Robinhood is looking to gather some assets, rolling out a new ACAT Transfer bonus of a flat 1% of the transferred amount with no cap. That means a transfer of $10,000 in asset value from an external brokerage account will earn a $100 bonus, a $100,000 transfer will earn a $1,000 bonus, and a $1,000,000 transfer will earn a $10,000 bonus. The bonus should arrive about 2 weeks after the completed transfer, but note that you must keep the assets there for 2 years otherwise they will claw it back. Here is the full fine print.
The bonus applies to eligible assets transferred from an external brokerage account into your Robinhood non-retirement brokerage account within the offer period, from October 23, 2023 to December 8, 2023. To keep the bonus, you must keep the money you transfer into Robinhood in your Robinhood individual brokerage account for at least 2 years.
As with all similar ACAT transfer offers, you can transfer over your existing stock holdings and the cost basis should also transfer over with no tax consequences. You don’t have to move cash. You just keep your same old shares of Apple or Coca-Cola or S&P 500 index ETFs or whatever at a different broker. If you already wanted to hold cash, you could also own things like Treasury bill ETFs or ultra-short term bond ETFs and earn interest on top of the bonus, but in that case this bonus isn’t that great because you’re only getting 1% spread over two years.
I’m not a fan of Robinhood’s barebones customer service, and two years is a long time, but 1% might be worth considering for transferring some buy-and-hold index funds if you have a large-enough portfolio to offset potential transfer-out fees later. Here’s the process that I would take at Fidelity (which has good customer service):
- Open a new, separate brokerage account at Fidelity. It will show up with a zero balance.
- Call Fidelity and transfer a little over $100,000 (or whatever number works for you) worth of an index ETF that you already intend to own and hold for 2 years (i.e. VTI) into that new brokerage account. You can designate exactly what you want transferred over. Keep track of the tax basis, just in case.
- Perform a full ACAT transfer of that new, separate brokerage account over to Robinhood. Fidelity does not charge an outgoing ACAT transfer fee. An ACAT transfer can take a week or so to complete, so you won’t be able to make any sell transactions during that time. Verify that the tax basis transfers over eventually (can take a while sometimes).
- Collect the bonus, and then transfer out again after two years – if you wish. (Robinhood’s job is to convince you to stay after these two years.) Note that Robinhood charges a $100 ACAT transfer out fee. You’ll have to either wait for another transfer promotion that reimburses that fee, or consider it a cost of the bonus.
During a conversation with a Fidelity rep about a transfer last year, I heard a memorable quote: “No, we won’t charge you a fee when you transfer out, and we won’t charge you a fee when you come back.” In other words, they are confident enough that they know you might leave for whatever reason, but many will eventually come back.
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Can you clarify why you need the new account at fidelity?
It’s just a clean way to separate out a specific portion of your portfolio.
What are your thoughts on Robinhood’s safety as a business, from bankruptcy and hackers? At one point I was concerned because I read there was no way to contact a human by phone in case of a problem with your account. Then weren’t they very close to going bankrupt at one point due to meme stocks and short selling?
Granted there is limited insurance against bankruptcy, but that process can take an incredibly long time. Plus, AFAIK, SIPC insurance doesn’t cover theft/hacks.
Do you believe Robinhood is a safe place to store your life savings?
Would I put my life savings into Robinhood? No. As I said, I don’t like their customer support and overall I wouldn’t put my entire portfolio into anything using Apex Clearing. Would I park some stuff there temporarily that doesn’t create complicated 1099s or K-1 forms? Probably.
Do I worry about bankruptcy? Not really. If you own 100 shares of VTI, you’ll still own 100 shares of VTI if they go bankrupt, even if those shares are worth more than $250k or whatever the SIPC limit is.
Do I worry about hackers? Sort of, I suppose, but mostly this would be from someone phishing your account password and that could happen with anyone from any broker.
I see what you are saying about customer support. I went to contact them yesterday, and their chat system – the only way to contact them other than insecure email – says “Our service support team is experiencing longer than normal wait times. Thank you for your patience.”. The problem is, they won’t even put you in the queue to chat with someone; they just kick you out. It is still like this 18 hours later.
Thanks for blogging about their transfer offer, but I think it is too much risk, especially for a 1% return over 2 years. A company that does not operate well can be costly.
Actually, I might be wrong about them refusing to put you in queue. It may just be a very confusing website, possibly designed to discourage usage of customer support. Still seems risky though.
Just extended to January 31 2024
Considering moving everything over to get the 1% bonus, but will be exceeding SIPC limits. I don’t understand how to interpret the “additional insurance policy”: https://robinhood.com/us/en/support/articles/how-youre-protected/. Does this mean I am covered up to $1billion in assets, up to $50 million, or neither of these things?