Acorns vs. Robinhood Brokerage Comparison (2023 Review)

Robo-advisors like Acorns and fee-free brokerages like Robinhood have recently grown in popularity, offering simplicity, convenience, and modern apps and interfaces. Here we'll compare Acorns and Robinhood.

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Acorns vs. Robinhood – Summary Comparison

Acorns vs. Robinhood – Commissions and Fees

Neither Acorns nor Robinhood has commissions on trades. With both platforms, you will still have to pay the unavoidable expense ratios on the ETF's (exchange traded funds) in which you're invested.

Acorns has 3 tiered account levels with different fees and different features:

• All 3 account levels have an individual taxable investment account called Acorns Invest.
• Their Basic plan at $1/mo. is just a taxable investment account.
• The Plus plan at $2/mo. includes access to retirement accounts – called Acorns Later – in the form of a Traditional IRA, Roth IRA, or SEP IRA.
• The Acorns Premium plan is $3/mo. and adds access to an FDIC-insured checking account called Acorns Spend.

Robinhood has no account fees aside from obvious miscellaneous one-time fees for things like paper statements, outbound account transfers, etc.

Robinhood does have a premium account option called Robinhood Gold that costs $5/mo. ($60/year) and gets you access to professional research reports, deeper market data, margin, and instant deposits.

Acorns vs. Robinhood – Investment Products

As a true robo-advisor, Acorns provides 5 ready-to-go, expert-built portfolios – comprised of low-cost ETF's – based on your risk tolerance. This obviously limits your investing options, but allows you to be completely hands-off in your investing. Acorns investors can choose among Conservative, Moderately Conservative, Moderate, Moderately Aggressive, and Aggressive portfolios. They state that these portfolios were built with the help of Harry Markowitz, the father of modern portfolio theory. Acorns does not offer individual stocks.

Robinhood is not a robo-advisor and is more like a “normal” online brokerage. Robinhood allows you to invest in individual stocks, ETF's, and options contracts of your choosing. Robinhood also recently added cryptocurrency trading.

Acorns vs. Robinhood – Customer Service

Acorns seems to have great customer service.

Robinhood has somewhat of a reputation for being slow or unresponsive at times with their customer service, and famously doesn’t have a published phone number.

Robinhood Outage and Issues

More importantly, Robinhood experienced outages on 3 days in one week in early March 2020, which they stated was due to “stress on our infrastructure—which struggled with unprecedented load.” One of the outages lasted an entire trading day. Obviously this was extremely frustrating and concerning for users, especially since these were extremely high-volume, highly-volatile days in the stock market.

Since the fiasco, Robinhood users have filed a class-action lawsuit against the platform, alleging that “Robinhood had a duty to provide a system and platform ‘robust enough’ to handle that trading volume and have a backup system to handle outages.”

There are also many user complaints such as these of the site being “frozen,” orders not going through, inability to login, etc.

On the one hand, you could argue that these events may cause Robinhood to improve their infrastructure to make sure this type of thing never happens again in the future. On the other hand, it is disconcerting considering other brokers didn’t experience these outages and problems during that same time period. I’ve already seen many users running from Robinhood in droves and finding alternatives in platforms like Acorns, M1 Finance, etc. It will be interesting to see how the future plays out for the platform.

Perhaps most importantly, Robinhood users have been fleeing en masse after the broker's recent stance on temporarily blocking users from buying stocks like GameStop ($GME) and AMC Entertainment ($AMC) during the massive short squeeze event. As of February 1, 2021, over 33 federal lawsuits have been filed against the platform across the country, citing securities trading and consumer protection violations, which add insult to injury after Robinhood hid the fact that it sold order flow and gave users worse trade execution prices.

The name of the platform now seems ironic, considering Robinhood seems to be placating hedge funds and Wall Street hotshots – at the expense of retail investors – at every turn.

Acorns vs. Robinhood – Mobile App

Acorns has a sleek, modern, intuitive, robust mobile app for both Apple iOS and Android. Robinhood also seems to have a great app for Apple iOS, but Android users have complained that the Robinhood app is problematic and unsupported.

Here are some screenshots of the Acorns app:

Here are some screenshots of the Robinhood app:

Acorns vs. Robinhood – Extra Features

• Acorns is unique in that it allows you to invest “spare change” automatically, letting you “round up” your purchases and invest the difference. This is great for people who have trouble saving. You can choose to apply a multiplier on these round-ups of up to 10x to consciously save and invest more. Acorns also lets you fund a retirement account like a Traditional or Roth IRA like you normally would.
• Both Acorns and Robinhood offer an optional FDIC-insured checking account with debit card. Acorns offers a form of cash back as what they call Found Money®, through which they’ve partnered with select stores where when you shop there, cash back goes into your Acorns account to be invested. Robinhood does not offer cash back but has a 0.30% APY.
• Both Robinhood and Acorns have educational resources via their blogs. Robinhood Gold, at $5/mo. ($60/year), gets you access to professional research reports and deeper market data. In terms of user education, Robinhood’s articles will likely be a little more technical in nature.
• Acorns also features automatic rebalancing that keeps your portfolio's target allocations on track. Robinhood does not offer automatic rebalancing.
• Both Acorns and Robinhood offer fractional shares, a feature that allows every penny to go to work for you faster. This means you can buy a fraction of a share of your investments. For example, if one single share costs $100 and you only have $10 to invest, you can buy 1/10 of a share with your $10 instead of having to wait to buy a whole share for $100. This is especially important for young investors with a small amount of capital.
• Being a full-fledged trading platform, Robinhood obviously offers an all-day trading window and order control. Acorns is a passive robo-advisor buy-and-hold investing platform, so there's no trading or order control.
• Robinhood has a margin rate of 5.00%. Margin refers to a collateralized loan where your investments act as the collateral. In order to access margin with Robinhood, you must pay for the $5/mo. Gold account and have a minimum invested balance of $2,000. Acorns does not offer margin.
• Both platforms offer dividend reinvestment. A dividend is just a return of value to shareholders as a periodic cash payment by a company. Dividend reinvestment means that when your investments pay a dividend, that payment can be automatically reinvested instead of sitting idly as a cash balance.

Acorns vs. Robinhood – Summary and Conclusion

• Acorns is a robo-advisor built for passive, long-term, set-and-forget, buy-and-hold investing. Robinhood is geared more toward traders but can still be used for passive, long-term investing. Neither platform charges commissions.
• Acorns has several account options ranging from $1 to $3 per month. Robinhood does not have account fees.
• Acorns offers taxable and retirement accounts. Robinhood only offers a taxable account at this time.
• Acorns has a set of expert-built portfolios in which you can invest. These portfolios are comprised of low-cost ETF's. Robinhood allows the trading of stocks, ETF's, options, and cryptocurrency.
• Acorns has solid customer service. Robinhood’s customer service and overall stability seem questionable.
• Acorns has a great mobile app for both Apple iOS and Android. Robinhood’s Android app seems to be lacking.
• Acorns does not offer margin. Robinhood has a 5.00% margin loan rate. If you want access to cheaper margin, consider M1 Finance.
• Both Acorns and Robinhood offer an optional FDIC-insured checking account.
• Acorns offers automatic rebalancing. Robinhood does not.
• Both Acorns and Robinhood support fractional shares and dividend reinvestment.
• Acorns allows you to “round up” your purchases to invest your spare change automatically.

Your choice between these two investing platforms should come down to your experience level, what account type you need, what you want to invest in, and how you want to invest.

Novice investors may feel more comfortable with Acorns, especially if you want to be hands-off in your investing. Robinhood will require a little more knowledge and effort, and is likely better suited for experienced traders. If you want to invest within a retirement account, you'd have to go with Acorns, as Robinhood doesn't offer retirement accounts. Acorns offers a handful of portfolios, while Robinhood gives you control to trade stocks, ETF's, options, and crypto. Again, this greater control comes at the cost of greater time and effort.

I appreciate that Acorns has significantly lowered both the physical and mental barriers to investing, making it about as easy as it can be, especially with their Round-Ups that invest your spare change automatically and their pre-built portfolios. I think even their premium $3/mo. plan is well worth the cost for all that it offers. Jack Bogle, considered the father of index investing, advocated for “the majesty of simplicity.” Acorns definitely embodies that.

Robinhood is definitely the better choice for active traders and/or those wanting to invest with margin. Keep in mind though that any gains with Robinhood are going to be taxed, since they don't offer retirement accounts at this time. Perhaps most importantly, the customer service and overall stability of Robinhood as a broker seem questionable to say the least, given the widespread user complaints and pending lawsuit over its March 2020 outages. If you want an alternative on which to day-trade stocks but don’t need fractional shares, consider Webull.

Disclaimer:  While I love diving into investing-related data and playing around with backtests, this is not financial advice, investing advice, or tax advice. The information on this website is for informational, educational, and entertainment purposes only. Investment products discussed (ETFs, mutual funds, etc.) are for illustrative purposes only. It is not a recommendation to buy, sell, or otherwise transact in any of the products mentioned. I always attempt to ensure the accuracy of information presented but that accuracy cannot be guaranteed. Do your own due diligence. All investing involves risk, including the risk of losing the money you invest. Past performance does not guarantee future results. Opinions are my own and do not represent those of other parties mentioned. Read my lengthier disclaimer here.