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Why Do Millions of People Use Robinhood to Invest?

By Matthew Frankel, CFP® - Apr 8, 2021 at 7:13AM

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Robinhood has a huge customer base, even though it isn't the only no-commission brokerage anymore.

More than 13 million people use Robinhood for their investing needs, according to the latest data from the company. This is an extremely impressive figure, especially considering pretty much every broker now offers commission-free stock trading. So, what makes Robinhood appealing to its millions of customers? In this Fool Live video clip, recorded on March 29, Fool.com contributor Matt Frankel, CFP, and Industry Focus host Jason Moser talk about why Robinhood is still attracting millions of people. 

Jason Moser: I mean, all things being equal, and let's just assume that Robinhood builds itself in a point in time where commissions are $0 already. I understand why people would go to Robinhood in the very beginning because it just was easy, it was app-based, it was free trades. But let's look at it from the perspective of if everybody just had free trades. If they weren't the ones that really lit the fire to get everybody else to bring their commissions down to zero, are you going with an account with Robinhood or are you going with TD Ameritrade, if both are zero commissions?

Matt Frankel: People are still going with Robinhood and the reason is because it's easy. You hit the nail on the head there. It's because it's really easy to get money there, it's really easy to buy a stock. My neighbor across the street just started investing a few weeks ago and I had to physically walk into his house and show him how to buy a stock on TD Ameritrade because I recommended it and how to do things like look at a research report and all that. The Robinhood platform, that's one thing they really do have going for them. They make it easy. So, it's easier. A lot of younger investors like them. They are a trustworthy platform in the sense that they are insured and things like that. The high-net-worth crowd, they really haven't penetrated that market yet and there's a reason.

Moser: Yes. There definitely is.

Frankel: I know you and I don't, but I wonder if any of our colleagues are Robinhood customers and could argue the other side of that.

Moser: I think I recall a long time ago talking to Aaron Bush about this. This was back when we were in the office. I think he had Robinhood and then maybe I think he said he was closing it or I mean, yes. I feel like whoever I spoke with, they kind of moved on from it.

Frankel: I will say, if you invest in crypto, I could see why you would want Robinhood. They offer a bunch of crypto currencies on their platform and you don't have to pay the fees like at a Coinbase or any of those exchanges and there's a financial benefit to keeping things in one place. The same reason that Bank of America customers get Merrill Edge accounts because then their finances are all in one place. I could see if you're a crypto investor, why Robinhood might be appealing. You can have your stocks in your cryptocurrencies in the same account.

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