Future of Investing

In inclusion move, SoFi opens up to customers ignored by wealth managers

  • Online lender SoFi announced that it's making its wealth management service available to non-borrowers.
  • Beyond a financial inclusion play, analysts say the move is motivated by a need to scale the business and acquire new customers.

Email a Friend

In inclusion move, SoFi opens up to customers ignored by wealth managers
Score another for financial inclusion. SoFi's announcement that it's offering wealth management services to a broader range of customers Tuesday may be a sign the startup is growing its business lines to compete with the big banks. The target is the 25 to 40-year old professionals who are ignored by traditional wealth managers and often stuck with high minimums if they want the advice of a professional. "SoFi is the only wealth management offering at this low price point to offer unlimited access to non-commissioned, licensed financial advisors, who are available via phone or chat, which certainly makes it more accessible to those who otherwise have been ignored," said John Gardner, general manager of SoFi Wealth. Over the past year, the online lender, which recently acquired mobile banking startup Zenbanx and signaled intentions of applying for a banking license, has moved away from a "great loans for great people" branding message to one that emphasizes financial freedom. New customers of SoFi Wealth will also be able to access SoFi's mentoring and networking events. The SoFi Wealth product's management fee is 0.25 percent (a fee that's waived for the first $10,000), and a $500 minimum initial investment or recurring monthly deposit of $100 -- a means to open up SoFi to a much larger slice of the population. But industry watchers say SoFi's interests in attracting a broader clientele are motivated by the imperative to grow. "It's more of a customer acquisition strategy than an inclusion play, given other moves, including the application for a banking charter," said Emmett Higdon, mobile practice leader at Javelin Strategy and Research. "All signs point to them going broad with a banking offering."  With SoFi positioning itself to offer more products, partly enabled by the Zenbanx acquisition, added Higdon, acquiring these customers would provide an added customer base to whom the company could market additional services. According one wealth management analyst, broadening SoFi Wealth's availability may be an important tool to help the company stay competitive. "The main thing is achieving scale -- that has to be their mantra," said Seth Freeman, senior managing director of EM Capital Management. "They have to scale up to survive and prosper, and they also have to develop and maintain a relationship with their customers." For analysts focused on financial inclusion, the SoFi Wealth product may be a step in the right direction, but a long way from giving underserved populations a needed leg up. "Even $500 is hard for low-income customers, these people are borrowing $200 to make ends meet -- but it's better than a $10,000 [minimum]" said Ashley Harrington, counsel at the Center for Responsible Lending. What's more likely, Harrington added, is that the availability of the product could benefit borrowers of color who have access to more capital. "It will be interesting to see how they market this product and who takes advantage of it," she said.  

0 comments on “In inclusion move, SoFi opens up to customers ignored by wealth managers”

Future of Investing

The effect of ‘money on the sidelines’ on fintech

  • As interest rates rise, money is increasingly finding its way towards safe, high yielding assets.
  • This is creating a challenge for fintechs predicated on selling or brokering riskier assets.
Zachary Miller | August 01, 2023
Future of Investing

With its core business slumping, Robinhood is eyeing credit cards

  • Last month Robinhood announced that it will be acquiring X1, a startup that offers income-based credit cards.
  • We dive into why Robinhood is expanding into credit cards and what X1 is bringing to the table.
Rabab Ahsan | July 28, 2023
Banking, Business of Fintech, Future of Investing

Closing the equity gap for underrepresented entrepreneurs: How Bank of America is driving diversity and inclusion in venture capital

  • Many small and new businesses are phasing out every year in the US. Although it can be argued that there are many reasons that may contribute to the failure of these businesses but inaccessibility to funding appears to be one of the root causes.
  • Bank of America is en route to creating a new narrative. To address these stumbling blocks and shine a light on diverse fintech founders, the Wall Street bank is devising an accelerator program called ‘Bank of America Breakthrough Lab’.
Sara Khairi | June 02, 2023
Future of Investing

Amid shifting market dynamics, how can wealth managers create value?

  • The wealth management market is going through a rough patch. Economic uncertainty and financial stress are having a negative impact on investor sentiment, shows a new EY global wealth research report.
  • As a result, clients have started to ask more questions and demand more proficiency. 
Sara Khairi | May 17, 2023
Future of Investing

Philosophical Switch: Wealthfront introduces stock investing and plans to build investing habits for the long run

  • Stock trading by small investors is on the up and up.
  • Just in time Wealthfront has launched the option to invest into individual stocks exemplifying a philosophical switch in its robo-advisor business model.
Rabab Ahsan | March 23, 2023
More Articles