SoFi Wealth LLC (“SoFi Wealth”) is an internet based (or “online”) investment advisor registered with the
Securities and Exchange Commission (“SEC”) since 2013. SoFi Wealth provides investment advice to
individual investors utilizing proprietary software, self-service tools, and through an experienced
investment team that provides financial planning services and advice on general asset allocation. SoFi
Wealth is owned by SoFi Hold Co., a holding company with no direct operations. SoFi Hold Co. is a
direct, wholly owned subsidiary of SoFi Technologies, Inc. and under common ownership with Social
Finance, LLC (formerly Social Finance, Inc.) (“SoFi”), a Delaware limited liability company, which is a
wholly owned subsidiary of SoFi Technologies, Inc., a Delaware corporation. SoFi Technologies, Inc. is a
publicly traded company (NASDAQ: SOFI).
The Services We Provide
SoFi Wealth provides clients online investment advisory services pursuant to a computer model over the
internet and through a mobile application (“Automated Investing” or “Automated Asset Management
Services”).
Wrap Fee Program
Automated Asset Management Services
SoFi Wealth offers its clients the opportunity to establish Automated Investing under the SoFi Invest
brand name. To establish Automated Investing, a client must accept and enter into a SoFi Wealth
Advisory Agreement.
In accordance with the SoFi Wealth Advisory Agreement, SoFi Wealth allows the customer to establish
an automated recurring deposit into an investment account, offers recommended asset allocation
portfolios, manages portfolios, and performs certain advisory functions with respect to each portfolio.
This includes recommending asset allocated portfolios and providing automated portfolio rebalancing
services.
SoFi Wealth is authorized to, among other things:
•Recommend one of five asset allocation models to investors - aggressive, moderately
aggressive, moderate, moderately conservative, and conservative. The system evaluates
user risk profiles through our online risk-evaluation system, also referred to as the Goals,
Risk and Objectives Exercise. Through a series of questions with user-input responses (goal,
time horizon and risk tolerance), SoFi Wealth identifies appropriate risk profiles based on a
set of criteria and automatically assigns the recommended asset allocation for our clients,
which is designed to tailor client risk to the profile supplied by the user;
•Identify security choices for our clients in order to attempt to reduce trading costs and other
fees; we periodically evaluate the performance of a range of indices and securities to
determine if we should replace an asset class or implement an additional asset class in our
clients’ portfolios;
•Determine appropriate times for portfolio rebalancing, based on market factors that return the
client to the target risk profile and attempt to lower trading costs and other fees;
•Identify asset classes and securities which are appropriate according to certain
pre-programmed rules related to a client’s account type and tax status: for instance, the
election of a non-qualified vs qualified account will result in different underlying holdings, but
models with a like risk tolerance will have similar target risk and return characteristics;
•Identify and evaluate the timing and method of disposition or liquidation of portfolio
investments, select and determine investments to be disposed of or liquidated, and cause an
investor to dispose of or liquidate investments in accordance with the terms of the Advisory
Agreement in order to facilitate allocation remodeling;
•Engage personnel to assist the Investment Adviser in providing investment advisory services,
including, without limitation, counsel, consultants, accountants, financial advisors and
sub-investment advisers;
•Open, maintain and close accounts, including custodial accounts, but excluding collection
accounts, with banks, including banks located outside the United States, and draw checks or
other orders for the payment of monies;
•Incur expenses as the Investment Adviser determines to be appropriate in the best interest of
investors, and, to the extent that the funds of an investor are available, pay all expenses,
debts and obligations;
•Perform such other duties, activities, functions and all other similar things necessary to
achieve, implement or facilitate any of the foregoing provisions in the United States as well as
foreign jurisdictions as per contractual agreements; and
•Invest investor funds into ETFs, including Sofi-branded ETFs.
There is no limitation or restriction on the ability of the Investment Advisor or any of its Affiliates to act as
an investment manager (or in a similar role) for other persons. This and other future activities of the
Investment Adviser and its Affiliates raise conflicts of interest.
Wrap Fee Program Overview
Automated Investing assets are managed as part of SoFi Wealth’s Wrap Program. A wrap account is a
professionally managed investment plan in which expenses, including brokerage commissions,
management fees, and administrative costs, are “wrapped” into a single charge. SoFi Wealth’s Wrap
Program provides clients with investment guidance, portfolio management, and brokerage services. SoFi
Wealth currently does not charge an advisory fee for this service, but clients will be responsible for
brokerage and ETF fees.
SoFi Wealth buys and sells securities consistent with analysis designed to seek an investment return the
adviser believes to be suitable to the investment objectives and goals of each distinct client account.
SoFi Wealth’s proprietary computer algorithm determines a recommended portfolio with limited, if any,
human interaction by performing an analysis of certain information provided by the client when
establishing an account. The information analyzed includes the goal of the account, risk tolerance, and
time horizon. The higher the risk tolerance and longer the time horizon indicated, the more
growth-oriented or aggressive the recommended portfolio will be. Lower risk tolerance and shorter time
horizon will result in a more income-oriented or conservative recommendation. Goals are considered to
the extent that the account value is expected to be withdrawn in a lump sum, or over time, resulting in a
more conservative or aggressive portfolio.
Client accounts are managed on a discretionary basis. See Item 16 of
SoFi Wealth’s Form ADV Part 2A
Disclosure Brochurefor more details. Clients are responsible for notifying SoFi of any changes to their
financial situation or investment objectives by contacting a SoFi agent at (855) 525-7634. SoFi Wealth
will periodically notify clients in writing how to update their financial information or request reasonable
investment restrictions. Clients may independently modify their target asset allocation at any time
through the SoFi Wealth website. Clients may establish a new Automated Investing account and provide
the requested financial information to obtain an updated computer-generated portfolio recommendation
from the algorithm.
Clients must appoint SoFi Wealth as their investment adviser of record on specified accounts
(collectively, the “Account”). The Account consists only of separate account(s) held by qualified
custodian(s) under the client’s name. The qualified custodian maintains physical custody of all funds and
securities of the Account, and the client retains all rights of ownership (e.g., right to withdraw securities
or cash, exercise or delegate proxy voting and receive transaction confirmations) of the Account. Please
see Item 12 of SoFi Wealth’s Form ADV Part 2A Disclosure Brochure for more information. Apex
Clearing acts as the qualified custodian for all accounts enrolled in the SoFi Wealth Wrap Fee Program,
and clients may not elect a different custodian.
It is important for a client to understand that we manage investments for other clients. The advice we
give to any client might be different from
the advice we give other clients and different from the actions
taken on our personal accounts, which presents the potential for a conflict of interest. SoFi Wealth is not
obligated to buy, sell or recommend to you any security or other investment that we may buy, sell or
recommend for any other clients or for our own accounts.
Conflicts may arise in the allocation of investment opportunities among accounts that we manage. We
strive to allocate investment opportunities believed to be appropriate for your account(s) based on the
information you have provided, and other accounts advised by our firm among such accounts equitably
and consistent with the best interests of all accounts involved. However, there can be no assurance that
a particular investment opportunity that comes to our attention will be allocated in any particular manner.
If we obtain material, non-public information about a security or its issuer that we may not lawfully use or
disclose, we have absolutely no obligation to disclose the information to any client or use it for any
client’s benefit.
Termination of our Advisory Agreement
The Advisory Agreement may be terminated by either party at any time, and without cause, in
accordance with the applicable Advisory Agreement. Upon termination of any account any earned,
unpaid fees will be due and payable in accordance with the applicable Advisory Agreement.
Brokerage Practices
SoFi Wealth clients who purchase securities through the SoFi Wealth platform are required to utilize the
brokerage services of our affiliate, SoFi Securities, a member of FINRA and SIPC, which acts as an
introducing broker-dealer effecting securities transactions for clients’ accounts for which Apex Clearing
provides trade execution and clearing services. Apex Clearing is broker-dealer, member FINRA and
SIPC.
Not all investment adviser firms require the use of a particular broker/dealer. However, for operational
and compliance purposes, we have made the decision to provide all asset management services
through one brokerage and custodial platform. You are not required or obligated to utilize our services
and therefore you are not required or obligated to open an account with SoFi Securities and Apex
Clearing. However, if you do not want to use SoFi Securities or Apex Clearing, we are unable to provide
our asset management services to you.
SoFi Wealth seeks the best overall execution of transactions for client accounts. Using an affiliated
broker presents a conflict of interest, as it results in additional compensation for the firm. SoFi Wealth
obtains information as to the general level of commission rates being charged by the brokerage
community from time to time and will periodically evaluate the overall reasonableness of brokerage
commissions paid on client transactions by reference to such data to ensure competitive commission
rates. “Best execution” means the best overall qualitative execution, not necessarily the lowest possible
commission cost. Accordingly, the factors that SoFi Wealth considers when selecting or recommending
brokers are matters that directly benefit client accounts, and are consistent with obtaining the best
execution of their transactions. These factors include: speed of execution, price improvement,
commission, quality of overall execution services, expertise, financial condition, and skill.
SoFi Securities earns revenue from lending securities and earning interest on uninvested cash, via a
sweep mechanism, in client accounts. Share lending programs benefit SoFi Wealth’s affiliated
broker-dealer, but will only benefit clients to the extent that such revenue is shared with clients.
SoFi Wealth aggregates securities sale and purchase orders for a client with similar orders being made
contemporaneously for other client accounts. Using this trading method, the average price of the
securities purchased or sold in such a transaction is calculated, and a client charged or credited, as the
case may be, the average transaction price. As a result, however, the price may be less favorable to the
client than it would be if similar transactions were not being executed concurrently for other accounts.
SoFi Securities earns revenue from their role as introducing broker-dealer, including payments for order
flow and securities lending. SoFi Securities does not charge commissions on trades.
Fees and Compensation
SoFi Wealth offers asset management services under the brand “Automated Investing,” under the
broader SoFi Invest umbrella. SoFi Wealth does not currently charge a management fee for Automated
Investing, but its broker-dealer affiliate, SoFi Securities LLC (“SoFi Securities”), earns revenue in two
main ways when clients invest with SoFi Wealth. One way is payment for order flow (PFOF) which is the
practice of wholesale market makers paying brokers for routing their clients’ orders to the market maker
for execution. By acquiring order flow in this way, market makers are able to trade profitably against
client orders, while clients may benefit from reduced trading costs. SoFi Securities also earns revenue
through Apex Clearing by lending clients’ ETF shares held in brokerage accounts to short-sellers in an
activity commonly called “Share Lending.” SoFi Wealth will likely introduce other products or services for
which it charges a fee in the future. SoFi Wealth may make changes to fees from time to time and will
notify you of any such changes.
SoFi Wealth does not currently receive any sales commissions, 12b-1 fees or other fees from ETFs or
other products for investing such funds on behalf of advisory clients. If this changes in the future, clients
will be appropriately notified and disclosures updated.
As a general matter, clients who invest in an ETF pay ETF fees. An ETF typically includes embedded
expenses that reduce the fund's net asset value, directly affecting the fund's performance and therefore
also a Client’s portfolio performance or an index benchmark comparison. Examples of ETF expenses are
management fees, custodian fees, brokerage commissions, and legal and accounting fees. ETF
expenses change from time to time at the sole discretion of the ETF issuer. These ETF fees do not flow
back to SoFi Wealth.
SoFi-branded ETFs include the SoFi Select 500 ETF, SoFi Next 500 ETF, SoFi Social 50 ETF, SoFi
Enhanced Yield ETF. SoFi-branded ETFs are distributed by Foreside Fund Services, LLC. Not all
SoFi-branded ETFs are included in the model portfolios. None of SoFi Wealth or any of its affiliates is an
affiliated person of the Funds, the Adviser, the Sub-Adviser, the distributor, or any of their affiliates. The
Fund’s investment adviser agreed to waive its Management Fees for the SoFi-branded ETFs used in
Automated Investing (SFY and SFYX) until at least June 30, 2024. At such time, the fee waivers end,
client holdings will be subject to the management fees, and SoFi Wealth will earn revenue from these
ETFs based on the investments made by SoFi Wealth clients.
Investors are charged incidental brokerage account fees for services provided by Apex Clearing such as
IRA administration, maintaining inactive accounts, transferring funds or securities to another firm via
ACAT, wires, and sending paper statements/confirmations. These fees will change from time to time and
can be found at the following website:
www.sofi.com/invest/fee-schedule.
A single, all-inclusive fee for brokerage, custodial, and recordkeeping services may cost more or less
than purchasing these services separately. The primary factor affecting the comprehensive fee is the
provision by SoFi Wealth of individualized investment advice and portfolio management services tailored
to the needs of each individual.
SoFi Wealth does not receive transaction-based compensation for the sale of securities to SoFi Wealth
investors. SoFi Wealth’s Automated Investing clients are also clients of SoFi Securities and will purchase
securities through them which represents a conflict of interest more fully described in Item 9 of this
document.