Trump Accounts Explained

A new savings idea for kids can be both smart and messy at the same time. We dig into the so-called Trump accounts, a proposal aimed at children born between January 2025 and December 31, 2028, and why the core concept is hard to argue with: get money invested early, let compounding growth work for years, and give families a real runway for college costs, a first home, and long-term financial security.

Then we zoom in on the part that raises eyebrows. We talk through how the accounts are reportedly structured, including Treasury’s use of BNY Mellon and how Robinhood Securities ends up serving as trustee, custodian, and broker. That setup triggers the big questions investors should ask about any long-term vehicle: Who controls the plumbing? Is the selection process fair? Do families get meaningful choice later, or does the default create “stickiness” that keeps assets on one platform even when better options exist?

We also tackle what’s actually inside the accounts today and what could show up tomorrow. Passive index funds and ETF-style investing sound sensible, but custody risk and platform risk can matter just as much as fund selection. From there, we explore the blurry boundary between investing and collecting, including crypto ETFs, stablecoin, meme coins, and how regulators like the SEC, CFTC, and FINRA influence what becomes “approved” inside retirement-style accounts.

If you care about child investing, custodial accounts, IRA rules, and the real-world incentives behind financial products, this conversation is for you. Subscribe, share the episode with a friend, and leave a review, then tell us: would you take the free money and opt in, or stay away until the structure changes?

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Disclaimer - These podcasts are not intended as investment advice. Individuals please consult your own investment, tax and legal advisors. They provide these insights for educational purposes only.

Transcript

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Welcome And The Big Idea

Steve Davenport 0:26

Hello everybody and welcome to Skeptic's Guide to Investing. Today I'm here with Clem Miller, and we're gonna start talking about Trump accounts. We know we need to put Trump's name on everything he does, so in every building he touches. So let's talk about what we're doing for children born between January 2025 and December 31, 2028. So Clem, tell me, why would we name these accounts Trump accounts versus just calling them IRA accounts for for babies and young children?

Clem Miller 1:08

Well, because to say two reasons. One, it's a short way of talking about it, right? So instead of saying IRA accounts for young children, that's a mouthful, right? Yeah, , and to call a Trump account is short. The other thing is is that you know, it's he as you said, he wants to put his his branding on basically everything. So, you know, this could be like Trump water, Trump, you know, everything, right? I mean, if he were if he you know made pizza, they'd be called Trump Pizzas, right? Everything is everything has to be Trump, and so it's Trump account. Okay.

Steve Davenport 1:50

Anybody thought about making the New York Harbor the

Why The Name “Trump Accounts”

Steve Davenport 1:53

Trump Harbor?

Clem Miller 1:55

not that I'm aware of it, but I know that he's been talking about Penn Station in New York being renamed Trump Station. He's been talking about Dulles Airport outside DC being called you know Trump Trump International Airport, something like that. there already is a Trump airport now down in West Palm Beach. Okay. He's going and then of course yeah, I don't know if you saw yesterday the the the quasi-commemorative Trump dollar came out. so I don't know, did you see that? No, I didn't see that. Yeah, it's it's actually technically legal tender, , but you know, which some commemorative coins are, but you know, it's largely a you know, it's largely a commemorative coin. I mean, for one thing, it costs sixty-one dollars to buy 25 dollar coins. Okay, and it's not because they're gold, you would think they'd be gold, they're gold colored. they're not even gold plated. They're like I saw a combination, I saw a composition analysis, and it was like nickel, zinc, you know, all the stuff that everything else is made out of.

Steve Davenport 3:18

Okay. Well, I mean, I guess I I think of this as you know one of those areas that will definitely keep you around for a long time if he creates these accounts now. Can you tell me a little bit about how these work differently or similarly to I understand that Michael Dell's making a big contribution to them, and other companies are starting to think about whether the employee, if it's the employees, their employees, they'll match some funds in it. I mean, is this going to end up being a significant part of turning you know college expenses and your first home into more reasonable ways to get it?

Clem Miller 4:02

So let me say that the idea of a Trump account, I think the idea is a really, really good idea. Okay, I think it's a great idea. I think that putting money away

Branding And The Trump Dollar

Clem Miller 4:19

when you're young, okay, , very young, and then having it compound over time is really an excellent idea. So I think that's I think that's great. And you know, the states, you know, have already done that with their 529 programs for education, for college education. So it's really just a federal version of a of a 529 plan. , but I would say a bit more maybe a bit more privatized, let's put it that way.

Steve Davenport 5:00

Okay, well tell me what is going on with these accounts in Robinhood. How did how did one of the most fervent users of media and crypto become the place for people to put their their kids' savings? Is crypto the answer for long-term savings?

Clem Miller 5:22

Absolutely not, but crypto is not being put into, well, at least not yet, okay, into the Trump accounts. So let me let me just describe this a little bit. So the way they structured this, , the way they've structured the Trump accounts in terms of the investments is that you have the Treasury Department hired BNY Mellon as a financial advisor to oversee the whole process. So they contracted with BNY Mellon to do that. And because and under the law, a financial advisor to the Treasury Department does not have to be a bid process. There doesn't have to be it's a no-bid process. So they could just select BNY Mellon. But what Treasury did was they told BNY Mellon, , we want you to, I mean, it looks by all appearances, right? And nobody has the actual paperwork, but BNY Mellon, when they did this contract with the Treasury Department, added Robin Hood securities, right, as a partner in that contract. So the question is, you know, BNY, is it really the , you know, how how did this is the way Robin Hood securities got interjected into the whole process because BNY Mellon, who had the contract, inserted them into the contract with the government, with the Treasury Department. So is that, you know, is that is that legal? Is that acceptable? I mean, if I, you know, if if you if you were, you know, let's say you were the defense department, Steve, and you were contracting with me, Raytheon or RTX now, for Patriot missiles, and if I said , oh, I want to put I want to put Y contractor into my our contract, like directly into the contract, not as a subcontractor to me, but directly into our contract, how would you feel about that? No, you

Compounding Early And 529 Comparison

Clem Miller 7:42

wouldn't feel good about that, right?

Steve Davenport 7:44

It depends. If I was trying to promote stable coin that I'm associated with, and it might help me, then I always look for the secondary and tertiary relationship here.

Clem Miller 7:57

Well, and that's what's going on here is is BNY Mellon stuck Robin Hood Securities into this contract that they have this no-bid contract. And so naturally what happened was you had a lot of people. now, what let me just say first, what is the role of Robin Hood Securities? Robin Hood Securities is the trustee for the trunk for the Trump accounts, it's the custodian for the Trump accounts, and it's the broker for the Trump accounts. All three of these roles are all embedded in Robin Hood Securities. And so they are at the center of this whole Trump account universe, so to speak. And , and so that's my that's the issue here is why, you know, why should they be at the center of this? Now, what's what's the consequence of that, of them being at the center of this? The the consequence is that is that what happens is that at when p when kids turn 18 with the Trump accounts, they have the you know, these Trump accounts automatically turn into regular IRAs. Okay. Okay. And so they have at that time, they have the option of being able to switch the IRA to a different um you know, trustee custodian, etc. So in other words, they don't have to have a Robin Hood IRA. They could continue with Robin Hood, but they could also go to you know another bank or whatever for an IRA, right? So another another broker for an IRA.

Steve Davenport 9:51

Yeah.

Clem Miller 9:52

they could, but what happens is that a lot of banks are saying, well, wait a minute, aren't you giving Robin Hood an unfair advantage? Because they're in this to begin with, they're gonna get all these kids and their parents used to the Robin Hood app, , used to the whole Robin Hood universe. And so why would you think that they're going to you know switch to another to another IRA, you know, move the money, you know, there's gonna be stickiness, there's gonna be friction, right? Right. So what essentially Trump and company are doing is they're giving Robin Hood an unfair advantage that is going to last years and years and years.

Steve Davenport 10:40

Yeah. No. I hate to ask this question because I know that between you and me, money doesn't really matter, but are there any fees in these accounts?

Clem Miller 10:58

I believe that there are tiny, tiny fees associated with these accounts, right? Okay. , so I don't know exactly what those fees are, but I don't think they're they're very large, right? but how can there not be fees, right? Somebody's gonna

How Robinhood Got The Role

Clem Miller 11:19

pay the the manager of this index fund. Now the the good thing so far is that apparently they they are just like passive index funds, right? They're you know variations of S P. I saw some unusual things there that I hadn't seen before, sort of variations of S P index funds. more total market versus just SP. Yeah. I mean, I don't know if that I don't know why. I mean, I guess you could do total market, right? As opposed to the S P, but what's the you know, you know, what's there isn't that much difference really, right? But my point is this. My point is this. I'm not terribly concerned about the investment options because it's not like they're throwing crypto in there or they're throwing other things yet, okay, yet. They might sometime down the road, and that would be a problem. And so I I would, you know, watch out for that. But right now, the investment options themselves seem kind of reasonable. But my my my concern is is this. So the the American Bankers Association a few months ago wrote a letter to the IRS, and actually they wrote two letters to the IRS, and in these letters they complained about Robin Hood being selected, and they discussed exactly what I just discussed, which is the you know, this first mover and you know long the effect that that they're gonna have in locking this in. And then the ABA said, well, our banks are disadvantaged by this.

Steve Davenport 13:05

I'm reading the in the document here, and it says Trump accounts held at the Treasury appointed initial trustee. Yeah, which I think is funny. You wouldn't name the firm if everybody knows it's BY, or everybody knows it's Robin Hood. Yeah, Treasury appointed initial trustee just raises a question, right? Exactly.

Clem Miller 13:30

So so yeah, so they're complaining that Robin Hood was selected. and the thing about Robin Hood is that, you know, when I was researching for this , you know, to to do this this broadcast, okay, this podcast, , you know, I asked I looked into a key question here, which is that, which is, you know, what kind of experience does Robinhood have in dealing with you know large volumes of accounts? And right now they've got about 300 something billion dollars, 360 billion total assets under management, which , you know, it's not insignificant, but it's not huge, right? When you consider you know what BNY Mellon or State Street or you know BlackRock or Vanguard, you know, they've got trillions and trillions of dollars. So they've got about 360. And when you divide it by the number of accounts that Robinhood has, and we all know that Robinhood appeals to you know sort of small traders, right? Yep. , and when you divide it by the number, you get a an average account size. Granted, that's average account size of ten to eleven thousand dollars per account. Right. And but you know, you've got a long right tail of of sizes, right? So median account, that is the the middle account, the you know the average account is is pulled upwards by the larger account. So the median account corrects for that, and the median account would be something around the order of three to four thousand dollars. So it's quite small. Now you can look at that in one of two ways. You can say, okay, three to four thousand dollars accounts, they don't really have much experience dealing with you know something complex like Trump accounts. On the other hand, you can look at it and say, three to four thousand dollar accounts. Well, they're used to dealing with small accounts, right? So I don't know how to I mean, you can look at it both from the positive dimension and from the negative dimension, right?

Steve Davenport 15:45

But but I mean I look at it from a custody standpoint of thinking about the large firms who are used to custodying assets for long periods of time, and I think 360 billion, they're probably one of the smaller people to to do this because you got the three, you know, BlackRock, Vanguard, , you know, those two alone count account for a large percentage of the retirement industry. And then you add Fidelity and some of the other people, Morgan Stanley and Merrill Lynch. And you you just realize that you know there this is a really I I don't my

Fees Index Funds And Bank Pushback

Steve Davenport 16:29

question is is will people trust Robin Hood with their children's money? Because I think there is a question about trust with Robin Hood because of its I don't know, it's confetti whenever you make a trade, or it's you know, the the way they celebrate every time you, you know, buy or sell or make any money on trade? It's it's more of a a game than it is a a real investment account, right? I I I agree. And So do we want to play a game with our grandkids or kids' money? No. It it feels like it'll have some trouble. And what happens if Trump I know this is a crazy thought, but what happens if Trump is impeached and Trump is you know, or has any legal proceedings against him? Will you want to put money in a kid's account that's related to a guy who's you know, criminally criminally guilty or criminally charged?

Clem Miller 17:31

Well, I I think this ABA complaint will be re will be live and andor revived when we have a new Congress coming in. And and I think that there will be investigations into the Trump accounts. And it could be that Robin Hood securities will be put in the spotlight. I want to mention, you know, you the question is why Robin Hood, right? and I think one of the issues here is that the owners of Robin Hood made a rather sizable contribution, I think it was two million dollars, something like that, to the Trump Inaugural Committee. And so so they were obviously trying to you know obtain some favors. You know, you just don't contribute a lot of money and not expect something back from it, right? it's not the I mean it's not like a contribution to a charity, right? The inauguration is not a charity, right? Right. So, you know, obviously they expected something in return from that. Also, in addition to that, and this this might seem this might seem a little fuzzier, right? But Robin Hood is the custodian that is servicing the world what's it called? The world liberty financial, the the whole Trump sons, Whitcoff sons, crypto venture, right? And things like the Trump coin and so on. Those are all custodied with Robin Hood. And so, you know, the question, you know, how does this flow into things? Well, it means that there's a it means that there's a strong relationship between the Trump and Whitkoff families and Robin Hood, you know, and the owners of Robin Hood. It means that for one thing. And for another thing, you know, it could be that the Trump sons and the Whitcoff sons had you know owe Robin Hood to a degree because maybe other you know more solid investment firms did not want to deal with world life, world liberty financial. So it could be that they didn't want to deal with it. And so Robin Hood agreed to that. And so now Robin Hood feel you know is reaping the benefits from working with the Trump sons by doing the Trump accounts.

Steve Davenport 20:35

Yeah, I mean, I I kind of look at it as if you put it on the same platform, eventually, as these investments are more accepted, meaning they're more readily used, they're gonna say, well, let's make those available to the people in the Trump accounts.

Clem Miller 20:53

Yeah, like crypto and so on. And yeah, oh, and , and even even world life financial.

Steve Davenport 20:59

Right. Yeah, that's my point is that if you put it in an environment where there's a lot more of that traded, opening up that wall and letting those people have that one as one of their choices, an index of crypto, an index of Trump, you know, memor memorabilia. I mean, do you do you think people look at some of these coins and say they're they're investments instead of they're they're just collector's items? I mean, the whole idea of collector gold items and collecting these stamps and collecting things with rare value, is it that the whole idea of this?

Clem Miller 21:42

, you know, the creation of these different things

Trust Risk And Political Fallout

Clem Miller 21:45

to to blur the line between investments and so you're you're so you're thinking, and I and this didn't even cross my mind, but I think you've got a good point here. You're thinking that maybe they'll put collectibles into the Trump accounts, yeah, or offer them as as options for the Trump accounts?

Steve Davenport 22:04

If if grandpa is is the one who's making the contribution, then he says, put it in here, put it in here for junior, and they hears that they now are available for stablecoin or they may avail. My question is, is there a clear, like when you have an investment account, is it clear that these items can't be included? You know, any of the any of these collectibles are collectibles considered an asset that you could hold in an investment account or not?

Clem Miller 22:39

Well, I get in in my IRA, , you can't hold them. If they start to break what you're saying is that in a Trump account or really in any IRA, right? If they start to break down walls and allow for collectibles to go in there, then that becomes an issue. I mean I think already we're seeing that with crypto. Right. Because you've got these you got these Bitcoin ETFs that are out there. Right.

Steve Davenport 23:13

And that immediately says to me they're an investable asset.

Clem Miller 23:18

Right. Even though they're I mean you know our opinion is that they're not investable.

Steve Davenport 23:22

That's what I I'm wondering, Clem. Who makes that call? Who makes the call that says well this is an investment and this is a you know souvenir?

Clem Miller 23:32

Well theoretically the SEC and the CFTC Will they register, right? Yeah, make those kinds of calls, right? and but you know who controls the SEC and the CFTC? The Trump administration, right? Right, the president. Ultimately they're going to make the call as to whether these things are available I don't want to say investable because investable means can mean two different things right right they're they they're investable in the sense that you can actually invest in them they're not can invest in them they're not investable in the sense that you know that it's wise to invest in them or that you should invest in them.

Steve Davenport 24:19

Well you know what I think I guess I would define investable as you know usable in account in investment accounts that are approved by the or monitored by FINRA and the SEC. You know if if account is has all investment protections associated with it whatever those may be then I consider that an investment account.

Clem Miller 24:45

Yeah if if it's you know a lockbox that has you know some coins in it and some stamps I think stamps and and and coins that were issued and have limited availability I I think those are going to be hard to differentiate from things

Crypto Collectibles And Regulatory Gray Areas

Clem Miller 25:10

that are created you know meme coins or any of these other things that are given similar language but they don't really have the same investability as as I would say you know a security does that's traded widely right yeah because traded narrowly isn't a definition that that eliminates you as an investable asset right I mean I would say you know that the the wise thing for the parent of a two-year-old you know investing in or with money in this Trump account is not even to have an in in a real stock it's to have an ETF right of stocks and and to let two year olds be invested in crypto and and yeah well we don't we don't know where we're we're raising where it might go versus where it is where it is today I agree with you and any other investment that allows a person to get a head start and get get moving in the investment field is a good thing.

Steve Davenport 26:17

The way it's operating and the way it's using Robinhood brings up questions about the future you know availability and what it's going to have in it. I think that Trump has pushed for a lot of things in this field of crypto in the area of stable coin and my question would be I hope these are unrelated to what happens with the Trump accounts and I think that from from my point of view if I was investing you know I had a young child you know do I want free money? Probably I think the free money is you know an interesting approach to get these started and if my company matched that would be wonderful I would do it and I would recommend doing it if the company's matching but I would just say that you should always be careful because you never know when something will become you know less of a good investment as you go through time. And I think that if if they started to trade in those other assets I would wonder about you know could problems in trading one type of asset for the Trump accounts affect the other Trump accounts you know does the organization have the capabilities that if there were a run or if there were you know some type of event in the marketplace for crypto could it eventually seep over and weaken the solit you know the them as a custodian as a trustee for these other assets that's what some people said you know that each of these providers for indexes are all the same that there's no difference between an SP index at Vanguard and an SP index at Blackrock and then someone made the point to me well what happens if there's a fire or an event at the facility where these are managed yeah well that's not a BlackRock specific event it's a if it's a fire at Vanguard and that would cause some questions about backup and other variables well the same thing is going to be true about Robinhood. What happened if the Robinhood facilities suddenly get attacked and are compromised then the people who have those accounts there are subject to Robinhood risk not just index risk and that's where I think people need to understand who's the provider of your index is also a variable you need to consider.

Clem Miller 28:53

And if you had enough money you would say hey I don't want it all in one place because why would I want to take that risk on when I don't have to I have four or five other good providers of the same product right so what's your suggestion to people who are looking at these and investing if we wrap this up well I think if you've got a a child who's eligible for this and can get some free money out of this I

Practical Advice And Closing

Clem Miller 29:25

would say take advantage of it but I would go I would put the minimal amount of your own money in it right I I because I think I think these accounts are going to come under some attack under the next Congress because of you know actual or purported corruption in the creation of these accounts yeah I mean I don't I I I don't think anybody's you know I mean there's a limited cap of five thousand dollars in these accounts every year so I'm hoping that this this doesn't degrade into that type of situation but you never know and I guess I'd say for everyone you know just buyer beware because nobody looks and cares about your money as much as you do so I if you don't have anything else I'm gonna say thank you to everybody for listening and we thanks everybody listen to some of our other podcasts we're currently working on a podcast on the Venezuela oil deal so thanks for listening everybody and have a great weekend thank you