Ask The Compound – Episode Summary

Podcast: Ask The Compound
Episode: Is Retail the Smart Money Now?
Date: May 21, 2025
Host: Ben Carlson, Duncan Hill
Special Guest: Steve Quirk (Chief Brokerage Officer, Robinhood)

Episode Overview

This episode explores the evolving landscape of retail investing, investigating whether retail investors have become the "smart money" in today's market. Host Ben Carlson and producer Duncan Hill are joined by Steve Quirk of Robinhood to discuss the impact of technology, financial education, new investment products, and generational shifts on retail investor behavior. They field audience questions on topics ranging from buying the dip and market resilience to the influence of AI and the future of retirement accounts.

Key Discussion Points & Insights

1. Are Retail Investors the New Smart Money?

• Backdrop: Wall Street turned bearish and sold during the market downturn, while retail investors kept buying—and were ultimately proven right as the market rebounded.
• Audience Question: Is financial education finally working? Are today’s retail investors better informed and more disciplined?
• Steve Quirk (Robinhood): Robinhood now has nearly 26 million clients, with the average user in their early 30s. Over half are first-time brokerage clients.
  • Quote: "We've got a lot of new investors this decade, right?" (03:16, Steve)
• Ben Carlson: Technology and lowered barriers (like commission-free and fractional share trading) have allowed people to invest earlier and more often, and overall investor behavior is improving.
  • Quote: "I do think investors are becoming better behaved, and it's not just buying the dip when the stock market falls." (04:27, Ben)
• The rise of educational resources (blogs, podcasts, newsletters) has made practical money knowledge widely accessible.
  • Quote: "The amount of information you can get... is just remarkable." (04:56, Steve)

2. Retail Resilience: Buying the Dip and Market Behavior

• Audience Question: What happens if we see a prolonged bear market? Will the "buy the dip" mentality endure?
• Trends:
  • Robinhood's net deposits show persistent investment flows, suggesting continuous faith in markets.
  • Main source: Young investors in their wealth accumulation phase are growing their earnings and investing more.
  • Product expansion (retirement accounts, yield products) attracts both new and seasoned investors from legacy brokerages.
  • User-friendly technology gives Robinhood an edge over older platforms.
  • Dollar-cost averaging and increasing savings rates are common among users.

3. The Future of Retail Investing

• Audience Question: Will 24/7 markets, AI-driven investing, prediction markets, and options strategies redefine retail investing?
• Steve: The playing field is more level than ever—costs are down, strategies are accessible, and technology is intuitive.
  • "70% of our customers do their research and their education and look for their investments when the market isn't open." (16:07, Steve)
• Robinhood now offers 24/7 trading on a subset of stocks; global participation boosts liquidity.
• Exchanges are moving to 24/5 trading, and rapid news cycles challenge the old "market hours" paradigm.
• Prediction markets are gaining traction, allowing users to speculate on events (economic data, earnings, elections).
  • Quote: "The interest in these is really off the charts." (20:19, Steve)
  • Example: Launched contracts a week before the election—800,000 accounts opened, 600 million contracts traded.

4. Retirement Accounts & Wealth Transfer

• Acquisition: Robinhood recently acquired Trade PMR to enter the advised accounts space.
• Reason: As self-directed users mature, their needs shift towards advisory services and comprehensive financial planning.
  • "If you look at the number of assets that are self directed in the US and then the number of assets...advised...it's like three times the size of self directed." (24:49, Steve)
• Wealth Transfer: The "great wealth transfer" involves $124 trillion passing to younger generations, creating opportunities for platforms appealing both to current and future clients.
  • 70% of heirs fire their parents’ advisor, opening doors for challenger platforms.

5. Differences in Retail Brokerage vs. Retirement Account Behavior

• Investors generally take a long-term, "set it and forget it" approach in IRAs/401(k)s, while brokerage accounts are used for more active trading and experimentation.
• Robinhood incentivizes retirement saving with contribution matching—1% for most users, 3% for Gold members.
• Quote: "Yeah, that is where they typically will put...a core portfolio and they don't mess with it as much as they would on the self directed side." (26:10, Steve)

6. AI and the Future of Financial Advice

• Audience Question: When will we see AI advisors guaranteeing returns?
• Ben: Guarantees are unrealistic—but AI will soon create more strategies and make information more digestible for young, tech-savvy investors.
• Steve: Robinhood is developing in-app AI tools (e.g., "Why did the market just go down?") for real-time guidance, news aggregation, and personalized education.
  • Quote: "We're building something—you can ask that question and it'll tell you." (28:22, Steve)
• Younger generations are more likely to trust and use AI-based financial tools.

7. Cultural Shifts in Investing

• Social Media: Catalyzed financial openness and reduced stigma around discussing money and investing strategies.
• Generational Change: The surge in first-time investors, particularly via mobile apps, is seen as a positive societal shift.
  • "Even if they’re gambling or speculating...it still could be a gateway to eventually learning and realizing—like, this is not the way, we need to try something else." (32:03, Ben)
• For the first time in 20 years, U.S. household stock ownership is rising, reaching 60%.
  • "We're approaching 60%. That's where the envy of the world." (33:10, Steve)

Notable Quotes & Memorable Moments

• Opening Thesis:
  "Retail was right. Wall Street was wrong. Is retail the smart money now?" (00:00, Ben)

• On Modern Investing Accessibility:
  "Robinhood's been credited with really, this revolution of opening the doors to a diverse young client base." (03:27, Steve)

• On Financial Education:
  "It's like giving me a book on how to ride a bike. Then you put the bike in front of me and I fall over. Like, you have to do it." (05:43, Steve)

• On Buying the Dip:
  "One of these times it's going to keep going down... But I can look at the returns if I go back to 1950, and they average about 9%." (06:22, Steve)

• On Generational Wealth:
  "There's this massive, massive $124 trillion wealth transfer that's already started." (24:49, Steve)

• On Prediction Markets:
  "The interest in these is really off the charts... 800,000 accounts opened and 600 million contracts [traded]." (20:19, Steve)

• On AI in Investing:
  "We're building something—you can ask that question and it'll tell you." (28:22, Steve)

Timestamps for Key Segments

• [00:00–02:19] Opening, framing the retail investor debate
• [02:20–05:43] State of financial education & accessibility
• [05:44–09:09] Generational shifts, learning by doing, tech's role
• [09:10–13:52] Discussion on retail buying trends, Gold product, user experience
• [15:00–19:09] Future of retail trading: 24/7 markets, expanded access
• [19:10–22:28] Prediction markets and their impact
• [22:29–27:03] Trade PMR acquisition, future of retirement accounts
• [27:29–30:13] AI-powered advice and the evolving investor mindset
• [30:14–33:28] Positive shifts in financial participation, generational engagement

Conclusion

This episode makes a strong case that individual investors are more empowered, knowledgeable, and better equipped than ever before. The hosts and their guest see this as a lasting change, not a pandemic-era phenomenon, driven by a confluence of technological leaps, open access to information, and shifting attitudes toward investing. The future promises more inclusivity—with tools like AI and 24/7 markets—and greater independence for retail investors at all stages of their financial journey.