Is it not kind of embarrassing that Robinhood was chosen as the trustee/broker of the 530A accounts?
Especially, as the reason was that they had a more modern infrastructure.
13 replies (most recent on top)
@2hy You seem to lack common sense. Millions of accounts with a couple of thousand in them each, become billions. And many customers for life, that you do not have to spend money to acquire.
You are obviously not in a position where financial skills are needed. Developer maybe?
Noy sure why Chuck was so eager to get these accounts, if they are such bad business! He even went to the WH begging for them.
@10c Nope! I’ve seen customers with multiple accounts amounting to a measly $678 ! Lol - you can open as many accounts as you want, but without assets to manage in those accounts we get $0. It’s the assets under management (AUM) that drive revenue.
@11h There is a term for your reasoning: "sour grapes"!! LOL!
Missing out on the 530A accounts may have been one of the largest miscalculations in CS history.
To make it even worse, the decision to go with Robinhood was based on the fact that they had a better platform!
@18z Not what they said
@11h How many of those 7 million accounts and counting will become the next 5 or 10 $100 billion customers? 7 million under 18 account holders... My guess a few might be future entrepreneurs....
Nearly two decades of locked up AUM growing, maybe that is peanuts to Chuck but it is two decades of a percentage of those 7 million interacting with the robinhood platform regularly. I guess when you frame it this way, it is a scam and embarrassing..... who would really want 2+ decades of future customers....
@11h If the accounts are so undesirable, why was Chuck lobbying so hard to get a slice of them?
And, why spending so much money on recruiting teenagers to start investing accounts with Schwab?
@10c We measure AUM and accounts. But it’s better to have 10 $100B accounts than 100B $10 ones.
A sticky $10 account is like a melted lollipop under the car seat in Dallas. It’s not going anywhere. But you don’t want it.
@tw You probably do not work in the financial industry. Of course, the number of accounts matter. There is a fair amount of "stickiness" in the industry. Customers do not change companies easily, and they tend to stick with the company they started with. Capturing this number of young customers without any marketing is a dream scenario. Look at how much money Schwab is now spending on trying to sign on teenagers.
Chuck's was brownnosing hard to get the business. It did not work.
@tw EDIT:
Typo: $12-13 trillion
@cr Not sure the # of accounts really matters. In fact, might be more expensive to have more accounts like those.
Here's the more important metric.
Assets:
Robinhood: about $369 billion
Schwab: about 12-23 trillion. Schwab adds more assets in a year, than Robinhood has in total.
You make money with assets, not the # of cutomers.
@ab I agree that these accounts are a scam. Anyone that puts any money (except for the free money) into a 530A account has been had.
That does not deny the fact that Schwab REALLY wanted, and was planning on, getting a fair share of these accounts.
Robinhood basically got 7 million (and counting) customers for free. Many of which will stay with them for the foreseeable future.
It would be more embarrassing if they were associated with those accounts
It's surprising given how Chuck puckered up. But these accounts are also a scam and the longer Schwab isn't associated with them the better.