Trump Accounts: The Good, the Bad, and the Ugly
As with all things Trump, the devil is in the details (and everywhere else. But for today we’ll focus on the details). While using the new Trump Accounts to sock away up to $5,000/year in tax-deferred growth for your children is a no-brainer from a dollar and cents perspective, dollars and cents are not the only perspectives.
Having previously suggested you consider a Trump Account despite its obnoxious name, I felt compelled to follow my own advice once the accounts went live on July 4. In creating a Trump Account for my own daughter, I discovered the previously hidden details, which I share now, so you can more fully weigh the pros and cons of opening an account for your own little loved ones before diving into the deep end of the reflecting pool.
CONCERN 1: PRIVACY
When you first attempt to open a Trump account you are made to think you must download the Trump Account App. Indeed, the entire homepage centers around a big “Download the app” button and screenshot of an iphone.
You have to dig deep into the FAQ drop down menu to find the non-app option, which does not even include a hyperlink:
Why does Trump want us to download an app so badly? It’s not clear. And no one seems to be investigating it. But my guess is (a) Trump wants to promote his buddies at Robinhood and BNY, who designed the app; as well as throw a bone to his friends at Apple and Google, who host the apps. My more uncomfortable guess (b) is that the app gives the Administration easy access to our private data, which they have already shown an interest in harvesting, such as through the White House App that granted full control over users’ devices earlier this year. As reported in the UK’s International Business Times:
Released on 27 March 2026 following a series of cryptic announcements, the programme [to bring the presidential press room directly to citizens’ smartphones] requests access to precise user locations, biometric fingerprint scanners, and internal storage modification. Because these tracking features go so far beyond what anyone expected, a basic government messaging tool is now at the center of a huge privacy debate.
I opted to visit the “secure IRS website called Individual One Accounts, or IOLA” as hidden on the Trump Account website, but helpfully hyperlinked here.
Once you complete registration for your Trump Account online, it is still unclear how safe your personal information is. You have to accept the agreement unilaterally offered you by the government and Robinhood, the chosen brokerage firm for the accounts, 38 pages of legalese forfeiting your rights to pretty much everything, including your right to access your funds at any given time:
Even in the web-based version, Robinhood acknowledges they will be tracking you through cookies and sharing information with “third-party partners.”
Robinhood doesn’t have a squeaky clean reputation for protecting customer data. Last year, they were fined $45 million for exposing millions of customer names and emails to hackers:
Furthermore, Robinhood has already shown a commitment to appeasing Trump, as one of the first custodians to drop DEI language under Trump 2.0, so what is to say they wouldn’t continue to appease him if, say, Mr. Trump requested information on certain Trump Account users’ online activity?
Concern 2: FEES
How does Robinhood get paid for hosting your Trump Account? It’s not clear. Why not? Because Robinhood asked the SEC for and was granted an exemption “from having to issue Form CRS—a customer relationship summary detailing issues such as a firm’s fees and conflicts of interest—to Trump Account holders, arguing that the document could confuse investors and that the rationale for requiring the disclosure doesn’t make sense in the case of Trump Accounts.”
Unlike Robinhood, I do have a CRS, which you can read here.
So all we have to go on is the Customer Agreement that says merely that Robinhood isn’t charging fees or commissions:
Does it matter if Robinhood issues a Form CRS if they aren’t charging us fees? Yes, I think it most certainly does. Without a CRS we are limited to the self-selected language and (lack of) transparency offered in the customer agreement. And the no fees language seems quite squirrelly—they state they are not charging “account” fees, but leave open the possibility of any other type of fee that might be called something else. Maybe they’ll call them “Squirrel Fees!”
And, no, I’m not just being cynical. This is the kind of bait-and-switch Robinhood has built a reputation for:
Just 6 years ago, FINRA fined Robinhood with a record $70 million fine for “misleading customers, causing them to lose millions of dollars” and causing “widespread and significant harm.” At the time, FINRA said “the fine is the largest it has ever levied and "reflects the scope and seriousness of Robinhood's violations." And just one year before that, Robinhood was fined $65 million by the SEC for “misleading its stock market customers about how the company makes its revenue from their trades.” This followed the previous year’s $1.25 million FINRA fine for “routing customers’ orders through four brokerages paying it to do so without ensuring orders were executed for the best possible price.”
So we’re not dealing with the Ghandi of custodians here. We’re dealing with a company with an established track record of misleading customers and hiding how it makes money. And now, a company that also doesn’t have to disclose its conflicts of interest or fees because the SEC, the same organization that recently fined them $65 million, exempted them from issuing a form CRS.
Why don’t they need our account fees? Robinhood isn’t a nonprofit after all! Well, last year, Robinhood got added to the SP500, the very investment you are forced to use when you open a Trump Account. So every dollar you put into a Trump Account, regardless of whatever other Squirrel Fees might lurk in the shadows, is also boosting the value of Robinhood. In addition, an estimated 14 million new accounts are going to be open on the Robinhood platform thanks to Trump Accounts. Regardless of Squirrel Fees, Chief Executive Officer Vlad Tenev celebrated, “This puts Robinhood in front of the next generation.”
CONCERN 3: DIVERSIFICATION
When you invest your hard-earned money into your kid’s Trump Account you are given exactly one option for how to invest it: The US S&P 500. That is, you must invest your Trump Account contributions into a fund that mirrors the 508 holdings of the S&P 500, weighted by market cap (size of the company). Indeed, once you fund the account, your contributions are AUTOMATICALLY invested in the SPYM, “an index fund that tracks the S&P 500.”
The allocation among these companies is weighted by company size, meaning over 38% of your child’s account will be invested in technology, and there’s nothing you can do to change that.
What about the other 3,406 US based, publicly traded companies? Or 10’s of thousands of non-US based publicly traded companies? Trump doesn’t care about them. Make America great, after all (and Make America’s greatest companies even greater).
Regardless of how you feel about MAGA, doesn’t it make sense to ride the wave of exceptional American industry and profit ever higher? No. No it does not. Funneling all of your kids’ savings into the 508 arguably over-valued, highly tech-concentrated stocks that make up the SP500 is, quite simply, reckless and irresponsible. That is unless your last name is Bezos, Zuckerberg or Musk, and you stand to earn billions more from Americans being force fed your stock.
How do I really feel?
As a believer in free markets and freedom generally, I don’t feel great. I can’t imagine any other time in our history when the government offered a benefit to people on the contingency that they invest in a specific set of companies and through a specific brokerage house, from which we may or may not be able to retrieve them.
As a parent and financial advisor who wants the best for my kid and clients, I am torn. The reality is that if you are a high earner with spare cashflow, the Trump Accounts are still a good way to tax-efficiently sock away money for your kids. And if you are worried about the over concentration in the SP 500, you can reduce similar exposure from other parts of your investments where you actually have the freedom to do so.
Is it worth sacrificing your privacy to lock up your hard-earned money into an overly tech-weighted SP500 for tax-deferred growth to help your kids retire one day? This financial advisor honestly doesn’t know. What do you think?
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