How does a retail brokerage stop its customers from leaving when the markets turn south? By giving them a retirement product designed to last for decades.
Robinhood's core business has been declining ever since it went public in July 2021. It had only 12 million active users in the third quarter — anRobinhood's big profit engines have historically been options and crypto.
Options trading surges during periods of speculative fervor; it slumps at times like the present, when investors are more interested in preserving capital than getting rich quick.Robinhood's retirement account is aimed primarily at workers in the gig economy, who don't have an employer offering a 401 plan.Robinhood is promising to add an extra 1% to all contributions.
The theory, says Steve Quirk, Robinhood's chief brokerage officer, is that any match at all — even if it's small — is generally enough to nudge people to start saving for retirement. When employers offer matching on 401 plans, bigger matches don't generally result in greater participation than smaller ones.Soon, says Quirk, Robinhood will start allowing people to transfer over their 401 balances — but it won't offer a match on those.
The product might be good in terms of building loyalty, but don't expect it to contribute meaningfully to Robinhood's bottom line any time soon.
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