This week, Robinhood announced its acquisition of TradePMR, marking its entry into the RIA custodial space. As someone who has navigated this exact terrain with Altruist, I believe this move is a fascinating development—not just for Robinhood but for the financial advisory community at large.
The custodial space isn’t for the faint of heart. It’s complex, with massive operational demands that go far beyond what’s required to serve retail investors. The technology architecture is far more demanding with multiple personas and dozens of third party integrations required to be relevant. It’s also ripe for disruption. Advisors have long been underserved by legacy custodians who prioritize scale over innovation. That’s why we’re building Altruist—to reimagine what’s possible for advisors and their clients.
A Long Road Ahead for Robinhood
Having undergone two custodial conversions at Altruist over the past 2 years (our own conversion from Apex to Altruist Clearing, and more recently, the conversion of Shareholder Services Group to Altruist Clearing), we understand better than most what it takes to build a modern RIA custodian and integrate an acquired custodial platform.
While Robinhood claims it will continue a working relationship with Wells Fargo, the fact is that it will need to move the assets and clients to a single clearing platform for the economics to make sense—a process that could take 2–3 years. Robinhood will need to build a new advisor front end, a new client front end, a new middle office, and infrastructure to support countless workflows and about 50 account types that aren’t critical for Robinhood’s retail offering but are essential for advisors—including trusts, solo 401(k)s, UGMA/UTMAs, and more.
Assuming a transition of TradePMR assets off of Wells Fargo is in the cards, this creates an additional challenge for Robinhood: convincing advisors to join a platform knowing there will be a significant account conversion down the road. Advisors are wary of the disruption and uncertainty that come with moving clients and accounts, which makes it even harder to attract new business during this period.
During this time, they’ll also need to address brand perception issues (I haven't seen "Dumb Money," but I heard it was good). Robinhood’s strengths in retail trading—low fees, gamified experiences, and trend-chasing mass-market appeal—don’t necessarily translate to the security and stability-oriented advisory space.
Last, in addition to completing a conversion, strengthening their brand perception with the advisor audience, and building an immense number of new products to meet the needs of advisors and their clients, they will have to develop a completely new go-to-market strategy.
But Robinhood is a highly innovative, well-capitalized company. They have strong leadership and a super talented team. They will figure it out.
The Stakes
In my view, Schwab and Fidelity will become relics over the next 20 years. They’ll be replaced by companies like Altruist and Robinhood.
For Robinhood, the next few years are about laying the foundation—building a platform to serve RIAs, earning the trust of advisors and clients, and navigating the challenges of an inevitable conversion. If they stay the course, they’ll emerge as a formidable competitor and the innovative spirit they bring to the industry will be a benefit to all.
At Altruist, we’re proud to already be delivering on this vision. We’ve built the infrastructure, gained the trust of thousands of advisors, and proven what’s possible. The transformation advisors have been waiting for isn’t on the horizon—it’s here today. While we couldn’t be more congratulatory of Vlad Tenev, Robb Baldwin, and their respective teams, we certainly won’t be sleeping on our opportunity to build an even more dominant lead while they try to catch up.
