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Robinhood Begins Pulling Customers From Larger Brokers

Robinhood has reportedly begun enticing customers from more established brokers like Fidelity and Charles Schwab.

The online trading platform has received about $1.1 billion in account transfers since Oct. 23, the day it began offering a 1% match on transferred brokerage accounts, the company told The Wall Street Journal (WSJ) in a report published Saturday (Dec. 16). 

According to that report, customers had transferred $350 million and $375 million in the second and third quarter, respectively, to Robinhood from other brokerages, according to company filings.

The WSJ says many accounts that have joined Robinhood thanks to the 1% promotion are significantly bigger than the average account on the platform, with more than 150 account transfers exceeding $1 million. Customers have primarily been coming from brokerages like Charles Schwab, Fidelity Investments and the Morgan Stanley-owned E*Trade.

The report said Robinhood still has fewer assets on its platform compared to the above-mentioned companies, whose assets are in the trillions. However, the shifts are happening following a season of consolidation in the brokerage space.

“There is some disruption happening in the space right now, probably the biggest disruption I’ve seen in my life,” Steve Quirk, Robinhood’s chief brokerage officer and a former executive TD Ameritrade, said of the industry consolidation. “For us, it’s an opportune time.”

Charles Schwab said that it has seen “absolutely no meaningful flows” moving to Robinhood and that most of its new individual-investor clients were under 40 years old.

“Younger investors may get started with smaller startup firms, but they often move to firms like Schwab as their needs evolve,” a spokeswoman said.

However, Robinhood has of late begun offering products designed to widen its customer base, as its recently launched traditional and Roth individual retirement accounts.

The company is also expanding in general. Last month, Robinhood marked its international debut as it began offering brokerage services to customers in the U.K., letting them trade upwards of 6,000 U.S. listed stocks.

“Since we launched Robinhood a decade ago, it’s always been our vision to expand internationally,” Robinhood CEO and Co-Founder Vlad Tenev said at the time. “As a hub for innovation, global finance and top tech talent, the United Kingdom is an ideal place for us to launch our first international brokerage product.”