2 Stocks Perfectly Positioned to Benefit From the $106 Trillion Great Wealth Transfer

Key Points

• Robinhood and Lemonade aim to capture a $106 trillion wealth shift from boomers to younger generations.

• Robinhood’s banking, retirement, and credit products grow with customers as they inherit from the previous generation.

• Lemonade starts with renters insurance, then upsells higher-margin coverage as customers’ wealth grows.

• 10 stocks we like better than Robinhood Markets ›

A flood of wealth is anticipated to sweep from baby boomers to younger generations over the next couple of decades. Cerulli Associates estimates $106 trillion will pass to younger generations. Of that, a large chunk is destined to be passed on to the companies that manage their finances.

Robinhood (NASDAQ: HOOD) and Lemonade (NYSE: LMND) are two fintechs laser-focused on providing financial services to Great Wealth Transfer winners. Robinhood offers the next generation of investing, banking, and credit products. Lemonade does the same for insurance.

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Here's a look at each.

Image source: Getty Images.

1. Robinhood

Robinhood is widely seen as the face of fintech by young, tech-savvy investors. It pioneered zero-commission stock trading, a win that continues to pay reputational dividends. It continues to attract interest by beefing up its premium Gold subscription. Perks include 3% IRA match, a credit card with 3% rewards, and $1,000 of interest-free margin trading. The subscription is cheap, at $5 a month as of this writing.

Robinhood has promising user base demographics. In a May 2025 Investor Day presentation, the company discloses the median age for Robinhood customers is 35. Robinhood is popular with millennials and Gen X, the two generations primed to inherit the most over the next 10 years. But what really sets it apart from competitors is how it's sprinting to meet these users where they'll be not next year, but a decade from now.

The company has diversified from trading into wealth management and banking, a huge profit driver. The recent unveiling of Banking and Strategies products is evidence of a company executing on an ambitious long-term vision. Both product lines are key to convincing young and maturing customers that Robinhood is a "serious" wealth manager.

The stock is far from undervalued. As of this writing, it trades at a forward price-to-earnings (P/E) ratio of over 50x, a valuation typically attributed to tech stocks -- much higher than the 29x S&P 500 (SNPINDEX: ^GSPC) average. There might be better-valued opportunities among competitors like Block.

Strong fundamentals justify its high multiples. The company is profitable and has been so for over a year. It's grown total platform assets at a staggering 99% in a single year, and it has over $4 billion on the balance sheet -- plenty to invest in growth, or lean upon during tough times.

Robinhood's young user base, ambitious vision, and strong fundamentals position it perfectly to win the Great Wealth Transfer. Its quickly growing suite of products is proof the company is moving to meet the next generation where it's at: online, via an award-winning interface that does investing, banking, and wealth management.

2. Lemonade

Lemonade is very well positioned to serve as a major insurer of young and maturing users. It offers insurance via the Lemonade app, an artificial intelligence (AI)-powered interface that can pay out claims in as little as 3 seconds. It typically attracts customers with the promise of cheap rental insurance. As customers mature, they purchase higher-margin insurance from Lemonade, like Car and Pet.

Powerful machine learning models put Lemonade in a league of its own. From Car to Life, these models gobble up data that the company uses to improve predictions. Combined with AI models that manage customers and employees, it can scale premiums from $609 million to $1,083 million while shrinking operating expenses, excluding growth spend.

To scale quickly, Lemonade is leaning into the expansion of its car insurance product. Car insurance is a huge unlock for users who want to stick with a single insurer across all products, snagging discounts. Lemonade knows this. In the Q1 2025 Shareholder letter, the company reveals it sees a 60% boost to conversion rates in states where it offers car insurance.

Lemonade has yet to prove it's a sustainable business. The company is unprofitable, a red flag in a volatile market that places a premium on stability.

Critics point to the Car product in particular. Car insurance is a loss leader, with an 82% loss ratio, well above the 40% to 60% industry ideal. That needs to improve. An ideal gross loss ratio is typically between 40% to 60%, according to data by Relativity6.

All signs point to Lemonade reaching profitability on a reasonable timeline. Gross loss ratios, a key insurance metric, are trending in the right direction: down. Loss ratios dropped from 79% in Q2 2024 to 69% in Q2 2025. Lemonade expects to reach adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) profitability in 2026, meaning the core business generates more profits than it spends. Investors would love to see it.

Great Wealth Transfer winners to buy and hold

Robinhood and Lemonade may be the real winners of the Great Wealth Transfer. Both are innovative fintech companies with strong and improving fundamentals. I plan on holding both in my portfolio for five years or more.

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Cole Tretheway has position in Lemonade and Robinhood. The Motley Fool has positions in and recommends Block and Lemonade. The Motley Fool has a disclosure policy.