SoFi, short for Social Finance, is one of many free trading platforms, including Robinhood, that are increasingly prying open Wall Street and giant investment firms. The fintech company, which was created in 2011 with a focus on a student loan refinancing, went public on June 1 following a SPAC merger with blank-check company Social Capital Hedosophia Corp V.
“We take a very structured and serious approach to consumer protection. We ensure that consumers are educated. We focus on suitability,” Noto said on “Squawk Box.” “Every time someone enters a buy action, we have a warning that says it’s an unproven asset, it’s highly volatile, and you could lose all of your money.”
Customers are “getting the bulk of the vast majority of that price improvement from payment for order flow,” Noto said. “It’s a widely used piece of the financial models that allow for fractional shares, that allows for paying no commissions. But it needs to be adequately disclosed. It’s a very, very small percentage of our revenue.”
“I think we’re seeing a generation of people that realize the importance of investing, and as an industry, we’ve given access to investing to more people. And so you see more 20-to-30-year-olds participating in the markets, and I think that will continue,” Noto said.
It is important to note that this company was ranked number 8 on the 2020 CNBC Disruptor 50 list, is also seeing a “strong appetite” in investing. So if they are providing a warning for the people out there, then it is time for the other investors to take note of this and become more cautious in the dealings of the cryptocurrency market as of now.