Robinhood pushes into wealth management
2min read Robinhood Markets Inc. recently announced its acquisition of TradePMR, a custodial and portfolio management platform for registered investment advisors (RIAs), in a cash-and-stock deal valued at approximately $300 million. Set to close in the first half of 2025, the acquisition is Robinhood’s strategic push into the wealth management sector as it aims to diversify beyond its traditional brokerage services. Through this acquisition, Robinhood intends to connect its client base with TradePMR’s network of RIAs, bridging its extensive retail customer pool with a growing segment of advisors, thus broadening its reach to wealthier and more mature investors.
The acquisition reflects Robinhood’s ambition to challenge wealth management giants like Charles Schwab and Fidelity, which dominate the RIA custody space. The wealth management sector is fiercely competitive and has attracted significant interest, especially as younger investors are projected to inherit substantial wealth in the coming years. By leveraging TradePMR’s technology, Robinhood hopes to make inroads with independent advisors who seek custodial services for younger clients, a demographic that forms the core of Robinhood’s user base.
TradePMR, headquartered in Gainesville, Florida, manages over $40 billion in assets under advisement and has built a reputation as a robust custodial platform for RIAs. Robinhood’s Chief Brokerage Officer, Steve Quirk, highlighted the strategic importance of reaching the “next generation of investors” through the RIA network. This acquisition will allow Robinhood to provide its clients with professional portfolio management options, which its customers have increasingly requested as they seek to diversify their financial management options.
Incorporating TradePMR’s services is expected to deepen Robinhood’s reach into the financial advisory sector, an attractive and steadily growing area of wealth management. Robinhood aims to launch a client referral program for advisors on the TradePMR platform, allowing them to access its young, tech-savvy customer base. TradePMR CEO Robb Baldwin emphasized the opportunity for advisors to attract younger clients, explaining that by integrating with Robinhood, advisors can meet their prospective clients “where they are,” using Robinhood’s popular platform.
The acquisition positions Robinhood to compete directly with established custodians such as Charles Schwab, Fidelity, and Pershing, each of which controls significant portions of the RIA market. However, breaking into this space won’t be easy, as advisors typically change custodians infrequently due to the administrative burden involved in transferring client assets. Despite this challenge, Robinhood is banking on its technology and existing client base to “leapfrog” ahead, potentially drawing advisors seeking to expand their reach to younger investors.
Robinhood’s move into RIA custody comes as the company experiences substantial growth. In 2024, its shares surged by approximately 175%, and it has diversified its offerings with new products such as a credit card, futures trading, and even election-related contracts. The addition of wealth management services further enhances Robinhood’s position as a comprehensive financial platform, enabling it to provide more holistic financial solutions to its clients as their needs evolve over time.
The acquisition also represents an opportunity for Robinhood to develop a digital financial advice service or robo-advisor, a feature it aims to launch next year. By combining TradePMR’s expertise in wealth management with Robinhood’s technology, the company is well-positioned to create a platform that appeals to both advisors and clients. This expansion into wealth management could drive further growth for Robinhood and position it as a formidable competitor in an industry that has seen significant consolidation and growth over recent years.
Shares of HOOD pressed toward all time highs as the announcement was the latest in a string of strategic moves that have been met with approval by investors. This is an incremental positive but it remains to be seen how effective the relationship will be. We do not view this as a reason to buy HOOD but it does provide further support to the 40% rally we have seen since the start of November.
