SoFi is making a significant shift in its robo-advisor offering by introducing new investment choices and, for the first time, a management fee.
Now charging a 0.25% annual fee based on assets, SoFi’s robo-advisor aligns with industry standards but remains lower than typical fees for human advisors. "The intention behind the fee is to keep it straightforward, transparent, and low, not just for our current offerings but for future expansions as well," explains Brian Walsh, SoFi’s head of advice and planning.
This fee structure isn’t unexpected in the industry, says David Goldstone, investment research manager at Condor Capital Wealth Management. He notes that other robo-advisors have followed a similar path, prioritizing growth before shifting to profitability. "I anticipated that SoFi would eventually introduce a fee," he says.
SoFi is also expanding its portfolio options, now offering a new alternative investment theme featuring real estate and multi-strategy funds. This complements its other themes: “classic,” with a mix of equities and fixed income, and socially responsible investing. Investors can start with as little as $50, making these options accessible to a broad audience.
In building these portfolios, SoFi partners with BlackRock, leveraging its Aladdin platform, a tool for portfolio management and risk analysis. SoFi’s portfolios primarily use BlackRock’s iShares ETFs, which helps manage liquidity and minimums. For those seeking additional diversification, SoFi’s alternative portfolios may include funds like the BlackRock Global Equity Market Neutral Fund (BDMIX) and BlackRock Real Estate Securities Fund (BIREX), depending on an investor’s risk tolerance.
Walsh highlights that the goal of offering alternative investments is to enhance portfolio diversification. He also notes that SoFi is committed to expanding its investment themes and will continuously review portfolios in collaboration with BlackRock and SoFi’s investment committee.
SoFi’s robo-advisor has seen substantial growth, recently surpassing $1.3 billion in assets, up from $800 million a year ago, and now serving over 175,000 clients. The platform draws both first-time investors and existing SoFi users, adding a key piece to SoFi’s broader financial ecosystem, which includes banking, student loan refinancing, mortgages, and credit cards. "Our vision is to be a digital one-stop shop, allowing customers to manage their savings, checking, and investments in one place," Walsh adds.
Meanwhile, SoFi’s stock dipped 2.2% Tuesday afternoon but is up nearly 39% year-to-date, outperforming the S&P 500’s 25.6% gain.
SoFi’s changes come at a time when the digital advice market is undergoing both growth and consolidation. Some robo-advisors have closed or been acquired by other firms. Goldman Sachs, for example, sold its Marcus Invest accounts to Betterment, and JPMorgan Chase shut down its standalone robo-advisor, citing profitability issues, though it continues to offer a hybrid service. In contrast, robo-advisors like Schwab and Wealthfront have managed to scale successfully.
Goldstone notes that robo-advisors face unique business challenges. "This sector operates on thin margins because fees are low," he says. "Customer acquisition costs are also high—often more than anticipated—because attracting wealth management clients organically is tough. Offering a free product alone isn’t enough."
