Robinhood is a relative newcomer to the online brokerage industry. Launched in 2015, its claim to fame was commission-free investing, with free trades in stocks, ETFs, options, and cryptocurrencies. Now that most brokers have moved to commission-free trading, Robinhood has lost that edge. Still, the low costs, zero account minimums, and overall simplicity remain attractive to new investors.

While not the oldest kid on the block, Vanguard has been around since 1975. Today, Vanguard has more than 30 million investors and over $7.8 trillion in global assets under management. The company offers an impressive lineup of low-cost mutual funds and exchange-traded funds (ETFs) aimed at buy-and-hold investors, as well as reasonably priced professional advice.

While these two brokers don’t share much in common—after all, they potentially target very different customers—we’ll take a closer look to help you decide which might be a better fit for your investing needs.

Usability

Robinhood makes it easy to open and fund a new account in a matter of minutes on its app or website. At Vanguard, you can open and fund an account online, but it takes a few days to get up and running. There’s additional paperwork to fill out at either broker if you want to trade options or have access to margin. At Robinhood, you’ll need to upgrade to Robinhood Gold ($5 per month) if you want to enable margin access.  

Robinhood’s website is sleek and easy to navigate, but this may be a function of its general simplicity. The mobile app and website are similar in look and feel, making it easy to bounce between the two interfaces. Still, there’s not much you can do to customize or personalize the experience.

Vanguard’s website has (finally) been updated and is now more user-friendly and modern-looking. That said, there’s still work to be done to make the website easier to navigate. You can’t get very far on Vanguard’s website unless you log into your account. The app is a good place to monitor positions, analyze your portfolio, catch up on the news, and place basic buy and sell orders.

Overall, we found Robinhood is a good starting place for new investors, especially if you have a small account and want to trade just a share or two at a time. Vanguard is a better option for buy-and-hold investors of all levels and for people who wish to access professional advice in combination with some of the lowest-cost funds in the business.

Trade Experience

Desktop Trade Experience

Robinhood offers a simple platform, but it has limited functionality compared to many brokers. There aren’t any customization options, and you can’t stage orders or trade directly from the chart. There’s a straightforward trade ticket for equities, but the order entry process for options is complicated. What’s more, Robinhood has been the subject of scrutiny (and litigation) due to recurring platform outages and trade restrictions.

Vanguard offers a basic platform geared toward buy-and-hold investors. You need to jump through a few hoops to place a trade, and you don’t get real-time data until you open a trade ticket. The trading platform is adequate for buy-and-hold investors, but it falls predictably short for traders and investors who want a responsive and customizable experience.

Robinhood and Vanguard’s platforms are so different that it’s impossible to say which offers the better trading experience. Even with its outages and record-making Security and Exchange Commission (SEC) fines, new and tech-savvy investors will likely prefer Robinhood. Buy-and-hold and more experienced investors, on the other hand, will enjoy Vanguard’s stability and reliability.

Mobile Trade Experience

On the mobile side, Robinhood’s app is more versatile than Vanguard’s app. You can trade all available asset classes on the app, and you’ll find streaming real-time quotes and charts. Vanguard limits what you can trade on mobile, and quotes are delayed 20 minutes until you open a trade ticket.

On the App Store, Robinhood has more reviews, but Vanguard has a better rating. Robinhood has a 4.1-star rating from some 3.7 million reviews, while Vanguard has 4.7 stars from about 167,000 reviews. Overall, we found that Robinhood’s app offers more functionality and is more fun to use than Vanguard’s.

Range of Offerings

Robinhood supports a narrow range of asset classes. You can trade stocks (no shorts), ETFs, options, and cryptocurrencies, including Bitcoin (BTC), Bitcoin Cash (BCH), Bitcoin SV (BSV), Dogecoin (DOGE), Ethereum (ETH), Ethereum Classic (ETC), and Litecoin (LTC). Vanguard offers a decent range of assets, including stocks, ETFs, fixed income, options, OTCBB, and a long list of no-load/no-fee mutual funds. You also have access to Vanguard’s robo-advisory service. Neither broker provides access to futures, options on futures, or forex markets.

Order Types

Robinhood and Vanguard offer the same basic order types, including market, limit, and stop-limit orders. Neither broker supports any conditional orders such as OCOs or OTOs.

Trading Technology

Robinhood did not share its order routing technology, payment for order flow (PFOF) details, or trade execution speeds. However, the company reports an average net price improvement of $0.0109 per share.

Robinhood’s Form S-1 Registration Statement filed with the SEC on July 1, 2021, indicates PFOF represented 81% of Robinhood’s total revenue in the first quarter of 2021, up from 75% in 2020. This should be concerning to investors. According to a press release from the SEC, “One of Robinhood’s selling points to customers was that trading was ‘commission free,’ but due in large part to its unusually high payment for order flow rates, Robinhood customers’ orders were executed at prices that were inferior to other brokers’ prices.”

Vanguard does not use smart order routing technology, and customers can’t route their own orders. Still, the broker reports an average net price improvement of $0.0159 per share for eligible marketable orders. We did not find any details about Vanguard’s execution speed, which is not surprising considering the broker’s target customer is playing the long game (and unlikely to be concerned about nanoseconds). Although Vanguard’s approach to routing is basic compared to many other brokers, it scores points for not accepting payment for order flow. Overall, Vanguard gets a solid win for trading technology.

Costs

Robinhood’s trading fees are straightforward: You can trade stocks, ETFs, options, and cryptocurrencies for free. The company says broker-assisted trades run $25, but we couldn’t find a way to actually reach a live broker.

Meanwhile, Vanguard charges $0 commissions for online equity, options (there’s a $1 per contract fee), OTCBB, and ETF trades for U.S.-based customers. Broker-assisted trades cost between $0 and $25, depending on your account balance. There’s also a sliding fee of $0 to $50 for broker-assisted mutual fund trades that fall outside the no-transaction-fee family.

Overall, it’s challenging to pick a winner for costs since the brokers don’t offer the same trading products. Still, Robinhood has the edge if you’re trading the usual suspects—equities and options—since it doesn’t charge a per-contract fee for options trades.

Account and Research Amenities

Predictably, Robinhood’s research offerings are limited. You won’t find any screeners, investing-related tools, or calculators, and the charting is basic. Still, news is available from several outlets, and you can access Morningstar research if you’re a Robinhood Gold client ($5/month subscription).

Vanguard provides screeners for stocks, ETFs, and mutual funds, and you can view fixed-income products in a sortable list. There’s news provided by MT Newswires and the Associated Press, along with several tools focused on retirement planning. Charting is limited, and there’s no technical analysis, but again, that’s not surprising for a broker that focuses on buy-and-hold investing and retirement planning.

Vanguard comes out ahead in this category due to a wider variety of tools and resources.

Portfolio Analysis

Robinhood’s portfolio analysis tools are somewhat limited, but you can view your unrealized gains and losses, total portfolio value, buying power, margin information, dividend history, and tax reports. 

Vanguard provides access to real-time buying power and margin information, internal rate of return, and unrealized and realized gains. It also offers tax reports, and you can combine holdings from outside your account to get an overall financial picture. Overall, Vanguards has the edge over Robinhood in the portfolio analysis department.

Education

Robinhood’s educational articles are easy to understand, but don’t expect any deep dives. It can be hard to find what you’re looking for because the content is posted in chronological order (and not organized by topic). There aren’t any videos or webinars, but the daily Robinhood Snacks newsletter and 15-minute podcast offer useful and lively information.

The focus of Vanguard’s educational content is to help you set and reach your financial goals. Much of the content is in the form of articles. Still, you’ll also find commentary and research papers, videos, and webcasts on investment products, retirement, industry news, financial planning, and the economy.

Overall, we found Robinhood’s content to be more engaging, while Vanguard’s was more informative.

Customer Service

Vanguard is the clear winner when it comes to customer service. Robinhood handles its customer service through the app and website, and you can’t call for help since there’s no inbound phone number. Vanguard offers phone support from 8 a.m. to 8 p.m. (Eastern) Monday through Friday. Live chat isn’t supported, but you can send a secure message via the website.

Security

Vanguard’s security is up to industry standards. You can log into the app with biometric (face or fingerprint) recognition, and you’re protected against account losses due to unauthorized or fraudulent activity. Vanguard carries excess Securities Investor Protection Corporation (SIPC) insurance (provided by London insurers) that provides each client with $49.5 million for securities and a cash limit of $1.9 million per customer. There’s an aggregate limit of $250 million for all clients.

Robinhood’s technical security is up to standards, but it lacks the excess SIPC insurance. However, your cash and securities are protected by standard SIPC insurance up to $500,000 (including $250,000 for cash claims). Through Sept. 2021, neither broker had any significant data breaches reported by the Identity Theft Research Center.

It’s worth noting that Robinhood derives most (81% as of the first quarter of 2021) of its revenue from payment for order flow. The SEC recently announced it is considering a full ban on payment for order flow practices because it creates “an inherent conflict of interest,” according to SEC Chairman Gary Gensler. Bans are already in effect in Australia, Canada, and the U.K.

It’s also worth noting that Robinhood faces dozens of class-action lawsuits over trading halts and platform crashes that reportedly led to financial losses for millions of Robinhood users.

Our Verdict

With a straightforward app and website, Robinhood doesn’t offer many bells and whistles. If you’re brand new to investing and trading a small balance, Robinhood could be a good place to gain experience before you switch to a more versatile broker. If you have concerns about Robinhood’s outages and trade restrictions, there are other zero-fee brokers out there that may offer a more predictable and reliable trading experience. Overall, we haven’t been fans of Robinhood’s efforts to gamify investing, and some of those concerns come out in these comparisons.   

Vanguard may not be as flashy as Robinhood, but buy-and-hold investors will value the broker’s simplicity and reliability. Vanguard is also a better fit for investors who want access to more asset classes, including some of the best (and lowest cost) funds in the business. We think young investors looking to enter the market may actually be better served by Vanguard as far as their long-term results compared to the type of trading behavior Robinhood nudges them towards—and that goes for all other types of investors as well.