Robinhood Moves to Keep Its Now Aging Customers

BY HANNAH LANG

Robinhood , the digital brokerage that channeled the meme-stock and crypto craze, is angling to keep its youthful clientele as they graduate from YOLO investing to estate planning.

The company said Wednesday it plans to roll out a slew of new services, from wealthmanagement tools and bespoke investment portfolios to bank accounts. All of them cater to Americans as they age, earn more money and navigate more-complicated financial lives. Robinhood customers’ median age has climbed to 35 years old from 31 over the past five years.

As it did with its brokerage, Robinhood is leaning into the ubiquitous presence mobile phones play in the lives of consumers. Some of its new offerings are more likely to appeal to a younger crowd;

the perks planned for bank account holders include discounted helicopter rides and home deliveries of cash that are as easy as ordering a meal on DoorDash.

The world is “moving from people who grew up needing stockbrokers and visits to bank branches to the type of people…who are growing up with the tools to independently manage their finances from home,” Vlad Tenev, Robinhood’s chief executive, told investors at an event late last year. “We’re uniquely positioned at the epicenter of this massive cultural and financial shift.”

Robinhood’s engaging mobile app had helped draw in millions of users in the aftermath of the pandemic, when a market rally and zero-commission trades captivated a new generation of traders. The company has since experienced its fair share of growing pains: Its platform was at times strained under a rush of trading activity in 2021, and its own share price tumbled after its IPO that same year. The stock pared those losses in February.

The new services are the clearest sign yet that the company is moving beyond the retail- investing renaissance of the early 2020s to set its sights on businesses dominated by a bevy of incumbent powerhouses, including Charles Schwab, Fidelity Investments and Bank of America’s Merrill Lynch.

The digitization of finance, which powered Robinhood’s success, also has pressured money-management firms of all stripes to slash the fees they charge customers. It has led the industry to turn toward more high-touch financial services, including wealth management, that remain more insulated from that pressure.

Some of Robinhood’s new offerings are only available through the company’s Robinhood Gold membership. A Gold subscription costs $5 a month, and also includes benefits like higher interest on uninvested brokerage cash and bigger matches on retirement account contributions.

For Gold members, Robinhood will charge 0.25% on managed individual and retirement accounts up to $100,000, then won’t charge management fees on balances greater than that amount— capping the maximum annual fee at $250 a year for subscribers.

The company’s new accounts aim to find the middle ground between robo advisers, where customers interact solely with a software algorithm, and the in-person visits that traditional wealth managers have long offered, said Steph Guild, Robinhood’s senior director of investment strategy and president of its asset-management division.

The feature, called Robinhood Strategies, is available for Gold subscribers starting Wednesday, and will roll out to all customers next month.

Coming later this year is Robinhood Banking, with checking and saving accounts that executives said are designed to simulate the “luxury” experience of private banking services, typically reserved for high-net-worth clients.

Users will be able to book a private jet or helicopter ride at a discount, and buy tickets to exclusive events like the Oscars or the Met Gala. That is in addition to more-traditional benefits like estate planning, tax advice and an in-app feature that tracks your net worth.

Robinhood also is launching a new artificial- intellig e n c e investment tool later this year called Robinhood Cortex. The tool can offer explanations for a particular stock’s rise or fall and suggest options trades based on a user’s expectations for a stock price.

Tenev has long signaled his plans to offer a wider array of financial services at Robinhood, beginning in 2023 when the brokerage started providing retirement accounts.

Last year, the brokerage launched its first credit card, offering 3% cash back on all purchases. More than 100,000 customers have the card now, the company said, and nearly three million more are on a waiting list.

At the same time, Robinhood has waded into edgier parts of the trading world: Robinhood recently unveiled a new prediction markets hub that will allow users to trade event contracts on the Federal Reserve’s coming interest rate move and the outcome of this month’s college basketball tournaments. Sports contracts in particular have attracted scrutiny from regulators and others in the industry, with critics arguing the product blurs the line between investing and gambling.

Tenev also has emphasized that Robinhood is pursuing a multipronged growth strategy: to be both the top platform among active traders and the No. 1 financial-services provider for the next generations of investors.

The ultimate goal, the chief executive has said, is becoming the world’s best financial ecosystem.