What You Need to Know
- Code for a beta version of Robinhood's iPhone app included references to retirement accounts, a software developer told Bloomberg.
- The firm's CEO said in January that retirement accounts were a major focus in 2022 due to customer demand.
- The move is not surprising but “will open Robinhood up to more regulatory scrutiny,” consultant Tim Welsh says.
Robinhood’s move into retirement accounts, announced earlier this year, could be coming soon, according to findings shared with Bloomberg by a software developer, Steve Moser.
The company is working to add support for Roth and traditional IRAs and pensions, including services related to rollovers and inherited IRAs, according to the news service.
“Underlying code inside of a beta version of the Robinhood app [for iPhone] was updated this week to include several references to the retirement accounts,” Bloomberg reported Thursday.
Industry consultant Timothy Welsh, president, CEO and founder of Nexus Strategy, called the strategy a “natural progression for any broker to offer as many ways as possible to aggregate assets on [its] platform in hopes of garnering incremental revenues.”
“As stock trading becomes commoditized, you need to find any way possible to continue to grow, so better penetrating the clients’ wallet share is a strategic mandate,” he told ThinkAdvisor on Friday.
He added: “Nothing surprising here — although it will open Robinhood up to more regulatory scrutiny as retirement accounts have added rules and regulations to comply with.”
The company’s decision to offer retirement accounts “mirrors a trend we have seen with many investing apps,” according to Craig Iskowitz, founder and CEO of Ezra Group, a consultancy focused on technology and wealth management. That trend, in a nutshell, is: “Find success in one area and then leverage that to expand into others,” he told ThinkAdvisor
Iskowitz added: “Acorns started with micro-investing via credit card roundups and expanded into checking accounts, IRAs and crypto. MoneyLion started with consumer loans and then added wealth management. Wealthfront started with wealth management and expanded into banking. It seems everyone’s goal is to offer a full suite of financial services.”