Robinhood, TradePMR Join Growing Referral Space

We know a guy who knows a guy.

Retail investment platform Robinhood and custodian TradePMR launched the pilot for their RIA referral program, the Robinhood Advisor Network, this week. The program is currently limited to RIAs with at least $500 million in assets and a TradePMR relationship. During the pilot, Robinhood employees with at least $250,000 in assets can connect with RIAs. When fully operational later this year, the program will extend to Robinhood customers. Participating RIAs must pay 25% of all revenue from referrals to Robinhood Asset Management, according to regulatory filings.

Though Charles Schwab and Fidelity dominate the referral space, Robinhood and TradePMR are the latest entrants in a quickly growing segment of wealth management. For advisors, the more referral programs, the merrier, it seems.

¿Por qué no los Dos?

California-based Mission Wealth joined Schwab’s program in 2003, but growth surged in 2010 when it also joined Fidelity’s network. “I think of these programs as a competitive bake-off,” said Matt Adams, Mission CEO. “We get a couple thousand referrals a year, but you don’t win automatically. You need an offering equal to or better than firms 10 times your size.” 

Mission now gains about $2 billion in new client assets annually from participating in both referral programs, he added.

Robinhood acquired TradePMR and first announced the referral program more than a year ago. Since then, plenty of other firms have made similar moves:

• Robo-advisor Betterment introduced its Betterment Advisor Network pilot for a small group of RIAs last month.
• Goldman Sachs Ayco started a referral program in January, with Creative Planning, Mercer Advisors and Wealth Enhancement among early participants.
• BNY Pershing plans to connect advisors with retail clients later this year.

Room for One More? While Schwab and Fidelity have been major drivers of RIA growth, many clients were baby boomers, the oldest of whom are turning 80 this year, and the pool is shrinking, said Robb Baldwin, TradePMR founder. “If they’ve raised their hand and said, ‘Hey, I want an advisor,’ it’s more than likely already happened,” he told Advisor Upside. He added that Robinhood and TradePMR aim to refer Gen Z and millennial clients, who already make up most of Robinhood’s 27 million-customer base. We suppose that’s a good headstart.