Robinhood's new call centers will offer suicide prevention support after a young customer's death
Robinhood, an online trading platform for amateur investors, says its new around-the-clock phone support for its 22 million customers will include suicide prevention support, the company has told USA TODAY.
The move comes after Robinhood this summer disclosed in a Securities and Exchange Commission filing that it had settled a wrongful death suit with the family of Alex Kearns, a 20-year-old who traded on Robinhood and killed himself after seeing a negative account balance of $730,000 on an options trade and was unable to contact anyone at the firm to clarify what had occurred..
A Robinhood spokeswoman declined to say whether the 24/7 call centers are part of the settlement or to improve the company's business, which has boomed with young traders investing in stocks and cryptocurrencies.
But another company spokeswoman said that if a suicidal person calls in, that person's call will be transferred to someone at Robinhood with training in how to handle threats of self-harm. The investor then would be referred to the national suicide prevention hotline.
The company also said it was devastated by the death of Kearns, and had spent a great deal of time and resources on educational materials and customer support since the June 2020 death.
Kearns' family sued Robinhood over the brokerage's "misleading communications" that caused their son to panic over what he wrongly believed were huge market losses.
A lawyer for the Kearns family, when reached by USA TODAY, declined to comment.
Established trading houses have long had "real people" for its customers to talk with about investments during the business day, according to Bradley Klontz, a clinical psychologist and certified financial planner in Boulder, Colorado.
Robinhood, which became a publicly traded company on July 29, has made headlines for other controversies, such as blocking its users in January from buying shares of GameStop, AMC and other companies following sudden and sharp increases in value.
The company also was fined $70 million this summer over outages after regulators charged Robinhood with misleading customers about how much cash was in their accounts and the risks of loss as well as exposing them to excessively risky trading tools. The firm, for example, approved thousands of customers for options trading, but those customers did not satisfy the firm’s eligibility criteria – or their accounts contained red flags indicating that options trading may not have been appropriate for them, according to federal regulators.
'Very likely' need for support
Robinhood said its trained agents will be matched with customers to provide specialized support depending on the issue. For example, if a person calls about options, that person will be put in touch with a registered representative who specializes in options.
Customers may request a call on the Robinhood app, and the company will send a notification to let the person know he or she is next in line. The call centers in different regions of the country went live Tuesday.
In response to questions from USA TODAY, a Robinhood spokeswoman said Wednesday that the call centers also will staff experts in suicide prevention.
Terrance Odean, a professor of finance at the University of California, Berkeley, has studied Robinhood, and said it's unclear whether a 24-hour call line would have prevented Kearns from killing himself.
However, Odean said there "very likely is a need among Robinhood users for support," as the site is popular with young, first-time investors.
He added that those investors may need assistance because Robinhood encourages its customers to invest in options, initial public offerings and cryptocurrencies.
"Those are a lot more complex than simply buying a stock," said Odean, who teaches personal finance. "There is more complexity and more to get confused about."
Odean, who said he became a Robinhood customer as part of his research into the company, said he has about 30 students who are Robinhood investors. He said he repeatedly tells them to only invest "what you can afford to lose, and do it for entertainment."
Following established broker-dealers
Klontz who said he manages a roughly half-billion dollar asset management firm, wonders whether Robinhood opened call centers because of the tragedy.
He added that Robinhood is following established broker-dealers who "all have human beings you can talk with."
Klontz said that he gives his roughly 50 clients his personal cellphone number, and he's told them to call him anytime if they have questions about their money.
Klontz said he's never been called in the middle of the night, but he believes his clients have more security and confidence in him if they can reach him any time when they have concerns.
Michael Cunningham, a professor at the University of Louisville who specializes in financial decision-making, agrees that giving investors access to a live person who can answer questions is "always better than no access."
Cunningham said the service centers could be helpful if a Robinhood agent can provide solid advice and help someone who may have made a big mistake. Or they could be harmful if an agent uses the call to encourage a customer to make a costly, risky investment.
Cunningham added that most young adult investors need "more guardrails" while trading, and they should get additional advice from experienced investors such as parents, relatives or professors.
"Find someone you respect who has your interest at heart," Cunningham said. "Find people who will give you objective advice and who have a track record of success and can keep a steady hand on the tiller when the storms blow through."
He also praised Robinhood for including suicide prevention at their call centers.
"If Robinhood is preparing their people on a 24/7 line to do suicide prevention, then it's doing a public service," he said. "It's an excellent idea to focus on the emotional as well as financial well-being of a customer."