Robinhood is one of the best advisor recruiters, here’s why
Robinhood Financial is stepping up its recruiting activity for financial advisers, entering the top 20 incumbent firms by pulling up to 40 experienced and licensed advisors from competing firms since the start of the year, according to InvestmentNews‘Advisers on the Data Move.
The majority of Robinhood’s advisor hires this year were from Fidelity Brokerage Services (35%) and TD Ameritrade Inc. (25%), the data showed. A handful of advisors were recruited from other wire houses and brokerage houses, including Charles Schwab & Co., Merrill Lynch, Pierce, Fenner & Smith Inc., Vanguard Marketing Corp. and Morgan Stanley, among others.
Robinhood’s recruiting activity in the first four months of this year is a stark contrast to previous years. The free online trading app recruited 52 advisors for the whole of 2020 and only eight advisers in total in 2019. The startup is now ranked 17th in the top 20, ahead of Commonwealth Financial Network, Rockefeller Financial and Purshe Kaplan Sterling Investments .
Robinhood plans to double the number of full-time registered representatives throughout 2021, a company spokesperson said. Robinhood has attracted a total of 100 advisers from other companies since 2019.
“This year Robinhood has seen a significant increase in interest and activity on our platform and we want to support all of our clients through this rapid growth,” the spokesperson said. “Robinhood uses qualified and trained Chartered Financial Representatives to provide efficient response times and meet the needs of our customers.”
To be clear, Robinhood is not an investment adviser and does not offer financial advice, the spokesperson said. These advisor recruits will not be used to provide financial advice, but rather customer service.
“We are increasing our number of financial professionals registered with FINRA to help our clients resolve their brokerage account issues,” the spokesperson said.
Over 10 million new brokerage accounts opened in 2020 as traditional investor interest skyrocketed during the pandemic and Robinhood claimed 27% of all new DIY account openings, more than any other business in Satisfaction of JD Power’s US self-managed investors for 2021 study.
The number of Robinhood users is currently 13 million.
The roles of these advisors, with job titles ranging from customer experience representatives to options support specialists, include phone support via a new in-app contact feature where customers can ask. speak with a registered financial representative by phone for issues related to options trading, account security, and clients needing assistance with transfers, such as withdrawing money, and selling issues.
Robinhood has opened new offices in Tempe, Arizona, Southlake, Texas, and Denver to create additional customer support centers and continued to grow its customer support team in Lake Mary, Florida and Charlotte, North Carolina.
“The expansion of our customer support teams is being developed in tandem with our continued investment in expanding information and training resources to help customers learn more about the markets and invest and take more informed decisions, ”the spokesperson said.
Robinhood’s increase in new hires is likely one in a series of moves to grow its business, repair damage to its reputation and appease regulators ahead of its IPO, said Jeremy Belfiore, CEO by Trusted Visions Placement & Consulting. Robinhood is also planning to create a platform for users to buy IPOs, including its own.
“Robinhood is doing everything it can to get more, I wouldn’t say regulated, but it has more policies, procedures and infrastructure in place to ban things like the GameStop Frenzy,” Belfiore said.
As its market share grew, its strength in digital channels and value for fees was offset by poor performance in trust, people and problem-solving, according to JD Power. Robinhood found itself at the center of the GameStop stock market surge in January and February of this year, causing outrage and skepticism from customers and even US political leaders.
Robinhood is likely leveraging its recent injection of capital to add a significant number of new hires in functional areas that should help the company improve its product, customer training and image, said Sophie Schmitt, senior analyst at Aite Group.
“Adding a human-focused customer service channel, coupled with technology to evolve this service, will help the company become more proactive in customer education and disclosure, especially before investing in options, ”she said.
As for the type of advisors who are drawn to Robinhood’s customer service centers, it is probably the advisers who have a hard time doing it on their own in large, established brokerage houses where fees and commissions are the way. an advisor makes money, said Jonathan Henschen, president. by Henschen & Associates. “The advisers who would be interested in Robinhood are the ones who want a stable salary.”
Danny Sarch, founder and owner of Leitner Sarch Consultants, a wealth management recruiting firm, has confirmed that no advisor with a well-established business portfolio will move to work at Robinhood.
“It is right that Robinhood needs people made redundant in order to answer questions to start working. [call center] business, ”Sarch said. “But that’s not the same as when Morgan Stanley hires a UBS advisor – they’re two totally different types. These are just licensed people looking for a decent paid job with a new name. “