Deals & People November 20, 2024

Robinhood to Acquire TradePMR, Expanding Into RIA Wealth Management

The firm known for stock trading will connect users to financial advisers, expanding further into financial services after entering retirement savings about two years ago.

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Robinhood Markets Inc. has announced an agreement to acquire Trade-PMR Inc., a custodial and portfolio management platform for registered investment advisers, as part of its move into wealth management.

TradePMR, with $40 billion in assets under administration, is expected to bolster Robinhood’s offerings by providing fiduciary financial advisory services tailored to individual investors; the acquisition marks Robinhood’s entry into the $7 trillion RIA market.

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It is also another expansion of financial service offerings from the firm known for its stock trading app. In late 2022, Robinhood announced entered retirement savings by offering an individual retirement account with a 1% match to entice uptake. In 2023, leadership noted on an earnings call that Robinhood may also move into personalized advisory experiences—something the TradePMR acquisition can bring by way of RIA services.

The acquisition, valued at approximately $300 million in cash and stock, is expected to close in the first half of 2025, subject to regulatory approvals and customary closing conditions.

Robinhood plans to create a referral program that connects RIAs to Robinhood’s client base of more than 24 million funded accounts, according to the announcement. TradePMR’s RIAs will gain access to a new pool of potential clients, leveraging Robinhood’s technology to scale their businesses.

Robinhood stated that the acquisition aligns with the firm’s mission to cater to its predominantly Millennial and Generation Z customers, who hold about 75% of the platform’s accounts and will be recipients of what firms such as Bank of America’s Merrill have forecast as some $84 trillion in wealth transfer in the coming decades.

Robinhood plans to integrate TradePMR’s custodial platform, Fusion, into its ecosystem. Investors will be able to view their managed assets alongside self-directed investments on the same platform. TradePMR’s partnership with Wells Fargo Clearing Services LLC will remain intact.

“Robinhood’s client base is the next generation of investors,” Robb Baldwin, founder and CEO of TradePMR, said in a statement. “We believe this acquisition allows us to build a multi-generational platform that will help introduce financial advisors to this next generation.”

Citi acted as the exclusive financial adviser to Robinhood, while Lazard Inc. served as the exclusive financial adviser to TradePMR.

Data & Research November 20, 2024

HSA Growth Continues, With Plan Sponsors Calling for More Education

The latest PSCA survey revealed rising health savings account usage, with employers advocating for more education to further participant uptake.

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Employee contributions and average account balances in health savings accounts are continuing to creep up, though plan sponsors see further participant education as key to boosting HSAs even further, according to the results of the sixth annual HSA Benchmarking Survey conducted by the Plan Sponsor Council of America.

According to the survey, the average participant contribution was $2,609 in 2023, up from $2,323 the previous year. Similarly, average account balances ended the year at $6,165, reflecting a slight increase from $6,130 in 2022.

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About 30% of employers are positioning health savings accounts as part of a broader retirement savings strategy. That is down from a little more than 40% in 2022, but still ahead of 27% marked in 2021, according to prior PSCA reports.

Meanwhile, only 30% of employers allow participants to view or manage HSA balances through their retirement portals, according to PSCA.

 

Organization size (number of employees)

Position HSA as retirement strategy

1 – 49

50 – 199

200 – 999

1,000  – 4,999

5,000+

All

Yes

22.5%

24.3%

32.6%

30.1%

31.6%

27.4%

No

72.9%

63.6%

57.2%

58.9%

57.9%

63.1%

Not yet, but planning to

4.7%

12.1%

10.1%

11.0%

10.5%

9.5%

Organization size (number of employees)

Participants can view or load their HSA balance in their retirement portal

1 – 49

50 – 199

200 – 999

1,000 – 4,999

5,000+

All

Yes

32.5%

24.8%

23.5%

33.8%

36.4%

28.4%

Despite the potential for HSAs to augment retirement saving, 87% of employers reported that their HSA investment options do not mirror their 401(k) investment lineups., 87% of employers reported that their HSA investment options do not mirror their 401(k) investment lineups. However, this figure is down 5% from 2022, indicating a gradual shift in alignment.

 

Organization size (number of employees)

HSA funds mirror 401(k) funds

1 – 49

50 – 199

200 – 999

1,000 – 4,999

5,000+

All

All funds are the same

0.0%

2.3%

2.0%

3.3%

3.2%

2.0%

Some funds are the same

4.6%

4.5%

7.9%

8.3%

9.7%

6.7%

No, but it is a goal

3.1%

3.4%

5.0%

5.0%

6.5%

4.3%

No, and it is not a goal

92.3%

89.8%

85.1%

83.3%

80.6%

87.0%

The survey found that education remains a top priority for employers aiming to boost HSA participation. The dominant focus of educational efforts was explaining the tax benefits of HSAs and contribution limits. Another topic of significance targeted by HSA education was saving HSA funds for retirement.

 

Organization size (number of employees)

Priorities in Participant Education

1 – 49

50 – 199

200 – 999

1,000 – 4,999

5,000+

All

Understanding the tax benefits of the HSA

61.3%

73.3%

79.1%

81.9%

78.4%

73.5%

Contribution limits

54.0%

54.1%

68.7%

69.4%

70.3%

61.4%

Choosing between HSA and 401(k)/403(b) plan contributions

8.1%

8.1%

10.4%

8.3%

16.2%

9.4%

Saving HSA funds for retirement

38.7%

40.7%

52.2%

55.6%

51.4%

46.2%

Rollovers

6.5%

11.1%

20.9%

20.8%

27.0%

15.1%

The survey highlighted increased adoption and usage of HSAs overall. High-deductible health plans tied to HSAs are gaining traction, with 60% of employees opting for an HSA-qualifying health option when available. Among eligible employees, 90% held an HSA in 2023, with three-quarters actively contributing to their accounts.

The survey analyzed the experiences of more than 500 employers offering HSA-qualifying health options in 2023. PSCA conducted the survey in the summer of 2024.

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