Robinhood Markets has penned an settlement to accumulate TradePMR, the Florida-based expertise and custodial providers supplier for registered funding advisors with over $40 billion in property beneath administration throughout 350 corporations.
The net brokerage agency can pay 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 house, because it goals to attach its traders with human advisors, in line with 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 property 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 will probably be on the lookout for 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 stated in a press release.
The 2 corporations will create a referral program, giving TradePMR’s RIA shoppers entry to Robinhood clients by means of a joint tech platform. Robinhood traders may even be capable to discover and join with TradePMR advisors.
“For a few years, the advisor business has mentioned the problem of dropping clients when property transition to a partner or to heirs,” Baldwin stated in a press release. “Robinhood’s consumer base is the subsequent era of traders. We imagine this acquisition permits us to construct a multi-generational platform that may assist introduce monetary advisors to this subsequent era.”
Robinhood stated it expects to keep up TradePMR’s long-standing relationship with Wells Fargo Clearing Providers, which gives clearing, execution and lending providers.
Along with equities, shoppers use Robinhood for buying and selling cryptocurrency and choices. The agency was criticized through the pandemic for encouraging what some noticed as reckless buying and selling amongst shoppers with simple entry to margin loans and a “gamified” consumer 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, although Robinhood had largely eliminated the options by 2021.
Across the identical time, Robinhood paid $135 million collectively to the SEC and FINRA to settle, with out admitting guilt, costs it did not execute some trades at the most effective obtainable worth and let unqualified traders commerce choices.
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 providers firm to try to buy a foothold within the RIA custody house. In 2020, Goldman Sachs bought Folio Monetary. Morgan Stanley acquired E*Commerce, which had an RIA custodial unit, in 2020, nevertheless it circled and bought the custody enterprise to Axos Monetary in 2021.
As of 9:11 a.m. ET, Robinhood’s inventory was up 54% in pre-market buying and selling.
