Robinhood has built its name over the past decade as an investment platform for millennials and Gen Z are interested in trading and exploring alternative investments like crypto. Now, those early adopters are getting older, and their investment needs are becoming more sophisticated. That explains one of Robinhood’s key decisions this week: The investment platform spent $300 million to acquire TradePMR, a wealth management platform for registered investment advisors (RIAs).
“Robinhood customers’ needs are evolving, and they’re looking for advice on how to build and manage their growing portfolios,” the company said in a blog post. “We believe this acquisition is the next step in serving these investors as their needs grow and mature.”
TradePMR is a platform for RIAs to connect with investors seeking individual, fee-only financial advice, and the partnership with Robinhood is expected to form a referral network, allowing Loyalty will be tied to Robinhood’s clients. Details of how the partnership will work and how much it will cost have not been disclosed to consumers.
The acquisition is particularly timely because, as the blog post notes, an estimated $84 trillion in wealth transfer is set to begin in the U.S. over the next few decades, leaving young investors with more money to invest. They may need help managing TradePMR, currently with $40 billion in assets under management, could help Robinhood become more competitive with Charles Schwab and other firms that offer services beyond trading. Connecting your customer base with TradePMR’s existing network of investment advisors means they can meet their individual goals and risk tolerance, all within the Robinhood ecosystem.
“Robinhood has consistently amassed a customer base that represents the investors of the future, reducing the age gap,” says Vijay Raghavan, senior analyst at Forrester. In fact, the company reports that 75% of funded customer accounts belong to millennials and Gen Z. They are digitally savvy and reaching an age where they will need more financial advice.
Raghavan says Robinhood’s customers are “verifiers,” or investors who gather their own information but want validation from experts. They tend to take more risk—like day trading or investing in crypto—for bigger potential returns.
“Validators are the largest and youngest segment of U.S. investors, so Robinhood’s customer base is valuable to RIAs, especially since they are willing to pay for financial advice,” he says.
While the so-called great wealth transfer will provide ample opportunity for platforms like Robin Hood to expand their customer base, financial advisors are also bracing for a lack of clients as spouses and other heirs seek such professionals. I am someone they feel comfortable working with. By now offering advisory services to its smaller clients, Robinhood hopes to avoid that fate (and past research suggests that heirs will retain asset managers they know and trust. ).
“We believe this acquisition allows us to create a multi-generational platform that will help introduce this next generation of financial advisors,” said Rob Baldwin, founder and CEO of TradePMR, in a blog post. will do.”
The estimated $300 million cash and stock deal is expected to close in the first half of 2025, subject to regulatory approvals.
