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How trustworthy are investment apps like Charles Schwab and Robinhood?

Submitted by Tech Insider on February 23, 2021 - 4:06pm

how trustworthy are the top investing apps

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When Gamestop (GME) and several other Reddit-hyped stocks soared recently, investment apps including Robinhood came under fire for temporarily halting stock purchases. This news also put the practices of popular investing apps, including the compensation model called payment for order flow, under the magnifying glass.

If you're looking for signs that you can trust an investment app with your money, research is your friend. You can generally find information about an app's customer complaint history, advertising issues, and other business information by viewing its Better Business Bureau profile.

 

Below, you can see how investing apps, brokerages, and automated investment advisors stack up when it comes to their Better Business Bureau rating. But BBB ratings aren't the only thing you should take into consideration when searching for an investment app; it's also wise to do your own research and look for any notable news about the company you're looking to park your money with. And when in doubt, it could make sense to consult your financial advisor or financial planner.

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How trustworthy are investing apps and brokerages?

Investing apps let you set up and manage accounts on your own. They typically offer self-directed trading accounts, retirement accounts, and custodial accounts.

 

In some instances, online brokerages also provide an automated investing account option. But not all automated advisors offer brokerage services. To draw a clearer distinction, we separated brokerages and automated or online advisors into two separate tables.

Below, you can see how investing apps and brokerages stack up when it comes to their Better Business Bureau rating:

Brokerage
Better Business Bureau rating

Ally Invest
D-

Charles Schwab
A+

E*TRADE
F

Fidelity Investments
C-

Firstrade
A+

Interactive Brokers
A-

Merrill Edge
A+

Robinhood
F

SoFi
A

Stash
F

TD Ameritrade
B

Webull
F

Keep reading for a closer look at each investment app's complaint history.

Ally Invest

Ally Invest provides self-directed trading, automated investing, retirement savings accounts, and forex trading. The investment app has closed 17 complaints in the last three years and 13 complaints in the last 12 months. The company has a D- rating from the BBB.

Charles Schwab

Schwab offers a wide array of investment products, including commission-free brokerage accounts, automated investing accounts, and retirement accounts. It has closed 100 complaints in the last three years and 58 complaints in the last 12 months. Charles Schwab has an A+ rating from the BBB.

E*TRADE

E*TRADE offers commission-free brokerage accounts, automated investing accounts, IRAs, and other wealth-building products. The company closed 81 complaints in the last three years and 81 complaints in the last 12 months. The BBB gives it an F rating.

Fidelity Investments

Fidelity is an online investment app offering brokerage accounts, retirement accounts, college savings plans, cash management accounts, and more. The company has closed 420 complaints in the last three years and 198 complaints in the last 12 months, according to BBB data. That large number of complaints is probably a main reason for Fidelity's rating of C- with the BBB.

Firstrade

Firstrade is a discount brokerage offering investing, custodial, retirement, and cash management accounts. It has closed one complaint in the last three years and one complaint in the last 12 months. The BBB gives it an A+ rating.

Interactive Brokers

Interactive Brokers offers more advanced trading resources for experienced investors. The company has closed 46 complaints in the last three years and 24 complaints in the last 12 months, and it has a rating of A- from the BBB.

Merrill Edge

Among Merrill Edge's offerings are active accounts, automated investing accounts, education savings accounts, and IRAs. The company has closed 5,499 complaints in the last three years and 1,841 complaints in the last 12 months. It has an A+ rating with the BBB.

Robinhood

Robinhood is a commission-free brokerage providing stock, option, ETF, and cryptocurrency trades. The investment app closed 999 complaints in the last three years and 741 complaints in the last 12 months. It has an F rating from the BBB.

SoFi

SoFi Invest offers fee-free active trading, automated investing, cryptocurrency trading, human advisor access, and more. Its BBB record shows that it closed 169 complaints in the last three years and 81 complaints in the last 12 months, and it has an A rating.

Stash

Stash specializes in investing accounts, fractional shares, and retirement and custodial accounts. The company has settled 430 complaints in the last three years and 294 complaints in the last 12 months. It has a BBB rating of F.

TD Ameritrade

Though recently acquired by Schwab, TD Ameritrade offers commission-free trading, automated investing and more. The company has closed 296 complaints in the last three years and 178 complaints in the last year. It has a B rating with the BBB.

Webull 

Webull offers commission-free trading, retirement investing, cryptocurrency trading, and more. In addition to its F rating, BBB data also shows that the company has closed 72 complaints in the last three years and 70 complain st in the last 12 months.

How trustworthy are automated investing advisors?

Automated advisors are investment apps that handle all of your accounts for you. Also known as robo-advice, these types of apps are best for beginner or hands-off investors who want professional guidance with their investments. We've also include Facet Wealth, a virtual financial planning firm, in this table.

Automated/online advisor
Better Business Bureau rating

Acorns
A+

Blooom
A-

DiversyFund
A+

Ellevest
B+

Facet Wealth
A+

Fundrise
A-

Roofstock
B+

Acorns

Acorns is a micro-investing app that's best for hands-off investors and retirement savers. BBB data shows that it has closed 135 complaints in the last three years and 114 complaints in the last 12 months. Acorns has an A+ BBB rating.

Blooom

Blooom provides automated investment management for IRAs, 401(k)s, and other employer-sponsored retirement plans. It has closed one complaint in the last three years and zero complaints in the last 12 months, and it has an A- rating with the BBB.

DiversyFund

DiversyFund is a real estate investment app that offers private commercial real estate investments for nonaccredited investors. It has an A+ rating with the BBB, and it has closed seven complaints in the last three years and five complaints in the last 12 months.

Ellevest

Ellevest is an automated investment app that handles your investment and retirement accounts for you. It has closed 13 complaints in the last three years and seven complaints in the last 12 months, and it has a B+ rating with the BBB.

Facet Wealth

Facet Wealth is a virtual financial planning firm that offers an array of wealth management services. BBB data shows that it closed two complaints in the last three years and one complaint in the last one 12 months. Facet has an A+ BBB rating.

Fundrise

Fundrise is a real estate crowdfunding investment app that offers automated investments in US commercial real estate investment trusts (REITs). BBB data shows that it closed 56 complaints in the last three years and 46 complaints in the last 12 months, and the BBB gives Fundrise an A- rating.

Roofstock

Roofstock is an online real estate marketplace that lets you buy or sell single-family rental properties. In addition to its B+ bureau rating, the company has closed one complaint in the last three years and one complaint in the last one year. 

How are Better Business Bureau ratings assigned?

The BBB assess a number of factors when assigning its ratings. While it primarily focuses on how well a company interacts with its customers, its ratings also take into account the following:

  • Type of business
  • Time in business
  • Complaint history
  • Licensing and/or government actions
  • Advertising issues

The BBB also says on its website that its ratings don't guarantee a company's performance or reliability. This is why it's crucial that you conduct your own research before making a final decision about which investment app (or any other personal finance product) to use.

Should you choose an app that has a bad rating?

As mentioned above, BBB ratings don't guarantee that an investment app or any other company will meet or exceed your expectations. The bureau's ratings primarily evaluate a company's complaint history and customer interaction track record.

Therefore, it's important that you take time to do additional research about prospective investment apps. The BBB's findings can be helpful in determining whether an investment app is trustworth, but also consider things like fee transparency and whether it's registered with the US Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA).

Rickie Houston is a wealth-building reporter at Personal Finance Insider who covers investing, brokerage, and wealth-building products.

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