Compliance November 20, 2024

Rhode Island To Start Auto-IRA Program in 2025

RISavers administered by Vestwell is expected to begin a pilot in the spring of 2025 in partnership with Connecticut's state program. 

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Rhode Island General Treasurer James Diossa announced Wednesday that the Rhode Island Treasury will launch the RISavers Program, an auto-IRA plan for Rhode Island private sector employees not currently offered a plan by their employer.

RISavers—created by the Secure Choice Retirement Savings Program Act passed by the Rhode Island General Assembly in June—will partner with an existing similar program in Connecticut to offer Rhode Islanders access to retirement savings. Vestwell, a third-party administrator, will run the program in coordination with the state’s treasury, adding to the firm’s list of state-facilitated automatic IRA programs that includes Connecticut, Colorado, New Jersey and Oregon.

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Rhode Island’s treasury plans to launch a pilot program in early 2025, with a full program launch followed shortly thereafter. The interstate partnership with Connecticut is the second of its type in the U.S.; Colorado offers an interstate consortium of state-run plans, which includes partnerships with Delaware and Vermont.

Employees at eligible businesses will be automatically enrolled in the program but can opt out at any time. The individual retirement accounts opened under RISavers will follow the employees if they change jobs. In addition, employees will have the ability to choose their risk preference and contribution rate.

Contributions will be processed as automatic payroll deductions, with employers providing program information and processing their employees’ deductions. Matching contributions are not allowed in the program, as with other state-facilitated programs.

Connecticut launched its program, MyCTSavings, in March 2022. Nearly 30,000 Connecticut residents have saved more than $33 million with the program to date, according to Rhode Island’s announcement.

“Over 170,000 Rhode Islanders lack access to a retirement savings plan at work,” said Diossa in a statement. “With this strategic partnership, Rhode Island has taken the first step to closing the retirement savings gap. … Through this interstate agreement, we gain an experienced partner that will help Rhode Island implement RISavers quickly and administer the program efficiently.”

RISavers will be overseen by the state treasury in cooperation with Vestwell State Savings.

Rhode Island marks the 20th state to launch an auto-IRA program. State-facilitated plans have accumulated more than $1.78 billion in assets, according to the Center for Retirement Initiatives at Georgetown University.

Deals & People November 20, 2024

Robinhood to Acquire TradePMR, Expanding Into RIA Wealth Management

The firm known for stock trading will connect users to financial advisers, expanding further into financial services after entering retirement savings about two years ago.

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Robinhood Markets Inc. has announced an agreement to acquire Trade-PMR Inc., a custodial and portfolio management platform for registered investment advisers, as part of its move into wealth management.

TradePMR, with $40 billion in assets under administration, is expected to bolster Robinhood’s offerings by providing fiduciary financial advisory services tailored to individual investors; the acquisition marks Robinhood’s entry into the $7 trillion RIA market.

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It is also another expansion of financial service offerings from the firm known for its stock trading app. In late 2022, Robinhood announced entered retirement savings by offering an individual retirement account with a 1% match to entice uptake. In 2023, leadership noted on an earnings call that Robinhood may also move into personalized advisory experiences—something the TradePMR acquisition can bring by way of RIA services.

The acquisition, valued at approximately $300 million in cash and stock, is expected to close in the first half of 2025, subject to regulatory approvals and customary closing conditions.

Robinhood plans to create a referral program that connects RIAs to Robinhood’s client base of more than 24 million funded accounts, according to the announcement. TradePMR’s RIAs will gain access to a new pool of potential clients, leveraging Robinhood’s technology to scale their businesses.

Robinhood stated that the acquisition aligns with the firm’s mission to cater to its predominantly Millennial and Generation Z customers, who hold about 75% of the platform’s accounts and will be recipients of what firms such as Bank of America’s Merrill have forecast as some $84 trillion in wealth transfer in the coming decades.

Robinhood plans to integrate TradePMR’s custodial platform, Fusion, into its ecosystem. Investors will be able to view their managed assets alongside self-directed investments on the same platform. TradePMR’s partnership with Wells Fargo Clearing Services LLC will remain intact.

“Robinhood’s client base is the next generation of investors,” Robb Baldwin, founder and CEO of TradePMR, said in a statement. “We believe this acquisition allows us to build a multi-generational platform that will help introduce financial advisors to this next generation.”

Citi acted as the exclusive financial adviser to Robinhood, while Lazard Inc. served as the exclusive financial adviser to TradePMR.

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