Choosing the right broker is a crucial part of investing because you need to be able to place trades, right? Well, every year IBD polls investors on what they like about their broker across a variety of metrics in its Best Online Brokers survey. Robinhood is known as the default trading platform of choice for young investors, but what else should traders consider when selecting a broker for the first time or switching to a new one?
IBD markets reporter Rachel Fox, who analyzed the survey's findings regarding young investors, says price is the No. 1 consideration for Gen Z and Millennial traders.
"I think one of the biggest things (from the IBD survey) was price — being very price conscious," Fox said. "They want to start small and do it on their own terms."
Robinhood has such a big foothold on the young market because of how they've branded themselves, according to Fox.
"They were the first to break into the whole [strategy of] zero commissions, you know, zero account minimums. ... People really think of them as that," Fox said.
Fox also noted the Robinhood app is very simple and easy to use: "Everything is laid out very clearly. It feels very comforting, I think, to a beginner."
While Robinhood can take a good amount of credit for making investing accessible "to a group of people who would have never touched it" otherwise, according to Fox, the trading platform did not get top marks in IBD's Best Online Brokers survey with regard to trade execution.
Robinhood Vs. Other Brokers: What Are Your Goals?
When choosing a broker, it's all about deciding what kind of trader you want to be. Fox says young investors are very interested in getting trade ideas and having access to research tools.
For those wanting to go beyond basic charts, Robinhood might not be the answer. Fidelity, TDAmeritrade and Charles Schwab earned the highest scores in IBD's survey regarding research tools. For trade ideas, Ally Invest, E-Trade and Robinhood earned top marks.
"Consider what your priorities are and what you picture your investing trajectory to look like," Fox said, whether that's starting a retirement account or casually trading meme stocks. "Figure out what you're here for because there's a lot of different ways you can be an investor."
