Wealthfront vs. Robinhood: Which Broker Is Right for You?

Robinhood and Wealthfront both aim to make investing easier. But there's a huge difference between Wealthfront vs. Robinhood. Robinhood is a brokerage firm that allows you to choose your own mix of investments including stocks, ETFs, and cryptocurrencies. Wealthfront handles all your investing for you. This Wealthfront vs. Robinhood comparison will help you decide which of these two approaches makes sense for you.

Wealthfront and Robinhood work differently when it comes to commissions and fees.

Wealthfront chooses your investments for you, rather than facilitating the purchase of stocks, bonds, or other assets. Since you aren't trading actively, you won't be involved in transactions that might charge commission. However, Wealthfront charges a fee of 0.25% on assets under management. This isn't uncommon, as even some of the best robo-advisors impose management fees. These fees are far lower than what a financial advisor would charge.

Recently, Wealthfront unveiled its Stock Investing Account. Users can trade individual stocks commission-free, for as little as $1. If you're thinking, "That sounds like Robinhood," bingo. Both the Stock Investing Account and Robinhood's taxable brokerage account offer cheap stock trading.

Robinhood doesn't manage your investments -- you control your own portfolio within your brokerage account. The good news is, Robinhood charges no fees for buying or selling stocks, ETFs, options, or cryptocurrencies through Robinhood Crypto. You won't lose any of your returns due to fees with this investment app.

Wealthfront Automated Investing purchases a mix of low-cost index funds for you. You can gain exposure to U.S. stocks, foreign stocks, emerging markets, dividend stocks, municipal bonds, real estate, corporate bonds, and emerging market bonds through these index funds. You can even customize the ETFs in your portfolio.

Wealthfront Stock Investing lets you take a hands-on approach to stock picking. You're on your own, but there are no fees, and you can buy stocks and ETFs on your own terms. But the account doesn't let you purchase other assets like crypto or mutual funds. Robinhood lets you invest in individual stocks, ETFs, fractional shares, and cryptocurrencies. You can have a wide selection of assets that make up your portfolio within this beginner-friendly investment account. Out of the two, it's the only platform that lets you trade options -- in fact, it's one of the best options trading platforms out there.

Both Robinhood and Wealthfront provide taxable brokerage accounts as well as accounts that function as checking accounts. However, there are some important differences in account type between Wealthfront vs. Robinhood.

Robinhood offers Roth and traditional IRAs, and it includes a 1% match for IRA contributions, rising to 3% for Robinhood Gold subscribers. Wealthfront, on the other hand, provides the opportunity to invest in several different types of IRAs as well as a trust account or 529 college savings account for children.

Plus, Wealthfront's banking features are more comprehensive than Robinhood's. Its cash management account can be used for spending and savings, and it earns high returns. Robinhood only pays interest on uninvested brokerage cash.

The Wealthfront app received a 4.8 out of 5-star rating on the iOS store, while the Robinhood app received a 4.2-star rating. However, both are full-featured apps that provide the services most users are looking for.

Wealthfront's app is designed to help people monitor their automated investments or to build a personalized investment portfolio of ETFs from the ground up. Robinhood's app provides more trading features because it's more focused on active investing -- although it still keeps things simple and has a low learning curve.

The simple and intuitive apps both Robinhood and Wealthfront offer are exactly the types of features most people look for when searching out the best online brokers for beginners.

If you want to take a hands-off approach to investing and are interested in amassing a portfolio full of ETFs that are chosen for you, Wealthfront has you covered. And if you want to dabble in individual stock or ETF investments, Wealthfront will let you do that, too.

To invest in individual stocks, trade options, and buy cryptocurrencies, consider opening a more flexible Robinhood account. Think about the type of investor you want to be, and consider your confidence in managing your own stock market investments when deciding which brokerage firm is best for you.