Robinhood partners with Capitalize for seamless 401(k) rollovers
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Robinhood Markets, one of the leading social trading platforms, has announced a partnership deal with Capitalize. The partnership will support the rolling over of retirement accounts by allowing traders to locate and transfer their existing 401(k) retirement accounts into Robinhood’s individual retirement accounts.
Robinhood partners with Capitalize
Robinhood rose in popularity among retail traders because of its commission-free trading features. The platform has been expanding to other sectors, and in 2022, it launched Robinhood Retirement. The Robinhood IRA offering has attracted nearly 500,000 customers, signaling massive adoption.
Under the partnership deal, the Robinhood trading app will be available on the Capitalize IRA marketplace. Robinhood has also introduced an extra 1% on each dollar that customers transfer from other retirement accounts to its platform. The offer is available until April 18.
According to the CEO of Capitalize, Gaurav Sharma, US citizens faced significant challenges in consolidating their retirement savings because the rollover process was outdated. Sharma noted that Robinhood recognized the challenge and was working to ensure users could save effectively for retirement.
The Capitalize enterprise rollover solution has become increasingly popular since its launch in 2021. Multiple IRA providers have adopted the solution. This solution combines proprietary technology and large-scale offerings to allow people to access and fund their IRAs.
There has been a significant increase in the number of Americans that are either cashing out their 401(k) too early, while some abandoned them. A study by Capitalize noted that over 24 million 401(k) accounts were abandoned by previous employers. There is also a significant challenge in locating and transferring assets in case of a change in employment.
Robinhood reports a 31% decline in monthly active users
As Robinhood expands its product offerings, the trading platform faces the challenge of declining numbers of monthly active users. These users declined by 31% year-over-year to 12 million. However, active users increased by 600,000 from the 11.4 million reported during the previous month.
Other metrics in the trading app have also declined, including the total value of assets under custody. AUC declined by 14% to 74.7 billion yearly. However, the AUC witnessed a monthly recovery of 20% to $62.2 billion.
The trading app is also facing pressure from US regulators. The brokerage platform made a filing disclosing an investigative subpoena that was issued by the US Securities and Exchange Commission (SEC). The subpoena revolved around inquiries made by the firm on cryptocurrency listings.
The SEC has been cracking down on the cryptocurrency sector following the failure of several crypto firms in 2022. The subpoena issued to Robinhood relates to cryptocurrency listings, custody, and other operations on the platform.
The other crypto trading platform also targeted by the SEC recently includes Kraken, with the regulator issuing a cease and desist order. The SEC also halted the issuance of the BUSD stablecoin by Paxos. The SEC also issued a Wells Notice to the Coinbase exchange in anticipation of enforcement action.
