Key Points:
Robinhood pioneered the elimination of trading commissions and account minimums.
The rest of the industry is compelled to follow, establishing a new norm.
Robinhood continues to break down barriers and open doors to the markets with new products and features.
Retail investors’ access to the stock market is at historic highs – data as of 2022 shows that 58% of all U.S. households participate in the stock market. But more progress needs to be made.
Legislators and regulators should revisit existing rules and pursue new policy solutions that reflect modern markets and promote retail access.
The U.S. Stock Market remains one of the greatest wealth generators in history, yet a small percentage of US households have historically held most of the total value of stocks (Yahoo! Finance, January 10, 2024). Robinhood set out in 2013 to change that. Our customers are shaking up an industry long reserved for the 1%.
In recent years, tens of millions of first-time investors have entered the markets. According to the Federal Reserve Board, 58% of households in the United States had exposure to the stock market in 2022. Many of them are Robinhood customers who, according to our survey data*, are more racially diverse than customers at incumbent brokerages.
Our approachable, low-cost platform, paired with our digestible educational content, is a central reason why millions of new investors of all backgrounds and socio-economic status are participating in the markets today.
Guided by our mission to democratize finance for all, we’ve eliminated historical barriers and unlocked access to the markets for everyday investors. These efforts have contributed to a broader trend: since Robinhood’s founding in 2013, the U.S. has experienced a 27% increase in the average amount of financial assets each household holds in equities (OECD, 2022). Numbers like these highlight the importance of access, education, and innovative tools—like those Robinhood provides—in unlocking the wealth-building potential of equity markets for retail investors. We pride ourselves on being among the first to:
Eliminate commissions and account minimums. Robinhood was the first U.S. retail broker to fully and successfully eliminate commissions and account minimums for investors. This disruption shook the industry, pushing even incumbent retail brokers to do the same, saving investors billions and counting. Today, U.S. customers can open an account and start their portfolios with as little as $1. Other fees may apply.
Introduce fractional share trading. Some of the most actively traded stocks have share prices in excess of $100. We introduced fractional shares in 2019, opening up the ability for investors to invest in high-priced stocks and ETFs with as little as $1.
Give everyday investors access to IPOs. For years, participating in Initial Public Offerings (IPOs) was exclusively reserved for institutional and high-net-worth investors. Aligned with our commitment to everyday investors, we opened up access to IPOs in 2021, including our own.
Allow customers to build their saving habits and invest in their future. We rolled out recurring investments in 2020. Available to investors at all levels, this feature offers a wide range of benefits—whether you’re just getting started and looking to build responsible investing habits or working toward long-term investing goals. Investing is a habit and recurring investments employ a strategy to build over time while potentially reducing the impact of market volatility.
Introduce an IRA match with no traditional employer necessary. In December 2022 we launched Robinhood Retirement, allowing customers to invest for their future the Robinhood way – no employer necessary. All while earning a match from Robinhood on every eligible contribution dollar.
24-hour market access. In 2023, Robinhood introduced 24-hour trading, enabling customers to trade stocks and ETFs around the clock, five days a week. This innovation empowers investors to stay engaged with the markets on their terms, whether they’re responding to market-moving events in real time or trading at hours that fit their schedules. By expanding access beyond regular trading hours, Robinhood ensures that investing is more flexible and convenient, putting greater control in the hands of its customers.
Robinhood has led the way in expanding investment opportunities for everyone, not just the wealthy – and we’re nowhere close to being done. Access to private securities markets, for example, is still largely limited to those meeting wealth-based criteria under the SEC’s “accredited investor” definition, leaving many locked out of high-growth investment opportunities. We intend to change that.
Robinhood supports regulatory reforms that allow more individuals to responsibly access the private securities markets without sacrificing important investor protections under the federal securities laws. While additional measures to expand the number of individuals who qualify under the SEC’s “accredited investor” definition would help, rules like this are simply antiquated, irrelevant, and unnecessary in today’s age of AI and ubiquitous access to information. We believe technology that already exists today can help retail investors of all backgrounds better understand the risks associated with investing in the private markets and responsibly determine — without paternalistic government intervention — whether and how to participate. In particular, we believe that AI and tokenization, which can help retail investors access the private markets in a responsible, informed, cost-effective, and efficient manner, can and should eliminate the need for the SEC’s accredited investor standard. To learn more about how we can unlock greater economic opportunities and foster broader participation and wealth creation opportunities for all Americans, read here.