Final month, Robinhood Markets introduced its entrance into the wealth administration area with its plan to amass TradePMR, the Florida-based know-how and custodial companies supplier for registered funding advisors with over $40 billion in belongings beneath administration throughout 350 companies.
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 purchasers who have been asking if the corporate had somebody who might advise them on their investments. TradePMR was searching for a method to attain next-generation traders, and Robinhood, with a mean age of early 30s for its buyer base, had them.
“What we’ve discovered 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 so forth., aspirational targets are, most of them don’t need to be simply self-directed,” Quirk mentioned. “Additionally they need the flexibility to have the ability to ask for assist in some portion of their belongings, or in some circumstances a bigger portion of their belongings. We actually hadn’t had an answer to offer them once they ask for that.”
Baldwin mentioned the 2 corporations will create a referral program, giving TradePMR’s RIA purchasers entry to Robinhood clients by means of a joint tech platform. That referral program can be completely different from these at the moment current on the huge custodians.
“Numerous RIAs which are giant are giant due to the referral applications, and people referral applications 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 subsequent technology that we’re all attempting to achieve. 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 so forth. COVID modified all the pieces about how all of us work already,” Baldwin mentioned.
They may construct a referral program that’s extra revolutionary 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 copy what TD did with its referral program, with advisors clamoring to get in. It’s estimated that $124 trillion in belongings will switch to the subsequent technology.
“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 subsequent decade or two and the way highly effective this may change into for any advisors which are a part of it.”
The know-how is one other key aspect 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 companies 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.
Against this, Robinhood constructed its personal back-office system on Amazon Internet Providers.
“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 what you are promoting and scale with previous techniques.”
Baldwin believes this can be a game-changer going ahead, and that can be a giant differentiator for companies that aren’t on legacy techniques. Only in the near past, we now 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 believe, once more, goes to take us to a complete completely different stage,” Baldwin mentioned. “And if we’re going to have these sorts of applied sciences and work with them effectively, we now have to have nice again places of work. They usually have it.”
