment scene, having been launched only in 2013. But given that it’s a completely commission-free trading platform, it’s easy to see why the service has been growing so rapidly.
The platform offers extremely limited customer service and is therefore designed almost exclusively for experienced self-directed investors who don’t need broker assistance or many of the investment tools and services investors have come to expect from full-service brokerages.
It also offers a relatively limited menu of investment options. You can trade stocks, exchange-traded funds (ETFs) and options, but not mutual funds, bonds and other investments. However, you can buy Bitcoin and other cryptocurrencies with Robinhood.
Robinhood doesn’t offer any managed account options, nor does it offer retirement accounts. All accounts opened with the platform are taxable brokerage accounts.
How Are They the Same?
Apart from the fact that all three are investment platforms, there are only a few similarities with certain features:
All three investment platforms provide self-directed investment brokerage services.
Both E*TRADE and TD Ameritrade offer managed portfolio options, including robo advisors (again, Robinhood doesn’t).
E*TRADE and TD Ameritrade are discount brokers, while Robinhood charges no trading fees at all.
All three platforms provide investor access online. TD Ameritrade and E*TRADE also offer iOS and Android mobile apps; 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 E*TRADE and TD Ameritrade also offer managed portfolio options, including robo advisors.
E*TRADE and TD Ameritrade offer all types of investments; Robinhood offers only stocks, options and ETFs, as well as cryptocurrencies, which E*TRADE and TD Ameritrade don’t.
E*TRADE and TD Ameritrade both charge commissions for trades, though E*TRADE discounts fees for frequent traders, while Robinhood is a commission-free platform.
E*TRADE offers 24/7 customer service by live chat; TD Ameritrade is available 24/7 by phone, live chat, email and text; Robinhood restricts customer service to email only.
E*TRADE has 30 local branch offices; TD Ameritrade has 360, plus more than 1,300 TD Bank branches; Robinhood has no local branches.
E*TRADE and TD Ameritrade offer various types of IRAs, while Robinhood offers only taxable accounts.
E*TRADE offers several unique features:
A robo advisor and several wealth management options.
Access to E*TRADE Savings Bank, offering free checking, a high interest-rate savings account and a line of credit (LOC).
With the LOC you can borrow up to 50% of the value of your account for any purpose except buying securities on margin. The interest rate is lower than margin interest rates, and you can repay on your own schedule.
TD Ameritrade is a full-service investment broker, well designed for self-directed investing. But it also offers a robo advisor and several wealth management options, primarily for larger investors.
But perhaps the most distinguishing factor the company offers is the tie-in with TD Bank. The bank offers full-service banking, including commercial banking and hundreds of branches up and down the East Coast. It’s a perfect combination of investing and banking under the same roof. And with it, you get the type of face-to-face contact that’s become highly unusual with investing.
Robinhood’s main feature is commission-free trading for stocks, options and ETFs. There’s no “gotcha provision” either — it’s true commission-free trading. It doesn’t even charge an annual fee to maintain your account. Even more unique is the ability to trade cryptocurrencies on the platform. That’s the type of investing usually reserved for cryptocurrency exchanges. But as cryptocurrencies continue to grow in popularity, Robinhood is well positioned to be an industry leader.
Robinhood is also designed as a pure self-directed trading platform. There are no managed portfolio options available, and the investment menu is limited to just stocks, options, ETFs and cryptocurrencies. The platform doesn’t offer bonds or mutual funds, nor does it provide a mobile app.
Minimum Initial Investment
E*TRADE requires a minimum of $500 to open a brokerage account. But it has relatively high minimums for its managed options. Managed account minimum investments are as follows:
Core Portfolios robo advisor, $5,000.
Blend portfolio, $25,000
Dedicated portfolio, $150,000
Fixed Income portfolio, $250,000
TD Ameritrade has no minimum initial investment requirement. Naturally, you’ll need to fund your account to begin investing. And if you invest with one of the managed portfolio options, there are specific requirements, as follows:
Essential Portfolios robo advisor, $5,000
Select Portfolios, $25,000
Personalized Portfolios, $250,000
Like TD Ameritrade, Robinhood has no minimum required investment. You’ll need to fund your account to begin trading, but how much that is will be your choice.
Winner — A two-way tie. Both TD Ameritrade and Robinhood have no minimum initial investment requirement.
Trading Fees and Annual Fees
Fees matter — a lot — and none of the three platforms has an annual fee to maintain their brokerage accounts. E*TRADE charges a commission of $6.95 per trade for stocks, options and mutual funds. However, if you make at least 30 trades per quarter, the fee drops to $4.95 per trade. E*TRADE has an annual advisory fee of 0.30% on its Core Portfolios robo advisor and annual advisory fees ranging from 0.35% to as high as 1.125% on its other managed portfolio options.
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 portfolio fees range from 0.30% to 1.25% per year.
Robinhood has no fees of any kind.
Winner — Robinhood, with no fees whatsoever.
As mentioned in the “About E*TRADE” section, the company offers discounted commissions for frequent traders (30 or more trades per quarter). If you’re a fund investor, E*TRADE has more than 250 commission-free ETFs and at least 4,400 no-fee mutual funds.
Another E*TRADE standout feature is its specialization in options trading. The trading platform is optimized for options trading and is considered one of the best in the industry. Similar to stocks and ETFs, it also offers discounted fees to frequent options traders.
TD Ameritrade’s main standout feature is the tie-in with TD Bank. The two are closely associated, so you can maintain investment activities at one of the bank’s more than 1,300 branches. And unlike E*TRADE, which has an online — but limited — banking service, TD Bank is a full-service bank and offers commercial services to small businesses, as well as loans to all consumers.
TD Ameritrade also has more than 360 branches around the country, adding a face-to-face component to your investing activities.
Robinhood has two standout features. First and most obvious is its free(!) trading. It charges no commissions or fees of any kind. It’s one of only two or three investment platforms available where this is possible.
The other standout feature is the ability to trade cryptocurrencies. Sure, you can do that on a cryptocurrency exchange. But if you want to hold cryptocurrency as part of your overall portfolio, Robinhood lets you do that, along with stocks, ETFs and options. There’s no need to maintain a dedicated cryptocurrency exchange account.
Winner — A three-way tie. On the surface, Robinhood wins as a free trading platform. But E*TRADE offers a full range of investment options (except cryptocurrencies) and has several managed portfolio options. TD Ameritrade has the highest fees of the group but also offers nearly unlimited investing, plus a very large network of brick-and-mortar offices across the country and bank branches that offer full-service banking.
E*TRADE customer support is available 24 hours a day seven days per week by live chat. Phone contact is available Monday through Friday from 8:30 a.m. to 8:30 p.m., Eastern Time. It also has a mobile app with full capabilities.
TD Ameritrade is available 24/7 by phone, live chat, text and email. Like E*TRADE, it has a full-service mobile app. But you can also get customer service at any of hundreds of TD Ameritrade offices and TD Bank branches.
Robinhood provides even less customer service availability. The company can be contacted only by email, as there is no phone contact capability.
Winner — TD Ameritrade, and it is not even close. 24/7 contact through multiple channels, plus hundreds of local branch offices, makes it the hands-down winner.
All three accounts come with SIPC coverage, which protects investor’s funds from broker failure, up to $500,000 in securities and cash, including up to $250,000 in cas.
For direct account security, E*TRADE offers $0 liability against unauthorized use of your account, as well as complete payment protection, information privacy, optional digital security ID and smart alerts by text or email.
TD Ameritrade uses advanced firewalls to keep unauthorized parties from accessing your personal information. It also uses anomaly detection and intrusion detection technology to determine unusual behavior. The website uses 128-bit encryption for the transmission of all data between the site and your computer. In the event of an unauthorized disappearance of cash or securities, TD Ameritrade provides its Asset Protection Guarantee; you’ll be reimbursed for any cash or securities lost due to unauthorized activity.
Robinhood encrypts sensitive information, like your Social Security number, before storage. Both the mobile and web applications securely communicate with servers using transport layer security (TLS) protocols. No online banking credentials are stored, and you can secure access to your mobile app using TouchID, FaceID or custom pin code. Robinhood also offers two-factor authentication.
Winner — TD Ameritrade. The Asset Protection Guarantee plan is exactly what investors are looking for.
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.
E*TRADE is perfect for high-frequency traders — to get the benefit of lower commissions — who also want the availability of all the tools, research and support of a full-service platform. That includes investors who want to invest in penny stocks, mutual funds, bonds, FOREX and futures (none of which are offered on Robinhood). It will also be a good choice if you either want your entire portfolio professionally managed or you want a mix between self-directed investing and managed options.
Basically, TD Ameritrade offers everything E*TRADE does. The main negative is that there’s no discount for frequent traders. For that reason, TD Ameritrade may be the better choice for those who are not active traders. But it’s the best choice of the three for any investor who also wants the face-to-face benefit that comes with the hundreds of branches the company has available.
It’s also the best broker for anyone who wants to have the availability of full-service banking with their investing activity. TD Bank provides just that.
Robinhood is best for very active self-directed investors who are solely concerned with eliminating trading commissions. Since there are few tools and no broker advice, you’ll need to have access to those services from outside sources.
Which Is the Best?
When it comes to total service level, TD Ameritrade has to be declared the overall winner. It has everything E*TRADE has — except lower commissions for frequent trading — but also comes with full-service banking and hundreds of branches.
But E*TRADE goes TD Ameritrade one better, with lower-cost frequent trading. It may be that the frequent trader who is looking for lower fees — but also wants the benefit of a full-service investment platform — will see E*TRADE as the best. Meanwhile, the less-frequent trader, who is also interested in banking services, will lean toward TD Ameritrade.
Robinhood can be declared the clear winner in just one category, and that’s commission-free trading. If you’re a frequent, self-directed trader who has all necessary investment resources from outside sources, Robinhood is clearly the best of the three. The cryptocurrency factor also figures in Robinhood’s favor, but it isn’t a deciding factor due to the limited number of people who invest in them.
There really is no one best investment broker between the three. The only thing that matters is what your own investment preferences are and which platform will work best for you.