Is SoFi Invest legit?
Whether a financial provider like SoFi Invest is legit a very relevant question one can have. After all you trust SoFi Invest with your investment money and savings. It is also a very common question, we get this asked a number of times.
One thing worth bearing in mind: all the brokers that you find on BrokerChooser are regulated by at least one top-tier financial authority. So in this basic sense SoFi Invest is of course legit. Additionally, there are other factors you can take into account when you check the legitimacy of SoFi Invest, e.g. if SoFi Invest is listed on any exchange, provide two-step login, disclose transparently its financial result, etc.
Here, we've collected and summarized the common questions on broker legitimacy, enabling you to decide for yourself whether you consider SoFi Invest legit in your individual circumstances. We also compared SoFi Invest with two similar brokers.
|SoFi Invest||Alpaca Trading||Robinhood|
|Broker listed on stock exchange||Yes||No||Yes|
|Annual financial statements on website||No||No||Yes|
|Mobile two-step authentication||Yes||Yes||Yes|
|Broker ownership transparency||Yes||Yes||Yes|
|Broker management transparency||Yes||Yes||No|
|Broker is audited by the Big Four||Yes||No||Yes|
SoFi Invest legitimacy
Things always worth considering
When you assess a stock broker it's best to think through the following aspects:
- What authority or authorities regulate the broker? In other words who can you turn to if something goes south?
- How much protection do you have?
- For how long SoFi Invest has been in operation?
- Is it publicly traded itself?
- How transparent is it?
- How much do they protect your account from unauthorized access?
- What auditor audits the brokerage?
As you see there are a number of aspects above. But not all of them were created equal.
We think the most important feature is to be regulated by at least one trustworthy authority.
First and foremost, to gather a wider knowledge about one broker's legitimacy, you should check the regulators of it. For this purpose, we sum up below the most important things to know about regulators and how to interpret them for your individual case.
SoFi Invest is regulated in the following countries and provides the following investor protection:
|Country of regulation:||USA|
|Investor protection amount:||$500k (securities up to $500k, cash up to $250k)|
Don't forget that regulators are not created equal. Investor protection can also vary from authority to authority. There are top-tier regulators whose excellence lies within their features such as the presence of segregated accounts, the range of protection tools or the investor protection amount itself. Check out a few of the top-tier regulators in the table below. Most brokers reviewed by BC fall below one of the following four regulators:
|FCA in the UK||Financial Services Compensation Scheme (FSCS) provides coverage up to £85,000.|
|SEC, FINRA in the US||Securities Investor Protection Corporation (SIPC) covers up to $500,000, including a $250,000 limit for cash.|
|BaFIN in Germany||€100,000 for cash, and €20,000 for securities.|
|ASIC in Australia||No investor protection.|
As you could see, SoFi Invest is regulated by SEC and provides the SIPC investor protection scheme. SIPC protects against the loss of cash and securities in case the broker goes bust. The limit of SIPC protection is $500,000, which includes a $250,000 limit for cash. A non-US citizen with SoFi Invest is treated by the SIPC the same as a US resident in case something goes bad. These amounts are substantially higher than what most European investor protection schemes offer.
Not all investments are protected by SIPC. In general, SIPC covers notes, stocks, bonds, mutual funds and other investment company shares, and other registered securities. It does not cover instruments such as unregistered investment contracts, unregistered limited partnerships, fixed annuity contracts, currency, and interests in gold, silver, or other commodity futures contracts or commodity options.
There are some brokers that provide additional insurance because they have private insurance (e.g.: eToro through Lloyd's, among the US brokers Charles Schwab and Ally have similar setups), which means that you have an extra legitimacy net above the regulatory. It's worth checking it out when you're choosing your broker.
SoFi Invest legitimacy
Additional "nice to have" legitimacy features
The subsequent bullet points are rather supplementary, “nice to have” features. Ticking them definitely adds to the legitimacy of an online broker, but not having them is not necessarily a big red flag.
SoFi Invest doesn't have a banking background, which is not crucial, but would make a better case for their legitimacy. The reason is that even if it's not required by law that a struggling broker must be saved by its parent bank, in most cases you can count on this happening.
Broker listed on stock exchange
SoFi Invest is listed on the following stock exchange: Nasdaq, which is a good sign for legitimacy.
Why is being listed on the stock market useful? For two reasons:
- Listed companies by and large have stringent reporting requirements
- If something really goes wrong with the broker, you'll be able to tell it from the (rapidly falling) share price of the broker in most cases. In this unlikely scenario, you'll have time to move your funds and securities to another broker.
Annual financial statements on website
SoFi Invest doesn't publish annual financial statements. These are sort of financial reports, which generally contain information about a brokerage's income, profit and loss, retained earnings and cash flows. Not having these exposed to the public doesn't necessarily mean that a broker is not legit, it's just a factor that we should take into account when choosing where to invest or trade.
Mobile two-step authentication
SoFi Invest provides two-step authentication when logging in, which makes the platform safer to use.
Broker ownership transparency
Ownership structure of SoFi Invest is public, everyone can check the owners of the company on their website, which adds to their legitimacy scores.
Broker management transparency
SoFi Invest is transparent about their management structure, which means that anyone can see who is in charge of management issues at the brokerage.
Broker is audited by the Big Four
SoFi Invest is audited by one of the so-called Big Four auditors (KPMG, PWC, Deloitte, EY).
SoFi Invest legitimacy
Now that we have gone through the most frequent and - as we think - most important legitimacy aspects of SoFi Invest, we can say that SoFi Invest is great in legitimacy, since it fulfils most of the important criteria mentioned above. We hope that you feel armed enough with information for your future decision. In case you're still unsure, use our broker finder and meet the best online broker that suits your needs.