Robinhood is beginning a pilot launch for Robinhood Advisor Network, a new RIA referral program for advisors to be connected with eligible clients with at least $250,000 in investable assets.
Plans for Robinhood’s entry into RIA referrals began with the company’s $300 million acquisition of Florida-based custodian TradePMR, which provided custody to 350 RIA firms at the time of its sale. Robinhood Advisor Network will only be available to RIAs that custody with TradePMR, and RIAs need a minimum of $500 million assets under management to participate in this initial pilot phase.
The referral process will take place inside Robinhood’s app, which has funded accounts for about 27 million customers. Robinhood has reported having a median customer age of 35 years old, positioning itself toward a younger investor base compared to legacy brokerage platforms.
“For the last 30 years, the RIA industry has grown off baby boomers. The current client base of the wealth management industry is the baby boomer. Now, Robinhood has more Gen Z and millennials than all the other brokerage firms combined,” TradePMR founder and CEO Robb Baldwin told InvestmentNews. “We believe Robinhood is uniquely positioned at the epicenter of the next generational wealth transfer.”
After completing an in-app questionnaire, eligible Robinhood users will be shown a list of at least three recommended advisors they can pursue working with. Robinhood will take a 25% fee on the gross revenue an advisor generates from clients referred via Robinhood Advisor Network. There will be no other associated monthly or annual fees from Robinhood, though clients will separately pay fees to the referred third-party advisors they set up accounts with.
“It's going to be the first app-based custodial platform that exists today. Everyone else has been like in the human handoff scenario for branch offices that's been the methodology for referral programs for the last 30 years in the RIA space,” said Baldwin. “We feel like this is going to be revolutionary and totally different, because it does things the way the next generation expects things to be done.”
The RIA referral market consists of longtime leaders Schwab Advisor Network (SAN) and Fidelity’s Wealth Advisor Solutions (WAS) program. Robinhood’s addition comes alongside other recent referral program launches from Pershing and Goldman Sachs, whose early participants include mega-RIAs Creative Planning, Mercer, and Wealth Enhancement.
Robinhood Advisor Network will operate under Robinhood Asset Management, an SEC registered investment advisor. Robinhood Advisor Network expects a broader launch in the second quarter of this year with continued in-app integration over time.
Right now, it's going to be based on supply and demand. We're going to live and learn with this small test first, and then we'll grow it over time as demand illustrates,” said Baldwin. “We have a lot of advisor interest at this point in time, but we don't know how many are going to end up in the [referral] pool long term.”
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