FinTech Social Media and Updates

Robinhood's Exit Fee Demands 4× Referral Revenue

Interesting highlight in this article about the new Robinhood Advisor Network (custodial referral program via TradePMR that pays a 25%-of-fees rev-share for the referral): "For an RIA that ends participation in the program, they will also pay a one-time fee of four times the revenue received from those referrals for the preceding 12 months." If I'm reading this correctly, it means that on top of the 25% rev-share back to Robinhood, firms would effectively have to "buy" the client away from Robinhood for 4X revenue if the firm ever wants to leave Robinhood (and thus leave the referral program)? On the one hand, I get that Robinhood (or any custodian) doesn't want to refer clients for a rev-share and then have the advisor leave after just a year or few and keep the remainder of the client's lifetime relationship. That's not a healthy incentive. But... paying 4X revenue is more than the valuation of that revenue for most advisory firms in the first place (especially if they're only keeping 75% of the revenue because 25% of it is already paid back to Robinhood as a rev-share)? Which would seem to effectively "bind" the firm to Robinhood indefinitely, or be compelled to "buy out" their Robinhood referrals relationship for more than the enterprise value of that client to the firm in the first place? Reasonable restriction to prevent firms from gaming the system, or too restrictive for firms that might have reasons someday to no longer work with Robinhood and be 'financially bound' if they previously received Robinhood referrals? What do you think? https://t.co/eDoZ1mY046