Robinhood Markets has penned an settlement to accumulate TradePMR, the Florida-based know-how and custodial companies supplier for registered funding advisors with over $40 billion in belongings beneath administration throughout 350 corporations.
The web brokerage agency pays some $300 million for TradePMR through a mixture of money and inventory, with the deal anticipated to shut within the first half of 2025. CEO Robb Baldwin, who based TradePMR in 1998, and his workforce will be part of Robinhood as a part of the transaction.
The deal marks Robinhood’s entrance into the wealth administration area, because it goals to attach its traders with human advisors, in response to the corporate.
Robinhood, which went public three years in the past, has greater than 24 million funded buyer accounts, nearly all of that are millennials and Gen Z traders, with about $160 billion in belongings in custody, or round $6,500 per account, on common. Regardless of the comparatively small particular person account sizes, Robinhood believes a few of its shoppers can be in search of extra refined monetary recommendation as they age.
“We imagine this acquisition is the subsequent step in serving these traders as their wants evolve and mature,” Robinhood mentioned in a press release.
The 2 corporations will create a referral program, giving TradePMR’s RIA shoppers entry to Robinhood clients by way of a joint tech platform. Robinhood traders may even have the ability to discover and join with TradePMR advisors.
“For a few years, the advisor business has mentioned the problem of dropping clients when belongings transition to a partner or to heirs,” Baldwin mentioned in a press release. “Robinhood’s shopper base is the subsequent technology of traders. We imagine this acquisition permits us to construct a multi-generational platform that can assist introduce monetary advisors to this subsequent technology.”
Robinhood mentioned it expects to take care of TradePMR’s long-standing relationship with Wells Fargo Clearing Providers, which gives clearing, execution and lending companies.
Along with equities, shoppers use Robinhood for buying and selling cryptocurrency and choices. The agency was criticized throughout the pandemic for encouraging what some noticed as reckless buying and selling amongst shoppers with straightforward entry to margin loans and a “gamified” person expertise, together with rewards, inventory giveaways, digital confetti drops for trades, video games and social media sharing. In January, Massachusetts’ regulators fined the net brokerage agency $7.5 million, claiming the gamification options harmed traders by fueling speculative buying and selling, though Robinhood had largely eliminated the options by 2021.
Robinhood used Citi to advise on the transaction, whereas TradePMR used Lazard Inc. as its monetary advisor.
This isn’t the primary publicly-traded monetary companies firm to attempt to buy a foothold within the RIA custody area. In 2020, Goldman Sachs bought Folio Monetary. Morgan Stanley acquired E*Commerce, which had an RIA custodial unit, in 2020, however it rotated and offered the custody enterprise to Axos Monetary in 2021.
As of 6:53 a.m. ET, Robinhood’s inventory was down 0.26% in pre-market buying and selling.
