No payment for order flow
In early 2021, Public announced that it would no longer be engaging in “payment for order flow” (PFOF). With PFOF, brokers route market orders to wholesalers instead of filling them on stock exchanges. The broker receives a kickback from the wholesaler, but the investor’s order may not be filled at the best price. By ditching PFOF, Public users can be sure that they are receiving the best price for their trades. In the place of PFOF revenue, Public introduced an optional feature where users can tip the broker.
Beginners looking to buy the biggest names in the market are likely to experience sticker shock. Public offers an alternative: fractional shares. Fractional investing allows small investors to buy highly priced stocks. Instead of buying a whole share of Amazon.com Inc (AMZN) for over $3,000, an investor can buy $5 worth. This feature greatly lowers the barrier to entry when it comes to a diversified portfolio.
Public offers investors a uniquely social trading experience. With the in-app feed, users can follow one another’s portfolios and trades. Additionally, users can publish and interact with posts from influencers. There is even a feature to tip content creators for quality posts.
Town Halls add yet another layer to Public’s community. These virtual events allow users to participate in a live Q&A with top executives all over the world. Public users are given exclusive access to ask questions and view answers via the social feed.
What could be improved
Limited investment options
Currently, Public allows its users to trade only stocks, ETFs, and cryptocurrencies. Left out of the mix are more traditional investments, including mutual funds, bonds, and CDs. Traders with a higher capacity for risk may seek options contracts, which are also not offered by Public. While Public’s limited options may be suitable for some investors, it leaves much to be desired.
Limited account types
Public users can only open a taxable account, which allows for trading — but without certain tax advantages. Currently, Public offers no retirement, custodial, or margin accounts. While this model may be suitable for Public’s investor base, it doesn’t accommodate a wide variety of investor situations.
Crypto traders on Public may not pay a commission fee, but that doesn’t mean the trade will be free. Public’s clearing partner, Apex Crypto, charges a markup on all cryptocurrency transactions. This markup varies between 1% and 2%, and shows up in the order execution price. This markup is higher than many we’ve seen among other crypto brokers, but it’s important to note that other brokers charge commissions where Public does not.