Robinhood Markets has penned an settlement to amass TradePMR, the Florida-based expertise and custodial providers supplier for registered funding advisors with over $40 billion in property below administration throughout 350 companies.
The web brokerage agency pays some $300 million for TradePMR by way of 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, based on 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 shall be on the lookout for extra subtle monetary recommendation as they age.
“We imagine this acquisition is the following step in serving these traders as their wants evolve and mature,” Robinhood stated in an announcement.
The 2 corporations will create a referral program, giving TradePMR’s RIA shoppers entry to Robinhood prospects by way of a joint tech platform. Robinhood traders may also be capable of discover and join with TradePMR advisors.
“For a few years, the advisor business has mentioned the difficulty of dropping prospects when property transition to a partner or to heirs,” Baldwin stated in an announcement. “Robinhood’s consumer base is the following technology of traders. We imagine this acquisition permits us to construct a multi-generational platform that may assist introduce monetary advisors to this subsequent technology.”
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, prices it didn’t execute some trades at the very best accessible value 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 attempt 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, however it rotated 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.
