Investing App Robinhood Expands with Retirement Account Options

Robinhood’s retirement accounts are diversifying its revenues and widening its customer base.

That’s been the popular investing app’s experience in the months since it expanded its offerings with the launch of traditional and Roth individual retirement accounts, the Wall Street Journal (WSJ) reported Friday (July 14). The company is also offering a 1% match to any deposit into the account to incentivize customers.

Sam Nordstrom, Robinhood Retirement product manager, said, per the report: “Robinhood Retirement works for us and for customers, both passive set-it-and-forget-it investors and folks who want to trade more actively.”

The retirement accounts offer trading in exchange-traded funds and stocks and have no percentage fee for retirement assets. This means Robinhood can continue offering free services, which is a key selling point.

Robinhood isn’t necessarily getting a steady revenue stream from its retirement accounts but aims to find an offering that can generate revenue without replicating the rest of its business, the report said.

With retirement accounts, customers have to decide for themselves how they want to invest and trade in a self-directed retirement account, per the report. The accounts do not allow for trading on margin either. Lastly, Robinhood is working on creating an advisory program for its retirement accounts.

This expansion into retirement services could be a transformational moment for the public company, growing its offerings as it offers its customers added services, incentives and advantages, the report said.

Launching retirement accounts has helped Robinhood compete more directly with traditional brokerages. Other money managers and brokerage platforms, like Fidelity Investments and Morgan Stanley’s E*Trade, have been offering such accounts for a while now.

In January 2022, the company said it was planning to expand its services, focusing on three areas: “being the best place to get started investing, helping first-time investors grow into long-term investors, and continuing to serve advanced investors with the power and simplicity they need.”

In another recent move, Robinhood announced in June that it had acquired the FinTech company X1, which offers users a no-fee income-based credit card with rewards on each purchase.