Is SoFi Wealth managed by Fiduciary?

Is the wealth account investments managed by fiduciary? I have searched around replies to other posts, and also looked through the site to see if there is any mention of a fiduciary, but haven't come across one yet.

Also, could someone shed a little light as to how the current gov't administration's (pending) policies might effect investors such as ourselves that leave the funds to be fully managed by professional services. I realize this could be a bit broad subject, but want to start a discussion to be better informed. Thank you!

Comments

  • John FJohn F Member, Moderator, Sofi Wealth Expert mod

    Yes. SoFi Wealth LLC is an SEC Registered Investment Advisor (RIA). As such, it has a duty to act as a fiduciary when we manage your money. We are not selling you securities and charging a commission for that service, as a brokerage firm would. We are acting on your behalf to invest in a portfolio we select based on the risk level you chose. We receive no compensation from any of the funds we invest your money in. 

    And yes, your second question is a bit broad. I know of no initiative by the administration to modify the existing fiduciary rules applicable to RIA’s. However, it has said that will be reviewing all regulations. It may decide to make changes or try to influence the SEC, Department of Labor, or the self-regulatory agencies like FINRA and the NYSE to change regulations. At this point I don’t think there has been any clear direction. 

    The recent press about fiduciaries has focused on the Department of Labor proposing that people who manage money in retirement accounts – IRAs, Roth IRAs, SEPs, 401(k) plans, etc. – act as fiduciaries. With or without this rule, an RIA, such as SoFi Wealth LLC, would still have that obligation. 

    From my perspective, the new Fiduciary rule is primarily aimed at brokerage firms who sell securities to people and offer these types of accounts. Until this rule, their duty was not that of a fiduciary, but rather to recommend investments that were suitable for the investor. For example, a speculative, small-cap stock would not be suitable for an elderly retiree, but might be for a 25-year-old with a high income. They were free to offer investments that pay high commissions, but might not be in the client’s best interest – so long as they were ‘suitable’. This new rule imposes a higher legal standard of care on the broker, but specific to retirement accounts. We have always had that standard in all types of accounts. 

    That said, fiduciary or not, SIPC insurance or not (you ask about this in another post), investments carry risks. A fiduciary acting in what they honestly believe are your best interests can still lose your money. The odds of a custodian going out of business are remote, but covered by SIPC insurance up to its limits. But if your securities go down in value, SIPC does not cover that loss. SoFi Securities is a member of SIPC, which protects securities customers of its members up to $500,000 (including $250,000 for claims for cash). There is a detailed explanatory brochure available upon request or at www.sipc.org. We’re happy to discuss the portfolio you’ve chosen and if it is right for you. A forum is not the right place to do that, but feel free to call us at 855-525-7634.  

  • Sharad RSharad R Member

    John, thank you for the well detailed response, truly appreciate it. This really helps boost my confidence quite a bit about going further with my investments in the wealth account.

    I wouldn't mind getting a hold of that explanatory brochure, but in the meantime will browse around on SIPC.org to educate myself a little further on the subject.

    As for the portfolio, I'll be testing the waters a bit for the upcoming months before moving any large sums into the account. At which time I'll be sure to get in contact with one of the advisers to update the investment portfolio. Again, thank you!

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