SoFi Introduces SoFi Invest for Active and Automated Trading
When it comes to FinTech firms, expansion is the name of the game. Often times this means diversifying your offerings in a logical way in order to gain customers and bring them into your ecosystem. That’s exactly what SoFi is aiming to do, launching new brokerage account options for either active or automated investing.
According to Barron’s, SoFi has introduced SoFi Invest, allowing users to buy and sell stocks and ETFs without transaction fees. This is being billed as the company’s Active Investing option and doesn’t have any account minimum. Meanwhile SoFi also offers Automated Investing with no management fees, although these accounts require either an initial deposit of $100 or $20 a month. Barron’s notes that this product had actually previously been available under the name SoFi Wealth.
By offering fee-free trades, SoFi joins a growing trend in the FinTech space. Notably Robinhood helped pioneer the movement and has since expanded beyond stock trades by offering options trading, cryptocurrencies, and more. Elsewhere Chase announced last year that it was bringing free trading to users with the You Invest platform. That offering entitles customers to make up to 100 commission-free trades in their first year. Subsequent trades go for just $2.95 — far lower than the $24.95 per trade the institution charged prior to the You Invest initiative.
In a letter obtained by The Los Angeles Times, SoFi CEO Anthony Noto wrote, “As part of our SoFi Invest plans, we released an alpha version of our new brokerage platform, inviting employees and select members to buy and sell individual stocks and ETFs with the tap of a button. We are iterating quickly to grow and scale our invest offerings meaningfully throughout the year. SoFi Invest is now available to everyone in the app.” Noto reportedly went on to say that the company intends to offer additional loan products as it continues to expand. Furthermore it seems the company’s strategy is more focused on growth than profitability, although Noto says, “We focused on quality over quantity and optimized the loan business for per-unit economics.”
With the rollout of SoFi Invest, competition between the company and the likes of Robinhood and Wealthfront seems to be heating up, with each firm working to introduce new products. That said, as we’ve seen with the Robinhood debacle late last year, rushing these expansions can backfire. Thus hopefully this growing competition will lead all involved to flourish and not flame out.