Is Public a Safe Brokerage Firm?

Public.com is a brokerage firm that takes a somewhat different approach to investing than many other brokers. The app, the stock-buying process, and the platform’s social features all stand apart from the usual setup. Because it works differently from the norm, some people may question whether Public.com is trustworthy or just another scam. We’re here to say that Public.com is not a scam.

Here’s why.

Public.com Company Profile

Public.com is based in New York and Copenhagen. It received its first round of funding in 2018 from Greycroft and has several celebrity investors behind it.

Public.com is a broker that lets investors trade many different types of securities. It puts a strong emphasis on the social side of investing and encourages users to share ideas and knowledge across the platform. Investors can follow other users and be followed in return, and Public.com staff also host many live events.

Is Public.com Legitimate?

One of the clearest places to look when trying to decide whether a broker is a scam is how it complies with financial regulators.

The most visible regulatory bodies in the investing world are the Financial Industry Regulatory Authority (FINRA) and the U.S. Securities and Exchange Commission (SEC). Both focus on making sure investors have a secure place to do business. Among the many rules these agencies enforce are requirements involving fair trading practices, protection of personal data, and transparent business operations.

Public.com is registered with FINRA and SEC.

Is Public App Safe?

Another way to judge whether a broker is trustworthy is by looking at the kinds of relationships it has with other companies.

A broker’s clearing firm is a good example. Clearing firms are separate businesses, but they work closely with brokers; one cannot function without the other unless the broker is self-clearing. Public.com’s clearing firm is Apex Clearing.

Apex is one of the biggest clearing firms in the United States, and it works with brokers that follow standard industry practices. If Public were a scam, Apex Clearing would not keep doing business with the company.

Is Public.com Insured?

Public.com offers SIPC coverage on eligible brokerage assets. That means assets in a brokerage account are protected up to $500,000. Of that $500,000 in coverage, $250,000 can be applied to cash balances sitting in the account. Public’s clearing firm also has additional insurance built in for another layer of protection.

The broker would not be able to offer that coverage if it didn’t live up to the regulatory mandates of FINRA and SEC.

Is Public.com Secure?

One of the requirements regulators impose is that brokers establish strong protections for their customers.

At Public, accounts are secured with AES 256-bit encryption at rest. Information transfers such as bank account data and personal information are protected using TLS 1.2 or newer. In addition to these security measures, Public.com uses two-factor authentication to help prevent unauthorized users from getting into accounts they shouldn’t access.

Public.com BBB Reviews

Aside from licensing and insurance, another place we can check to see whether a company’s business practices meet expectations is the Better Business Bureau (BBB).

BBB Rating

Public.com is accredited and has an ‘A’ rating from the BBB.

According to the BBB, rating a business involves looking at several parts of a company’s practices. The main factors include the number of complaints, the type of business, how long the firm has existed, transparency, and licensing.





Public.com Complaints & Reviews

In addition to the BBB rating, we can also get a sense of customer experience and satisfaction through reviews and complaints posted on BBB’s website.

Customers point to positives like quick customer service, a responsive app, and a solid range of investment products.

Negative reviews tend to center on the same issue. Some customers report frozen accounts and trouble with withdrawals. Interestingly, company responses often point to day-trading rules and account restrictions. The best way to avoid problems at Public.com is to read the broker’s rules before making assumptions.

Investing System

Public offers self-directed accounts, and it also has certain advisory-style products through its affiliates. It does not provide traditional financial-planning services. With a self-managed account, it’s possible to trade the following asset classes:

• Cryptocurrencies
• Treasury and Corporate bonds
• Exchange-traded funds
• Closed-end funds
• Stocks
• Options
• Alternative investments

The alternative-investment service offers trading in shares of collectible items, like Air Jordans, Banksy paintings, digital artwork, and famous video games. Public.com securitizes these physical and intangible assets and then releases the shares on its platform for trading.





Public’s main retirement account types are the individual taxable account and the Traditional/Roth IRA account.

An individual account at Public can sign up for recurring investments in a basket of assets. Public calls this program an Investment Plan. A plan can invest in a maximum of 20 assets. These can be securities or cryptocurrencies.

Another unique investing service is Alpha. This is an Artificial Intelligence that Public is testing in conjunction with GPT-4. It can perform a variety of functions, such delivering analyst recommendations (but not its own recommendations) on a security and summarizing earnings calls as soon as 2 hours after they finish.

Public.com only opens accounts for U.S. residents who must have U.S. citizenship, permanent residency, or have a valid visa. A Social Security Number is also required.

While the alternative investments generally aren’t covered by SIPC, physical assets are protected by Aspen American Insurance Company. Digital and intangible assets are self-insured.

Cash Management

Aside from brokerage accounts, Public also has cash accounts. These currently earn 3.3%, which is quite appealing. Public’s cash account allows unlimited deposits and withdrawals, so it functions like a checking account (though no checks are provided). Technically, it is a brokerage account with an FDIC sweep, sending funds to partner banks for insurance coverage up to $5 million.

The drawback is that there’s no check-writing or debit card linked to Public’s cash account.

Public.com Cost

Public does not charge commissions for stocks, equity options, and ETF trades made during market hours online. There is no minimum balance requirement for a standard brokerage account. For other trades, fees may apply to non-Premium members (and sometimes Premium users as well).

For example, index options cost 50¢ each for non-Premium customers and 35¢ for Premium members. A stock order placed in pre-market or after-hours costs $2.99 for regular customers. Crypto trades come with either a fixed fee (as high as $6.29) or a 1.25% fee.





Treasury holdings range from 0.29% to 0.09% a year, depending on the Treasury balance.

Buying an investment plan costs from $0.49 to $1.99 per trade, based on the number of symbols it includes. Premium clients pay nothing.

Public’s cash account has no minimum or maintenance fees.

Mobile App

Public clients get to use a user-friendly mobile app that is compatible with both Android and Apple phones and tablets. The software does leave out some features we hoped to see, like mobile check deposit and live streaming of video news. Nevertheless, there are some useful features. Of particular importance is the trade ticket, which is very easy to use. Available trade types include:

- Market
- Limit
- Stop





Asset profiles on the Public app have icons in the top-right corner to add the asset to a watchlist or set up an alert. There is a chart on the profile, although there are no tools of any kind. A graph cannot be rotated horizontally.

Where the app really shines is in its community forum. This is an opportunity for Public users to connect with each other and discuss potential investments and the day’s market news. There’s a Feed icon in the bottom menu for this social network, and each asset’s profile also has a digital bulletin board at the bottom.

Website

Social networking and a watchlist both sync with the website, so it’s really easy to switch between the two platforms. The website also has the same research information the app delivers on specific assets. Surprisingly, charting is just as bad with no tools and no full-screen mode.





The order ticket has the same order types the mobile app provides. On either platform, it’s possible to set up a recurring purchase schedule for an individual asset.





Beyond its website and mobile app, Public does not have any other trading platform, such as a desktop program.

Asset Research

Although Public’s research tools are somewhat limited, it is still possible to find something to trade at Public. Market news is available on the app (through the globe icon that appears in the bottom menu) and on the website (through the Explore link that appears in the left-hand column). There are groups of assets here, including:

- Popular crypto
- Top movers
- Earnings this week
- International stocks (Y shares)
- Popular ETFs

It’s easy to scroll through these tiles and see what assets are in them. Clicking or tapping on an entry pulls up the asset’s profile. Both securities and cryptocurrencies have basic trading stats like 24-hour volume and market capitalization.

Securities have the lion’s share of information. Popular stocks have analysts’ trade recommendations with price targets. During our probing, Bank of America had trade recommendations from no less than 28 analysts.

News articles have thumbnails and links to external sites. Examples of providers include Seeking Alpha, Fox News, and Reuters.

Some resources are available only with a Premium membership. These include the three major financial statements (cash flow, income, and balance sheet).

Margin

A brokerage account with Public can operate using cash or margin. Margin brings features like option spreads and leveraged positions, though you can’t short sell.

Borrowing money involves a cost, and margin is no exception. Currently, Public applies 4.9% to 3.95% on margin balances. Loans above $1 million may receive individualized rates.

Any cash account at Public can convert to margin on the website or the app through the settings menu.

Customer Service

Public has a Help Center, and member support is available by chat in the app. The chat tool begins in robo format and has the ability to bring on a human rep if needed. Hours for this personalized service are during the weekday only.

During our testing of the chat service, we found it moderately helpful. Within the chat window, there is also a list of FAQs with answers that many Public customers will find helpful. For issues that can wait, Public has a service email address (support@public.com).

The website does offer a few (only a few) self-help features under the settings & privacy page, which will be found under the account tab that appears in the upper-right corner of the site.

The real downside in this category is the lack of phone service. It is not possible to contact a Public representative over the phone at all. This seems like a terrible idea as some issues will in all probability need phone support at some point.

Bonus Services

DRIP Service: Cash dividends inside a Public account can be automatically converted into additional shares of the securities that paid them.

Initial Public Offerings: Public.com does offer IPO investing when shares are available and eligibility requirements are met.

Fractional Shares: Generally speaking, trades at Public can be made in either whole shares or whole dollars. Some small issues, like over-the-counter stocks, require a whole-share purchase.

Individual Retirement Accounts: Public offers Traditional and Roth IRAs.

Extended-hours Trading: Public clients can trade securities during the weekday from 4:00 am, New York time, until 8:00 pm. Cryptocurrencies trade around the clock, 7 days a week.

Periodic Mutual Fund Investing: No mutual funds are available.

Fully-paid Securities Lending Program: Public customers earn 10% of the net proceeds on loaned-out shares. The program is through Apex Clearing Corp, Public’s clearing firm. The income is automatically credited to the account the following month.

Our Recommendations

Beginners: On one hand, Public.com is designed for novices. It has a large library of educational materials that are written for newbies. On the other hand, while the company now has some advisory-style products, it still lacks full-service planning, and these would be better for beginning investors. We recommend a hybrid robo-human advisory account with a firm like Webull.

Active Stock Trading: Although Public does have some good trading resources, like OTC stocks and fractional-share trading, it just doesn’t have the software to create a pro-level experience. We suggest Charles Schwab instead.

Mutual Funds: Although Public doesn’t have any mutual funds, Charles Schwab has thousands of them.

Retirement Planning & Long-Term Investing: Public is not designed for retirement saving. Robinhood, by comparison, has lots of long-term planning resources, including a 1% free contribution match.

Small Accounts: Because of Public’s inactivity and other fees, we can’t defend it for small investors. Webull would be a better pick.

Public Brokerage Review Summary

With the sole exception of alternative investments, Public.com just doesn’t have anything to make it stand out from the crowd. In fact, it often fails just to be average.

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