4 ms·

Brokerage is such a competitive space, their valuation never made any sense. And big money players would never use Robinhood over Schwab et all

ramesh31 4y ago
> And big money players would never use Robinhood over schwab et all Their entire business model is PFOF [0]. That is, a huge fucking scam against retail. [0] https://www.investopedia.com/terms/p/paymentoforderflow.asp https://www.investopedia.com/terms/p/paymentoforderflow.asp
- fullshark 4y ago
  Why would a typical retail investor prefer commissions to PFOF? Seems like a much better deal.
  - ramesh31 4y ago
    >Why would a typical retail investor prefer commissions to PFOF? It's about incentives. I am more than happy to pay $0.65 to Fidelity for my options trades, because I know that Fidelity's incentive is to get me the best possible price. Commission fees are absolutely negligible compared to price improvement with a real broker.
    - fullshark 4y ago
      I don't remember exactly but i thought Robinhood was first about how it had "free" trades and then they basically forced all their competitors to race to the bottom and lower fees in response. For some retail traders it was like pay $10 to get a few shares of some stock you want to buy. Pretty terrible deal in comparison to PFOF. You don't sound like a typical investor so I get why you might care deeply about pennies at price execution. But I think most retail investors really don't care about PFOF and prefer it to commissions. And some of these retail firms are basically about just getting your stock trading business so they can funnel you towards professional portfolio managers who will just take a cut of your savings for no real value...that is probably even worse than the PFOF business model imo.
dangus 4y ago
Basically, the beta version of the Fidelity app very nearly defeats the purpose of using a brokerage like Robinhood. “We will be like [established legacy business] but our app will be better” is not a long term business model.

ramesh31 4y ago

> And big money players would never use Robinhood over schwab et all Their entire business model is PFOF [0]. That is, a huge fucking scam against retail. [0] https://www.investopedia.com/terms/p/paymentoforderflow.asp https://www.investopedia.com/terms/p/paymentoforderflow.asp

fullshark 4y ago
Why would a typical retail investor prefer commissions to PFOF? Seems like a much better deal.
- ramesh31 4y ago
  >Why would a typical retail investor prefer commissions to PFOF? It's about incentives. I am more than happy to pay $0.65 to Fidelity for my options trades, because I know that Fidelity's incentive is to get me the best possible price. Commission fees are absolutely negligible compared to price improvement with a real broker.
  - fullshark 4y ago
    I don't remember exactly but i thought Robinhood was first about how it had "free" trades and then they basically forced all their competitors to race to the bottom and lower fees in response. For some retail traders it was like pay $10 to get a few shares of some stock you want to buy. Pretty terrible deal in comparison to PFOF. You don't sound like a typical investor so I get why you might care deeply about pennies at price execution. But I think most retail investors really don't care about PFOF and prefer it to commissions. And some of these retail firms are basically about just getting your stock trading business so they can funnel you towards professional portfolio managers who will just take a cut of your savings for no real value...that is probably even worse than the PFOF business model imo.

dangus 4y ago

Basically, the beta version of the Fidelity app very nearly defeats the purpose of using a brokerage like Robinhood. “We will be like [established legacy business] but our app will be better” is not a long term business model.