Robinhood's custodian platform TradePMR will reduce interest rates on margin and securities-backed lending to as low as 4.25% beginning July 1, marking a direct challenge to legacy custodians in a market where Charles Schwab reported 85% growth in similar lending products earlier this year. Kate Mapstone, head of RIA Strategy at Robinhood Markets, announced the rate cuts at the firm's advisor conference in Washington, D.C., on Wednesday, telling attendees that Robinhood's retail margin balance had grown more than fourfold in two years after introducing lower rates. The new RIA rates will vary based on the bank call rate and balance size, Mapstone said on the sidelines of the conference.
TradePMR CEO Robb Baldwin framed the rate reduction as a competitive necessity in an industry where advisors increasingly shop for favourable lending terms. "This has become a serious solution to offset the possibility of having to sell assets for a tax event or purchase," Baldwin said. "There are a lot of people who compete for larger balances for asset-backed loans, and we get that industry-wide that some of the most sophisticated advisors out there are really shopping for good rates, and we want to be competitive." Robinhood currently offers tiered margin lending rates ranging from 5.00% to 3.95% on its retail platform, according to its most recent rate schedule.
The rate cuts arrive as TradePMR passes its one-year anniversary under Robinhood ownership and positions itself against Schwab and Fidelity Investments for a larger share of the RIA custody market. Earlier this year, Schwab CEO Rick Wurster said the custodian was leaning further into its lending capabilities for RIAs after seeing 85% growth in originations in its pledged asset line, which allows borrowing against non-retirement assets. TradePMR's move suggests the custodian space is entering a new phase of price competition on credit products that have traditionally carried wide spreads.
Beyond lower borrowing costs, TradePMR is rolling out a forgivable loan program designed to help RIAs fund advisor acquisition and succession-planning transactions. Baldwin said on the sidelines of the conference that the firm had already made a few loans and had a strong pipeline of interest. "We've introduced this by email already to advisors, but we're educating them more about it today," he said. "I spoke with some advisors about it last night, and they were really excited about what they want to do with it to grow their business." The program represents a departure from traditional RIA financing, where advisors typically rely on banks or specialty lenders for succession capital.
The firm is also launching a high-yield cash savings option for advisors to use within client portfolios, which Mapstone described as a response to fintech companies that have offered meaningfully higher rates on cash for years. "We know that fintech companies have offered meaningfully higher rates on cash savings for years, while clients' cash or traditional brochures continue to earn next to nothing," she said. "This is an area ripe for disruption as we continue to build our capabilities for advisors." The cash product will roll out alongside a client referral program going live next week to 5,000 clients, according to Baldwin.
Steve Quirk, chief brokerage officer of Robinhood Markets, positioned the suite of products as part of a broader strategy to deepen relationships with advisors and pass economic benefits through to their clients. "The more of a relationship that we have, the easier it becomes for us to deliver economic benefits to them, because it's easier to find ways so that we can monetize it and then deliver more back to them, and then their customers can benefit," Quirk said on the sidelines of the conference. He contrasted Robinhood's approach with that of Schwab and Fidelity by emphasising that TradePMR does not offer proprietary products or compete against advisors, though he acknowledged the firm offers a concierge service for self-serve clients seeking help.
Pat Dunn, TradePMR's senior director of concierge services, told a later panel that his team would generally refer clients to third-party advisors if their needs became more complex, drawing a line between Robinhood's retail business and its RIA platform. "As the complexity ratchets up, that is the space I would look for advisors and that specialization," he said. "Who has SpaceX RSUs (restricted stock units) that they need help being managed out of? Who has crazy tax-loss harvesting stuff they need to accomplish? There are always going to be things that take a lot of care and time, and that is not a place that we are going to scale into."
The push into RIA lending and cash products follows TradePMR's announcement earlier this week that it had renewed its contract with Wells Fargo for custody and clearing solutions through 2032, giving advisors a choice between remaining with that bank or migrating to Robinhood. Baldwin said on the sidelines that once Robinhood builds out a fuller wealth custodial platform for advisors, demand will be high for what he characterised as a more tech-forward offering and the first among competitors not built on a mainframe computer. "It's amazing what Robinhood has been able to create, but now we are building out the wealth side, and it's going to take a little more time," he said. "We'll iterate until that's complete. When that becomes available, I think we'll have a lot of advisors who are going to want to be there, and I think we have more advisors who want to be there than not."