If you are looking to switch from Robinhood to another trading platform, turns out you are not alone. In recent days, a vast number of Robinhood investors have been looking to take their trading elsewhere. In this post we will explore why that’s the case and how you can switch from Robinhood to other alternatives.
The GameStop Saga
If you are an investor or have a little bit of interest in investing, then you will be well aware of the recent barbs traded between Redditors of WallStreetBets (a subreddit page) and the actual short sellers on WallStreet. But if you are new to the saga, here’s what’s been going on:
GameStop is a company that owns thousands of brick and mortar stores selling video games. However thanks to the pandemic and with increasing numbers of people buying games online, the company hasn’t been doing too well in recent years. Given the situation, various hedge funds on WallStreet shorted the company’s stock enmasse. Shorting is basically when an investor predicts that the value of a stock would go down in the future. Then they borrow the same share, sell it at a current price, then buy it back in the future when it’s value goes down and pockets the difference.
When the Redditors of WallStreetBets got wind of the massive shorting of the GameStop stock, they banded together to buy the shares of GameStop in large numbers. In the process they drove up the price of the stock, costing these hedge funds who had bet on the stock going down, huge losses. As the price of the stock began rising, more investors began to flock to the market to purchase these shares and drove the price even higher.
What does this have to do with Robinhood?
Well as it turns out, the orders placed on RobinHood are routed through Citadel Securities who also lent money to Melvin Capital, one of the hedge funds actively shorting GameStop. With Melvin Capital hemorrhaging millions of dollars thanks to traders driving up the price of GameStock shares, Citadel Securities also stood to lose a lot of money.
It was around this time when Robinhood disabled trading for GameStock giving investors a reason to complain about foul play and rightfully say. By disabling mass trading, the price of GameStop that was being temporarily propped up by investors flocking in, cooled off again in the process causing a lot of investors to lose a lot of money. Now there are class action lawsuits against Robinhood and a lot of disgruntled investors who are leaving the platform to switch to other alternatives for their investment needs.
If you also happen to fall in that group or are just plain looking to transfer your funds out of Robinhood to another brokerage account and are wondering how to do so. This post is for you. We will share how you can transfer your funds from Robinhood to other popular brokerage accounts.
Robinhood to WeBull
WeBull is a great platform which offers most if not all features that Robinhood has to offer. It allows fractional traders, crypto trading, dividend reinvestment plan (DRIP) and much more, all without any cost ($0 commissions and $0 deposit minimums). If you don’t have an account already with WeBull, this is the first thing you will have to do. You can do so by clicking here. Signing up using this link and funding your account with $100 or more will help you get 2 free stocks valued up to $1850.
To switch from Robinhood to Webull, make sure that your account information matches that on your Robinhood account. Once you have signed up for the account and are logged in, click on your avatar on the top right corner of the screen and select My Account from the dropdown menu (see figure 1)
Figure 1. Select My Account from the drop down menu
Now that you are in ‘My Account’ screen, choose the ‘Transfer Stocks’ option from the menu on the left hand side of the screen (see Figure 2), to bring up the Transfer Stocks menu.
Figure 2. Select Transfer Stocks from the drop down menu
Keep the default value in the “Choose Receiving Account” field. Select Robinhood from the “Choose Broker to Transfer From” dropdown menu. Set “Delivering Account Type” to Individual. The “Delivering Account No.” is your Robinhood account number which you find by logging into your Robinhood account or app and going into your account information. Once again make sure that the “Delivering Account Name” i.e your name on Robinhood account and “Receiving account’s name” i.e your name on WeBull, are the same. Read the Must Read notice posted on WeBull regarding the details of supported invested types that can be transferred over, fees associated with the transfer and other details.
Once you have made appropriate selections (partial or full transfer etc), submit your request. The request can take a couple of business days to process and the fund transfer to complete.
Robinhood to M1 Finance
M1 Finance is another great platform that allows beginners in the trading world to conduct business with ease. Like WeBull this platform allows fractional share trading. It also offers retirement accounts for free and lets you open up Roth IRA accounts. While most conventional brokerages have commissions and fees associated with their retirement account offerings, M1 Finance offers this service for free when you open up an account with only 500$. They also let you roll over an old IRA or 401K account onto their platform. They also offer the DRIP feature as well. The one downside of M1 Finance is that it doesn’t offer crypto trading.
To switch over to M1 Finance from Robinhood, you obviously must open up an account with them. Make sure to select the correct account type that you have with the Robinhood brokerage. Once you have done that, select the ‘Transfers’ option from the navigation bar on top (see figure 3).
Figure 3. Transfers option
Once you are on the transfers screen, click on the ‘Move Money’ button which looks like what you see below (see figure 4):
Figure 4. Move Money Button
From the list of options presented, select the ‘Account Transfer’ button. This will take you to the Account Transfer screen. Once here, select the ‘Transfer brokerage account or IRA’ option. When you arrive here, you are requested to send in your most account statement. You can get this by logging into your account on Robinhood and going into your account settings, selecting Statements & History and selecting Account Statements.
In your request submission, you will be asked to select a Brokerage Firm from a dropdown menu. In your case this will be Robinhood. Add your Account Number. Select Account Type and select Full Transfer (assuming that you want to bring all your account holdings over). Keep in mind that there is a 75$ charge by Robinhood to transfer your holdings out of their platform. When requested to submit your account statement, upload the .pdf file of your account statement that you acquired previously and once you submit your request, you can now let M1 take over the rest of the process. Your account should be active within a couple of days.
Conclusion
Between WeBull and M1 finance, you have two solid alternatives to Robinhood where you can continue your investment journey. In the coming days, Robinhood maybe under a lot of scrutiny with pending class action lawsuits. So in the meantime, if you had been thinking about switching your account from Robinhood and take your investments elsewhere, you now have options to explore.
Disclaimer: Like all other posts on Hustle Domain, please keep in mind that this post is for educational and entertainment purposes only and is not meant to be financial advice. Please practice caution and do your own research before investing.