I always find surprising that Robinhood was able to build such a large business with such mediocre customer support.
I switched to Charles Schwab and just the fact that there's a 24/7 phone number compensates for the lack of simplicity.
I used to think that I wanted the simplicity of something like Robinhood. But I have learned to appreciate the complexity of Schwab. The reality is that behind Robinhood's simplicity there's a lack of sophistication and process in their operation.
I commend what they built, but Robinhoood it's too exposed to the cross winds of retail trading and regulatory scrutiny.
I feel that by having my investments in Robinhood, I'm adding some sort of risk multiplier that has nothing to do with the nature of my investments. It has to do mainly with how amateur-ish their brokerage operation feels.
>I always find surprising that Robinhood was able to build such a large business with such mediocre customer support.
This is the standard people have become trained to expect. Google does the same thing. The idea is basically that a certain level of scale, you can completely ignore customer support. There's always new users signing up, and placating any single one is no longer worth your time.
Anyone who does serious trading knows the value of actual 24/7 human customer support, and uses a platform like Schwab or Fidelity. But Robinhood is arbitraging the naivety of the millions of people who've never invested.
I love that you get on a call with real native speaker in the US with Schwab; that part of customer support has been stellar. I like that they cover international ATM fees too.
I don't care for how they handle security though. I really wish they supported WebAuthn or at least TOTP that didn't require Symantec's proprietary TOPT solution. I wish they supported PGP for messages as well (I know those GMail users are having their financial data read by Google). When I asked about what "SchwabSecure" really is and what sort of encryption they use gave me marketing fluff, even stating "The reason you may not find more detailed information available online which supports this is so that we can prevent criminals from obtaining this information, and using that to get a foothold"--as opposed to my recent evaluation of email providers to see the competition who could provide the MOST transparency about how they set up their security.
>I feel that by having my investments in Robinhood, I'm adding some sort of risk multiplier that has nothing to do with the nature of my investments. It has to do mainly with how amateur-ish their brokerage operation feels.
In the sense that they'll collapse and you'll lose your portfolio, or that they'll be down at a critical time you want to make a trade? For a buy and hold type of investor, the latter isn't really a concern.
I agree 1000% with this. I "recently" switched from RH to ally since I already have a decent chunk of cash there, and I am STILL waiting on my cost-basis to transfer. It has been over 75 days since they transferred my stock and cash, and every time I reach out to customer service they feed me the same canned response that due to volume of transfers it is taking longer than expected and they have no ETA on when my cost-basis will transfer.
Beware that Robinhood also miscalculates wash sales, which they've admitted to me. I typically don't care about customer support, as I don't do a lot of trades, but messing up tax forms is a huge no-no for me.
> I always find surprising that Robinhood was able to build such a large business with such mediocre customer support.
Because the interface is much easier to use. Particularly for options, which are dangerously easy to trade with Robinhood compared to their competitors like Think or Swim.
Maybe I’m wrong and there’s a better company that offers this, but the reason I use RH is so that I can trade both cryptos and regular securities out of the same account, with 0-day settlement on trades (without opening a margin account) since every RH account is an implicit margin account.
I also like the instant deposits that scale with account size.
RH’s trading hours for securities is more limited than anyone else, but I don’t find myself trading outside of those hours anyways.
I also don’t like their naive tax accounting and don’t expect them to handle wash sales properly, which are two very big negatives, but I haven’t found a better broker for my main use case.
While I am really glad Robinhood existed back when I started working to introduce me to investing, their amateurish ops (see their outages in the past few years) and customer support (they managed to bungle a position transfer costing me a few hundred bucks) pushed me to more established players. Most of these established players now have low to zero commissions with much better customer support, order execution etc. I doubt any serious investor uses (or should be using!) Robinhood.
They screwed up, but did they deserve the "largest penalty ever?" Established brokerage houses have gotten away with worse and paid less. Sounds an awful lot like another true real-life example of the very same r/WSB David/Goliath narrative the "established" part of the industry wishes it could discredit.
Its so difficult to say what is going on behind closed doors when established brokerage houses get caught(or any brokerage). In many ways it makes perfect sense that an established firm is able to negotiate for more lenient penalties, much like an established lawyer might be able to negotiate for more lenient sentences.
Note: This is not related to any activity relating to the gamestop/meme stock trading restrictions earlier this year, and was predominantly for their violations regarding proper trading controls and communications during 2018 to late 2020. This is a rather substantial fine in terms of those violations.
None of these fines (either meme stock fines or systemic failures/price improvement issues) are "substantial". It's not even a slap on the wrist for Robinhood, compared to the money they are making. They are probably clearing profits north of $70M in half a day.
“…and exposed them to excessively risky trading tools such as options”
Oh FFS. That was actually one of positive things that Robinhood did. They could have had some better safeguards for the unlimited loss scenarios to be sure but to lament access to all options is disingenuous at best.
Also important to know FINRA kept the 57 million. They are the SRO but let’s be honest they are the enforcement arm of the SEC.... but the government does not get to keep the fines.
When the "fine" is minuscule relative to profits and the bulk of it goes to a private company / self-regulatory organization (FINRA: [1]), it might be more accurate to label this a "bribe" for plausible deniability...
FINRA is the industry equivalent of a firm’s Chief Compliance Officer. They’re supposed to identify and correct issues at the expense of the industry rather than wasting the government’s limited resources. FINRA conducts regular exams of all members the way a Compliance Officer will regularly examine all department functions. Whereas the SEC conducts random periodic exams (like an auditor), targeted exams (like an investigator) and occasionally “sweep” exams relating to the topic du jour (usually in preparing to issue to a new rule).
With the number of fines this company has occurred in its short existence Im very surprised they are still allowed to be a brokerage of sorts and will be allowed to go public.
$70M is 0.625% of the conservative value of Robinhood[1] as of a year ago. That means they have over 99.375% of value remaining to work with. How is this not simply treated as "cost of doing business" in the finance world? They should be putting execs in prison when the law is blatantly broken.
Then they expect younger generations to blindly trust the finance system. Time is ripe for millennials to cash in their 401ks and find a new place to put it....where sticky hands can't touch it.
Firstly, this fine was issued by FINRA, not the SEC. Secondly, which laws did they break exactly?
This is a substantial fine for the scope of violations that were being investigated, as this has nothing to do with any of the gamestop restrictions earlier this year but their messaging, outages and vetting of customer expertise during 2018-2020.
It boils down to a $70M fine for not having a high avilability system, being bad at explaining trading concepts and allowing people to take risks that other banks would not. That's quite a reasonable amount.
Prison? Really? A lot of otherwise disadvantaged people have made life-changing money with RH. It offers education, research tools, and generally does a good job of being useful in supporting a proactive investing and trading habit.
I would guess that the real cost here is the publicity and reputation hit, not the fine.
The PFOF premium that Robinhood commands is really fascinating. Last I checked market makers were paying like double for RH’s flow as opposed to Schwab or whatever.
I’ve been doing work in crypto lately and it always creeps me how hard the exchanges push you to lever up. RH makes derivatives trading seem like free money. Citadel is willing to pay real money to be the counterparty.
“HFT” gets a bad rap in spite of often providing a necessary service, and a lot of that is because of Michael Lewis’s dumbass book, but there is a dark side where firms round up unsophisticated people and sell them the opportunity to engage in complex derivatives transactions with sharky pros via dark patterns and sketchy growth hacking.
I'm glad RH got fined, but this is a reminder that FINRA hasn't meaningfully fined the likes of Goldman, Morgan Stanley, HSBC or any other large brokerage.
Assuming Robinhood's story was accurate that everyone was trading on margin (at least by default and thus a lot of traders) and that they were approaching some serious questions about if they had enough cash on had to cover the trades / possible losses ... I'm not sure what the right thing to do in that case would be.
Keep everyone trading and possibly run out of cash to cover everything? Or stop trading and possibly hose the folks trying to make trades?
Robinhood is and has been manipulative and predatory for years.
Arguing that Robinhood did illegal things "for the benefit of their banking partners" or whatever other conspiracy theory you're suggesting is just that, a conspiracy theory.
Let Robinhood be punished for the terrible things they have actually done instead of pointing at provably-false boogeymen.
They didn’t do anything illegal during that time. There is nothing illegal about restricting highly volatile equities pretty much every brokerage does this. Don’t know how many times this has to be said here before people stop making this accusation
[+] [-] whoisjuan|4 years ago|reply
I switched to Charles Schwab and just the fact that there's a 24/7 phone number compensates for the lack of simplicity. I used to think that I wanted the simplicity of something like Robinhood. But I have learned to appreciate the complexity of Schwab. The reality is that behind Robinhood's simplicity there's a lack of sophistication and process in their operation.
I commend what they built, but Robinhoood it's too exposed to the cross winds of retail trading and regulatory scrutiny. I feel that by having my investments in Robinhood, I'm adding some sort of risk multiplier that has nothing to do with the nature of my investments. It has to do mainly with how amateur-ish their brokerage operation feels.
[+] [-] foo92691|4 years ago|reply
You must be new to the tech industry. :-)
[+] [-] ramesh31|4 years ago|reply
This is the standard people have become trained to expect. Google does the same thing. The idea is basically that a certain level of scale, you can completely ignore customer support. There's always new users signing up, and placating any single one is no longer worth your time.
Anyone who does serious trading knows the value of actual 24/7 human customer support, and uses a platform like Schwab or Fidelity. But Robinhood is arbitraging the naivety of the millions of people who've never invested.
[+] [-] toastal|4 years ago|reply
I don't care for how they handle security though. I really wish they supported WebAuthn or at least TOTP that didn't require Symantec's proprietary TOPT solution. I wish they supported PGP for messages as well (I know those GMail users are having their financial data read by Google). When I asked about what "SchwabSecure" really is and what sort of encryption they use gave me marketing fluff, even stating "The reason you may not find more detailed information available online which supports this is so that we can prevent criminals from obtaining this information, and using that to get a foothold"--as opposed to my recent evaluation of email providers to see the competition who could provide the MOST transparency about how they set up their security.
[+] [-] gruez|4 years ago|reply
In the sense that they'll collapse and you'll lose your portfolio, or that they'll be down at a critical time you want to make a trade? For a buy and hold type of investor, the latter isn't really a concern.
[+] [-] jermaustin1|4 years ago|reply
I agree 1000% with this. I "recently" switched from RH to ally since I already have a decent chunk of cash there, and I am STILL waiting on my cost-basis to transfer. It has been over 75 days since they transferred my stock and cash, and every time I reach out to customer service they feed me the same canned response that due to volume of transfers it is taking longer than expected and they have no ETA on when my cost-basis will transfer.
[+] [-] AznHisoka|4 years ago|reply
[+] [-] duped|4 years ago|reply
Because the interface is much easier to use. Particularly for options, which are dangerously easy to trade with Robinhood compared to their competitors like Think or Swim.
[+] [-] zzt123|4 years ago|reply
I also like the instant deposits that scale with account size.
RH’s trading hours for securities is more limited than anyone else, but I don’t find myself trading outside of those hours anyways.
I also don’t like their naive tax accounting and don’t expect them to handle wash sales properly, which are two very big negatives, but I haven’t found a better broker for my main use case.
[+] [-] rajup|4 years ago|reply
[+] [-] rdiddly|4 years ago|reply
[+] [-] lavezzi|4 years ago|reply
Yes, and hopefully that penalty record keeps rising dramatically.
[+] [-] mym1990|4 years ago|reply
[+] [-] cwkoss|4 years ago|reply
[+] [-] Vaslo|4 years ago|reply
[+] [-] chunky1994|4 years ago|reply
[+] [-] FridayoLeary|4 years ago|reply
[+] [-] alpb|4 years ago|reply
[+] [-] beefman|4 years ago|reply
Yahoo! Finance: https://finance.yahoo.com/news/robinhood-hit-with-record-fin...
Archived version of Reuters story: https://archive.is/NxI0t
[+] [-] oxymoran|4 years ago|reply
Oh FFS. That was actually one of positive things that Robinhood did. They could have had some better safeguards for the unlimited loss scenarios to be sure but to lament access to all options is disingenuous at best.
[+] [-] wcchandler|4 years ago|reply
[+] [-] sitzkrieg|4 years ago|reply
buncha clueless reddit people yoloing
[+] [-] chews|4 years ago|reply
[+] [-] beambot|4 years ago|reply
[1] https://en.wikipedia.org/wiki/Financial_Industry_Regulatory_...
[+] [-] asteroidbelt|4 years ago|reply
[+] [-] elliekelly|4 years ago|reply
[+] [-] meepmorp|4 years ago|reply
https://www.reuters.com/business/finance/robinhood-pay-65-ml...
[+] [-] MangoCoffee|4 years ago|reply
[+] [-] atlgator|4 years ago|reply
[+] [-] Black101|4 years ago|reply
[+] [-] ProAm|4 years ago|reply
[+] [-] atatatat|4 years ago|reply
[+] [-] jb775|4 years ago|reply
$70M is 0.625% of the conservative value of Robinhood[1] as of a year ago. That means they have over 99.375% of value remaining to work with. How is this not simply treated as "cost of doing business" in the finance world? They should be putting execs in prison when the law is blatantly broken.
Then they expect younger generations to blindly trust the finance system. Time is ripe for millennials to cash in their 401ks and find a new place to put it....where sticky hands can't touch it.
[1] https://edition.cnn.com/2020/08/17/investing/robinhood-tradi...
[+] [-] chunky1994|4 years ago|reply
This is a substantial fine for the scope of violations that were being investigated, as this has nothing to do with any of the gamestop restrictions earlier this year but their messaging, outages and vetting of customer expertise during 2018-2020.
It boils down to a $70M fine for not having a high avilability system, being bad at explaining trading concepts and allowing people to take risks that other banks would not. That's quite a reasonable amount.
[+] [-] themodelplumber|4 years ago|reply
I would guess that the real cost here is the publicity and reputation hit, not the fine.
[+] [-] benreesman|4 years ago|reply
I’ve been doing work in crypto lately and it always creeps me how hard the exchanges push you to lever up. RH makes derivatives trading seem like free money. Citadel is willing to pay real money to be the counterparty.
“HFT” gets a bad rap in spite of often providing a necessary service, and a lot of that is because of Michael Lewis’s dumbass book, but there is a dark side where firms round up unsophisticated people and sell them the opportunity to engage in complex derivatives transactions with sharky pros via dark patterns and sketchy growth hacking.
[+] [-] lupire|4 years ago|reply
[+] [-] divs1210|4 years ago|reply
[+] [-] colechristensen|4 years ago|reply
[+] [-] newfonewhodis|4 years ago|reply
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[+] [-] Marciplan|4 years ago|reply
[+] [-] ZoomerCretin|4 years ago|reply
[+] [-] duxup|4 years ago|reply
Keep everyone trading and possibly run out of cash to cover everything? Or stop trading and possibly hose the folks trying to make trades?
[+] [-] nrmitchi|4 years ago|reply
Arguing that Robinhood did illegal things "for the benefit of their banking partners" or whatever other conspiracy theory you're suggesting is just that, a conspiracy theory.
Let Robinhood be punished for the terrible things they have actually done instead of pointing at provably-false boogeymen.
[+] [-] edgyquant|4 years ago|reply
[+] [-] underseacables|4 years ago|reply
[+] [-] AlwaysRock|4 years ago|reply
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[+] [-] rychco|4 years ago|reply