In a letter to investors, BlackRock Chairman and CEO Larry Fink (BLK) warned of a potential retirement crisis, warning that “future generations will be able to “The United States needs a coordinated, high-level effort to ensure a successful 2020.”
Vlad Tenev (HOOD), co-founder and CEO of Robinhood Markets, echoed similar sentiments, telling Yahoo Finance Editor-in-Chief Brian Sozzi, “People are taking control of their retirement. “We need to take the initiative ourselves,” he said, adding, “We kind of are.” After joining the company, he can rely on the pension plan if he works for 20, 30 or more years. ”
That's why Robinhood is expanding its suite of products. Modern credit cards are new credit cards, but they also offer savings options for retirement savings. Tenev says the field is growing. “In the first year, assets held in retirement accounts peaked at about $1.4 billion, and we just announced yesterday that we've surpassed $4 billion. So it took us about a year to reach that goal. It went from $1.5 billion to $4 billion in the first three months of this year. ”
Read the full interview with Vlad Tenev here. For expert insights and the latest market trends, click here to watch the full episode of Morning His Brief.
Editor's note: This article was written by Stephanie Mikulich.
video transcript
Brian Sozzi: As you know, I was reading this morning a great note from the Bernstein team regarding Bernstein's product launches. And I thought, Robinhood is no longer just a trading platform. How do you want investors to see your company?
Vlad Tenev: Well, I definitely think that in the long run your goal is to have all your assets stored on Robinhood. All financial assets, investments and retirement. And every time you make a financial transaction, it has to go through Robinhood. We should be able to support you in that regard. And the space, the whole space, is huge.
So even one of the new product lines that we've launched is Retirement, which we launched a little over a year ago. So in the first year, we had up to about $1.4 billion in custodial assets and retirement accounts. And yesterday, we announced that we had surpassed $4 billion. So it took about a year to reach $1.5 billion. And his first three months of this year he went from $1.5 billion to $4 billion.
So the growth has been really amazing because of the 3% match that we're giving our customers. But you put it in the context of the IRA industry as a whole. That means he has $14 trillion in assets in U.S. voluntary retirement accounts.
In other words, it's a huge market. And we're excited about the fact that we've got what we believe is the best product ever. And this one has a lot of room to run. We have more assets to offer to our customers.
Brian Sozzi: Given your focus on retirement, Vlad, it sounds like a more mature Robinhood from you. I had to listen to this. Do you agree with Larry Fink that we are in a retirement crisis, and how is your company evolving to address such issues?
Vlad Tenev: Yeah. I mean, I agree. I think it is really necessary for people to take the initiative in managing their lives after retirement.
That means we are already past the stage where you can join a company, work for 20 or 30 years, and then rely on the pension system. In some cases, people hold multiple jobs. They have multiple sources of income. They move from one job to the next.
Therefore, when you are in such a regime, it becomes even more important to have a personal retirement account and take control of your finances. And I didn't think there was a great product out there that would really make that easy for customers. I think for a really long time, retirement accounts were seen as kind of a profit center, a way to push more economics from customers into the bottom line of these big bulge bracket brokerages. So the way we address this problem and help solve the problem is by developing these great products. And can your personal retirement account actually compete with employer-sponsored plans?
And I think by making the user experience so much better with things like Match, we're stepping in to provide retirement benefits and that safety net for gig economy workers. And I think you'll find that continues to resonate. More and more customers, independent contractors, are choosing our individual retirement account products.
