Shares of Robinhood Markets (HOOD) rallied as much as 4% in after-hours trading on January 29. The surge followed news that the U.S. is considering giving the fintech platform a key role in overseeing the new “Trump Accounts” being created for millions of children. According to Bloomberg, a selection is expected soon, with the Treasury Department eyeing up to three companies as initial trustees, including banks and nonbanks.
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Interestingly, Robinhood has already started internal preparations in case it is selected as a trustee, according to people familiar with the matter. Meanwhile, some major brokerages like Fidelity Investments and Vanguard Group are not on the initial candidate list.
What Are Trump Accounts?
President Donald Trump introduced Trump Accounts as part of his One Big Beautiful Bill Act. The program seeds $1,000 individual retirement accounts for children born from 2025 through 2028. These tax-advantaged savings accounts are aimed at promoting long-term savings for goals like retirement, education, or homeownership.
These accounts will be invested in U.S. stock index funds and locked until the child turns 18. The Internal Revenue Service (IRS) said that the funds should have no annual fees and expenses of no more than 0.1%.
How Will Robinhood Benefit?
As a prime trustee, Robinhood could earn billions of dollars in new assets to manage. Although customers will have the option to transfer funds to new providers, initial trustees could gain early access to fund launches, potentially managing billions in new assets and attracting customers for additional products. However, onboarding a broad range of clients, many of whom may be unfamiliar with similar investment funds, presents a significant operational challenge, requiring robust customer support systems.
Robinhood CEO Vlad Tenev previously said the company has been “very engaged” in the Trump Accounts process since the start and also attended a White House event focused on the initiative. In December, he told the President that Robinhood could provide the technology and resources to make the accounts “as robust and intuitive as possible.” He had also stated, “I think this is super important, particularly now, because getting people from a young age to buy into our free-market system and be owners of America. I think that could solve a lot of the problem.”
Importance of Secondary Players
Notably, some of America’s biggest banks like JPMorgan Chase (JPM), Wells Fargo (WFC), and Bank of America (BAC) have expressed interest in secondary roles for Trump Account rollovers rather than serving as initial trustees. They see it as a simpler and less costly way to be involved and gain access to millions of new customers. Spokespersons for Fidelity and Vanguard said their firms are working with the administration to ensure customers can access rollover accounts beyond the initial providers.
Bank of America said that it is continuing to engage with the administration on the best way to make Trump Account rollovers accessible to its clients. It is also going to offer Trump Accounts, with matching and pretax contributions, to eligible employees.
Is HOOD a Good Stock to Buy Now?
On TipRanks, Robinhood stock commands a Strong Buy consensus rating based on 15 Buys and four Hold ratings. The average Robinhood price target of $154.94 implies 53% upside potential from current levels. Over the past year, HOOD stock has surged over 91%.
