Robinhood’s According to Vlad Tenev, the new partnership with the US Treasury for so-called Trump accounts for children will increase the company’s visibility among aspiring investors and benefit its future growth.
On Monday, the Treasury Department announced it had selected Robinhood alongside BNY Mellon to operate Trump Accounts – tax-deferred, custodial-like investment accounts for children set to launch this summer with a $1,000 seed government contribution for children born between 2025 and 2028 – and to develop the associated app.
Calling it an evolution of the American dream and an important part of the company’s mission to “democratize finance for all,” Tenev, the investing app’s CEO, spoke to CNBC’s “Squawk on the Street” on Tuesday.
“This puts Robinhood at the forefront of the next generation … this will literally be the first investment account for millions of people,” he said.
He added that in the short term, the company will focus more on its government partnership than on monetizing the account, which will be fee- and commission-free for customers.
“These are intended to be the absolute most cost-effective tools and ways to get clients to invest,” he said. However, “we may incur management fees in the future from ETFs deployed in these accounts… these will be very minimal given the way we monetize them. The way it works is that we actually operate as a subcontractor to BNY and therefore essentially have a government subcontracting agreement.”
Robinhood, in collaboration with BNY, will act as broker and custodian, design the app and provide front-end and customer support, Tenev said.
“This is the first time for us to really work with the government in this way,” he added. “Our goal is to make this the best product the government has ever been associated with.”
According to the IRS, taxpayers had enrolled more than 4 million children in Trump accounts as of March 31, and more than 1 million were eligible for the Treasury Department’s $1,000 contribution to the pilot program
JPMorgan Chase, Bank of America, Wells Fargo, SoFi, BlackRock and Charles Schwab – as well as BNY as and Robinhood – are among the companies that have announced they will top up the $1,000 federal contribution for their employees’ children.
Robinhood shares rose 1% on Monday following the news.
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