Robinhood Teases New Roboadvisor Product As Company Looks To Disrupt Advisory — Will It Be Worth It?
Robinhood used to be good for YOLOing stimulus checks, gambling on penny stocks, and losing big on options. But after the 2022-23 bear market, the brokerage took up a new strategy — paying people to save for retirement. It worked, with Robinhood’s assets under custody exploding to nearly $200B, courtesy of attractive transfer offers. And now, it’s preparing to take its next major step into money management.
- New filings show that Robinhood is planning to launch a “digital advice offering” similar to roboadvisors offered by Wealthfront and Vanguard, with a minimum deposit of $50.
- Robinhood Asset Management will charge a 0.25% annual fee on managed assets, but this fee will be waived for Robinhood Gold users on balances above $100K.
Will it be worth it? Robinhood has teased an advisory product for a while, acquiring AI investing platform Pluto and registered investment advisory custodian TradePMR in an effort to offer a wider suite of affordable, self-management options. A 0.25% annual fee might not be too competitive compared to other roboadvisors offered by Vanguard or Wealthfront. However, compared with traditional investment advisors — which regularly charge 0.5%, 1%, or higher — it might be an attractive draw, thanks to the help of human advisors. Ultimately, though, the real winners are likely to be Robinhood Gold users, who would pay a max of $250/yr in fees on balances >$100K.
