Robin Hood’s Vlad Tenev said the new partnership with the US Treasury on so-called Trump accounts for children will increase exposure to the company among emerging investors and benefit its future growth.
On Monday, the Treasury Department announced that it had selected Robinhood, along with BNY Mellon, to help power the Trump Account, a tax-deferred sheltered investment account for children scheduled to open this summer with a $1,000 seed contribution from the government for children born between 2025 and 2028, and build an app linked to it.
Tenev, the investment app’s CEO, told CNBC’s “Squawk on the Street” on Tuesday that this is an evolution of the American dream and a key part of the company’s own mission to “democratize finance for everyone.”
“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 the company will focus on partnering with governments rather than monetizing accounts in the short term, and said there will be no fees or charges for customers.
“These are absolutely low-cost instruments and are intended to be a way to capture customer investment,” he said. However, “in the future, we may incur management fees through the ETFs that are managed in these accounts…It will be very small given the way we monetize. The way it works is that we are actually acting as a subcontractor to BNY, so we are essentially subcontracting to the government.”
Robinhood will partner with BNY to act as broker and trustee, design the app, and provide front-end and customer support, Tenev said.
“This is our first experience actually working with the government in this way,” he added. “Our goal is to make this the best product the government has ever been involved with.”
As of March 31, taxpayers had enrolled more than 4 million children in Trump’s accounts, and more than 1 million were eligible for $1,000 contributions to the Treasury Department’s pilot program, according to the IRS.
JPMorgan Chase, Bank of America, Wells Fargo, SoFi, BlackRock, Charles Schwab, as well as BNY and Robinhood, are among the companies that have announced $1,000 federal contributions for the children of their employees.
Robinhood shares rose 1% on Monday on the news.
