Final month, Robinhood Markets introduced its entrance into the wealth administration house with its plan to accumulate TradePMR, the Florida-based know-how and custodial companies supplier for registered funding advisors with over $40 billion in property underneath administration throughout 350 corporations.
TradePMR CEO Robb Baldwin and Robinhood Chief Brokerage Officer Steve Quirk mentioned the deal in additional element on the MarketCounsel Summit in Las Vegas. The deal got here collectively as a result of Robinhood had self-directed shoppers who have been asking if the corporate had somebody who might advise them on their investments. TradePMR was in search of a strategy to attain next-generation traders, and Robinhood, with a mean age of early 30s for its buyer base, had them.
“What we’ve realized over time is so as to have the ability to be capable of accommodate all their wants as they develop, begin having children and households, and many others., aspirational targets are, most of them don’t need to be simply self-directed,” Quirk mentioned. “In addition they need the power to have the ability to ask for assist in some portion of their property, or in some circumstances a bigger portion of their property. We actually hadn’t had an answer to offer them after they ask for that.”
Baldwin mentioned the 2 corporations will create a referral program, giving TradePMR’s RIA shoppers entry to Robinhood clients via a joint tech platform. That referral program can be totally different from these at present current on the large custodians.
“Numerous RIAs which are giant are giant due to the referral packages, and people referral packages have been diminished over time,” he mentioned. “We actually really feel prefer it’s time to kick this into excessive gear as a result of right here’s the following era that we’re all making an attempt to succeed in. They’re all right here in a single spot.”
The prevailing referral program mannequin “was constructed with private relationship with thoughts, assembly in a convention room face-to-face, and many others. COVID modified all the pieces about how all of us work already,” Baldwin mentioned.
They are going to construct a referral program that’s extra progressive than rivals’ and extra digitally centered, because the next-gen investor operates digitally, he mentioned.
Quirk, who spent 13 years at TD Ameritrade, mentioned they hope to duplicate what TD did with its referral program, with advisors clamoring to get in. It’s estimated that $124 trillion in property will switch to the following era.
“The recipients of which are the purchasers of Robinhood,” he mentioned. “It’s actually highly effective to consider the place this goes over the course of the following decade or two and the way highly effective this will turn into for any advisors which are a part of it.”
The know-how is one other key component of the deal, Baldwin mentioned. Most custodian and brokerage back-office techniques are constructed on legacy know-how.
“While you deep dive into these techniques, you notice they’re all on mainframe computer systems; they’re all constructed within the ’70s and ’80s,” he mentioned.
Many corporations have been cobblestoning issues on high of those legacy platforms to attempt to make them extra environment friendly. “That is what we’ve been doing for many years,” he mentioned.
In contrast, Robinhood constructed its personal back-office system on Amazon Net Companies.
“To me that’s an enormous lightbulb as a result of if you’re within the know-how enterprise in any respect, you notice it’s actually powerful to do integrations with previous techniques,” Baldwin mentioned. “It’s actually powerful to develop your small business and scale with previous techniques.”
Baldwin believes this can be a game-changer going ahead, and that can be a giant differentiator for corporations that aren’t on legacy techniques. Only in the near past, now we have began to see extra wealthtech startups creating merchandise inside six months.
“We’re beginning to see a revolution happen once more in our business from a know-how standpoint that I feel, once more, goes to take us to an entire totally different degree,” Baldwin mentioned. “And if we’re going to have these sorts of applied sciences and work with them effectively, now we have to have nice again workplaces. They usually have it.”
