Robinhood pushed beyond the business of online investing Wednesday with the launch of an online wealth management service to be priced at $250 a year or less: Robinhood Strategies. Now available to its 2.6 million Gold subscribers, the firm plans to make it available to all investors in April.
Subscribers to the new program — which charges a 0.25% management fee for assets of $100,000 or less — can select single stocks and exchange-traded funds for their portfolios.
The online service includes guidance on tax loss harvesting and other tax-friendly strategies. “Managed individual and retirement accounts with support for joint accounts [are] coming soon,” according to its website.
Gold members, the firm says, get nearly "free management" for each dollar over $100,000 and have "an effective management fee of 0.1% for portfolios with $250,000 or 0.05% for those with $500,000."
Robinhood also says it will expand its banking offering this year. This effort is set to include checking and savings accounts, access to private banking services like estate planning and tax advice, and cash delivery services in some markets. Banking services will be provided by FDIC member Coastal Community Bank.
“Robinhood is going for it — Now a brokerage, a wealth manager, and a private bank,” said Bitwise Investment Management CEO Hunter Horsley on X. “Legacy financial services companies are getting disrupted from every direction.”
The firm says its wealth management services will be supported by Robinhood Cortex, an artificial intelligence investment tool set to launch later this year that analyzes portfolios and provides insights on how to optimize them.
A Big Deal or Small Potatoes?
As news spread about Robinhood’s latest ventures, financial professionals weighed in on what they represent for the industry — and financial advisors.
Manish Jain, CEO of the wealth platform Mezzi, said on LinkedIn: “They are calling this new offering an investment advisor or 'Robinhood Strategies' but [it] appears more like [robo-advisors] Wealthfront/Betterment with capped fees and customization."
But others disagree and see Robinhood’s moves as game-changing.
“It’s over for Merrill Lynch and Ameriprise Financial Services, LLC. Robinhood roboadvisor is here … fees are capped at $250 a year,” wrote Springroll AI CEO Michael Jacobs on Linkedin.
“Based on my experience creating advisor models for financial planning, trading, etc., leveraging the Springroll AI platform and data … the Robinhood robo-advisor will likely return results above the 85th percentile,” Jacobs added. “And it’s essentially free. Welcome to the future of investing!”
For its part, Robinhood executives say the firm wanted to “take the best of all the models that are out there, from a human advisor … who can provide you guidance and reassurance to robo-advisors that … give you a low-cost, easy way to access advice … and create something that doesn’t exist today,” Steph Guild, president of Robinhood asset management senior director of Investment Strategy, told Bloomberg in an interview.
When asked about how many human advisors are part of the Strategies effort, the firm declined to give a specific number. It noted that Guild leads the team, which is "guided by a collective 50-plus years of Wall Street experience managing both institutional and high net worth clients," according to a statement sent by email to ThinkAdvisor.
As for how much direct contact investors in the program may have with these financial professionals, "customers won’t be able to contact the team directly," the firm said. "However, you can contact customer support anytime."
As of Dec. 31, Robinhood had $193 billion in assets under custody. It struck a deal in November to buy RIA custodian TradePMR, which had $40 billion in assets under administration late last year.
At least one observer sees the latest Robinhood efforts as baby steps when it comes to its competitiveness in wealth managment. "They have a long way to go to accomplish this (think Betterment, who has tried, and a few others), and Gen AI will not get them there," Seth Adam Stuart, an investment product and strategy consultant, told ThinkAdvisor.
In general, the required intellectual capital and global resources "take years and tens of million if not billions [of dollars] to build, implement and use with a trusted chain of custody, etc.," Stuart adds. "To be very frank, at this time it's more marketing vaporware that might meet some mass-affluent needs (if that)."
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