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Closing Your Robinhood Account
If you now have decided that it is time to close your account for good, follow these easy steps.
- You need your account balance to be 0
- For your account balance to be 0, you either need to transfer your funds to another trading company* or by selling all your securities and transferring the balance to your bank account
- You can make a request to close your account directly on the Robinhood app or web platform once your account balance is 0:
- Click the person account icon in the app
- Tap settings -> Account information -> scroll down -> select Deactivate account
- Follow the prompts on the screen to close your account
*If you want to transfer your account to another brokerage, Robinhood will charge you a $75 transfer fee. The process is done by contacting your new Broker and requesting that your assets (cash and stocks) be transferred to them. This is done via the Automated Customer Account Transfer Service.
It is important to note that you cannot transfer cryptocurrency via this service at this time, and so you must sell this if you are wishing to leave Robinhood completely. If you fully transfer your assets, Robinhood automatically closes your account once the transfer is complete.
Legal documents such as statements and tax documentation are kept and you can continue to access these via the Robinhood app even after you’ve closed your account. This does not reactivate your account. The reason these are not deleted is that they are required to be kept for a number of years by law, and therefore since they were created while you were a Robinhood customer, the company is legally required to keep these records.
Robinhood service
If you’ve been trading with Robinhood you may have found yourself less happy with the service than previously recently. The mounting dismay among users is mainly associated with glitches in the software that had caused some users distress, and even a few complete shutdowns of the app means that users had to cease their trading activities for 1-2 days while this was being fixed.
For some users, Robinhood is a good starting point for investments as it is easy to use, mainly mobile based with Android and IOS versions (there is a web interface too, however, this isn’t how most users access their accounts), and 0% commission on trades. However, as users become more familiar with trading, they may like more advanced options that are not offered by Robinhood.
If you have reached a point for whatever reason in your trading journey where it is time for you to part ways with the platform then read on to learn the ways to close your account and the steps you need to complete in order to do this as smoothly as possible.
First, let’s have a more detailed look into why users are closing their accounts to help you decide if you’re on the fence.
Reasons Robinhood Users Are Finding New Platforms
Robinhood makes a profit in three major ways; interest earned on users’ cash balance, margin lending, and most controversially by selling order information to high-frequency traders. The SEC launched an investigation into the company for this in September of 2020, and they were fined 1.25 million USD in 2019 by the Financial Industry Regulatory Authority for not procuring the best prices for their customers. An investigation by the Wall Street Journal found that Robinhood was receiving significantly more cash than rivals for the same practice.
In the introduction we mentioned that the SEC had launched an investigation into Robinhood, the company paid 65 million USD to settle this investigation. We can’t say for sure, but you may think it indicates some malpractice.
Although most banks and financial investment firms are subject to cyberattacks and security breaches, customers expect honesty and integrity from their service providers about such matters. In 2019 when subject to a hacking attack, Robinhood appeared to minimize the significance of this, claiming there had not been any evidence of abuse at the time. In 2020 however, they released a statement indicating that 2000 customer accounts were no longer secure and that hackers had managed to access some users’ funds, transferring these out of the company. The fact that this happened may have been inevitable, however, the lack of clear communication and advice to customers on how to protect their accounts is highly unpalatable to some people.
In another glitch in the app, infinite leverage was offered to gold users meaning that they could borrow and use infinite money from the platform. To make a long story short, some users managed to procure six-figure losses on their accounts in the short time that the glitch was in place.
Making trading accessible to the masses is both an amazing gift of companies such as Robinhood and a great responsibility. Sadly, because not all users are fully educated on how the platform works, and the platform does not require them to be, a young university of Nebraska student took his own life in 2020. Alex E Kearns believed he had lost a quarter of a million dollars. Although this is a marginal note; he had not actually lost the money, he simply did not understand the meaning of his statement at the time. The company has stated that they are considering further customer education for level three options authorization. Mr. Kearns’ family is suing the company.
The loss of Mr. Kearns is a tremendous tragedy, however, it shows the immense responsibility that certain types of the company hold, as this could potentially have been avoided had he been provided with training, or simply not been allowed to use such large sums with such a short history of trading.
There are few more controversies surrounding Robinhood, however the above are the main concerns in our opinion, with issues with corporate responsibility in regards to user information, clear communication with users about how the company profits off their investments, and pastoral responsibility for allowing new traders to put significant amounts on the line without any gateway testing of their understanding of the process.
