Robinhood – Why We Don’t Recommend It

Dec 18, 2020 | Investing, Personal Finance | 0 comments

person holding a smartphone with an investment app on display

The popular investment app Robinhood has been around for a few years now. While it has grown in popularity it has also seen it’s fair share of problems. As Financial Coaches, we have mixed feelings about this and many other FinTech trends.

Our Thoughts on Robinhood

While we don’t manage investments for our clients. We are DIY investors ourselves and teach our clients how to get started investing as new investors.

From our perspective, while making investing more accessible than ever before. With the touch of one finger you can complete a trade – which is both a good and bad thing. Especially when combined with a lack of financial education and the digital glitter used to keep investors coming back to the app again and again to complete trades. This feature alone has a hidden agenda. As it has come to be know that Robinhood makes it’s profit from “order flow”. Meaning they make money based on how many transactions you make.

Taking all of this into consideration it is important that “users beware!” Having access to simple investing applications can be a good thing. But the burden of educating oneself to make healthy financial decisions and knowing how to take long term financial goals into consideration, falls directly on the individual user. Something that takes a great deal of knowledge and time to learn.

Finally, is the ability to manage risk and ensure you do not take on too much. Investing is only gambling if you are not making educated decisions that take things like risk into consideration.

(Learn the difference between Financial Advisors and Financial Coaches)

Learn More

A spirited conversation took off on LinkedIn about Robinhood and the issues they were facing with the SEC [Securities and Exchange Commission]. That inspired Mitch -a financial professional from New York to discuss further and he was kind enough to invite me to his LIVE recording.

He and I had a chance to talk in more detail about Robinhood and what we feel is important for users to know and consider when using the app or apps like it.

 

Read more about what people are saying in the original post and don’t forget to connect with us on LinkedIn

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