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Robinhood vs Questrade: Which is Better For Trading & Investing in Canada?

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Investors should always be looking for the best deals when it comes to brokerage account options. While traditional banks are likely to charge high fees, there are several online brokers out there that offer discount brokerage services. Questrade has arguably some of the lowest fees in the industry in Canada.

If you are looking to invest in the US market, however, Robinhood charges clients zero trading fees, enabled by utilizing pay for order flow structure to generate revenue. Let’s dive into a few differences between Robinhood vs Questrade.

Questrade Vs Robinhood: Quick Comparison

Questrade

Questrade Logo

 

With a net worth or assets under management (AUM) of over $25 billion, Questrade is one of the largest online brokerage platforms in Canada. Founded in 1999, it has one of the lowest trading fees in the industry for Canadian citizens and has shown consistent growth of about 200,000 new customer accounts opened annually.

It has also won the award for Best Managed Companies nine times since it was founded. The platform offers a variety of different account types, including registered, non-registered, and margin accounts. All these features combined make Questrade arguably the best online broker in Canada for those interested in self directed investing.

Pros

  • Large collection of market data and market research tools for investors for advanced Canadian investors.
  • No account maintenance fee.
  • Fees waived for transferring accounts from other brokerages into Questrade
  • No fees when purchasing exchange traded funds (ETFs)
  • Low cost fee structure for trading
  • Low initial investment of $1,000 required.
  • Regulated as a member of the investment industry regulatory organization of Canada (IIROC)

Cons

  • No commission trading only includes a limited number of ETFs and does not include stock trades.
  • ECN and Forex fees are charged on some trades.
  • Slow account openings

 

Learn more at Questrade.com

 

Robinhood

Robinhood logo

Robinhood is an American broker which uses a payment for order flow structure to generate revenue. Only legal residents of the US can open an account. This mobile trading platform is recommended for beginning investors who want to buy and hold stocks in the US stock market. It also features a user interface that is very easy to navigate and intuitive to use.

Pros

  • Has a Cash Management feature which allows customers to earn interest on funds that are sitting in their account un invested
  • Easy to navigate mobile app and web based trading platform
  • Easy account setup
  • No minimum deposit is required and no inactivity fees (although the Robinhood Gold account, which offers premium features, requires an account minimum)

Cons

  • Very basic range of products and investment options
  • Lack of customer support
  • Limited material for customer education on market data

 

Learn more at Robinhood.com

 

Fees

With different fee structures, it is difficult to compare these two platforms. It is important to understand your investing and trading goals when choosing your investment platform. Choosing the right platform will depend on your investment strategy and timeline, and these goals should be the driving force for choosing a platform.

Questrade

Questrade has some of the lowest fees in the industry. Since payment for order flow isn’t allowed in Canada, most brokerages are not able to offer truly commission free trading. Even though Questrade has lower fees and minimums, users are still charged various account inactivity fees and commissions.

Some of these fees can be easily avoided by making a minimum of one trade per quarter or keeping at least $5,000 assets under management in your account.

Questrade also has foreign exchange fees when converting CAD to trade in non-domestic markets. Despite these fees, Questrade continues to be the brokerage with the lowest trading fees in Canada.

Robinhood

Robinhood uses a payment for order flow method of generating revenue, making it virtually commission free. Once a trade is placed, Robinhood sends the order to a market maker which finds the widest bid-ask spread.

The market maker purchases the stock at the lowest bid and sells it to the Robinhood customer at the highest ask price. The difference between the two is how Robinhood makes its money.

Customer Service

Customer service is an important aspect for many clients. Resolving issues and talking with advisers about investment strategies are critical to building relationships with customers.

Questrade

Questrade has had a consistent customer service department that is possibly one of the best in Canada. They are available through online chat, email, and phone.

Robinhood

The Robinhood support team that is able to answer client inquiries, but there is no ability to contact the company through chat or phone. The only option is to contact Robinhood through email. Usually, the support team will deliver the relevant information through email within 24 hours.

Which Online Broker is Best For You?

Person holding a Smartphone and Checking Stock Market

The best brokerage for you will depend on your investment strategy, time horizon, and risk. It will also depend on whether you will use all the trading tools and features of the two platforms.

Questrade

For investors who prefer to trade ETFs and index funds, Questrade is a great platform since they offer commission-free ETF purchases.

Questrade also has a low cost trading fee structure for stocks and other securities. This makes it a great platform for people who prefer to manage their own portfolios and save on trading costs.

Another main appeal of Questrade compared to other discount brokerages like Robinhood is the ability to invest in foreign assets like precious metals.

 

Learn more at Questrade.com

 

Robinhood

Robinhood has a very attractive fee structure given that they are able to rely on payment for order flow rather than commissions for revenue. As a tradeoff, the customer will be getting buy and sell prices that may not be the best price. There are also no withdrawal fees or fees for account inactivity.

Robinhood is also limited in its investment options. Customers are limited for the most part to US-listed companies, it is not available in Canada. It also has a weak customer support system and little to no educational material.

If you are starting your journey into investing with a buy-and-hold strategy, Robinhood’s intuitive platform may be the best platform for you. Choosing your investment strategy, complexity of analytical tools, and time horizon is important when selecting an investment broker.

There are differences between the two trading platforms, but opening the right brokerage account for your strategy can help you save money on fees in the long run, so choose wisely!

 

Learn more at Robinhood.com