SoFi Automated Investing at a glance
Pros: Where SoFi Automated Investing stands out
SoFi Automated Investing’s biggest draw is its low cost, and customers should have no arguments around the company’s management fee: zero. That compares favorably to the industry as a whole, where the standard is 0.25 percent, or $25 per $10,000 invested. SoFi is one of a handful of robo-advisors that charge nothing, with Schwab Intelligent Portfolios being another.
SoFi constructs its portfolios with 11 ETFs representing broad swaths of the market (total bond market and small-cap ETFs, for example). SoFi uses a couple of its own funds (more on this later) and most of the rest come from Vanguard, a well-known low-cost leader in funds.
These funds (with a couple exceptions) are cheap, allowing you to build a portfolio that costs very little. In fact, the Vanguard funds used are among the cheapest around, with expense ratios below 0.10 percent, or a cost of $10 annually for every $10,000 invested. Several of the funds cost less than half of that.
All in, it should be easy to build a portfolio that costs little. Between SoFi’s free management and the low-cost funds, you could easily pay less than $10 per year for each $10,000 invested. SoFi says its average portfolio has expenses of 0.05 percent, or $5 for every $10,000 invested.
Automatic rebalancing is included in the package. If your actual portfolio starts to drift from your target allocation (if stocks outperform bonds, for example), SoFi will bring it back in line.
Access to certified financial planners
You’re not paying a management fee, so SoFi must be skimping on service somewhere down the line, right? If so, it doesn’t appear to be in financial advisors. You’ll be set up to speak with certified financial planners (CFPs), who abide by fiduciary code to act in your best interest. They can help you with answers to less common investing questions and developing a financial plan.
You’ll also be able to reach customer service representatives via the phone seven days a week at convenient times. Being able to get answers to questions with a phone call is becoming increasingly rare, so this is a plus for SoFi.
Easy to get started
It’s easy to get started with a SoFi Automated Investing account. You’ll run through a few questions on your investing goals, when you need the money, and which of five model portfolios you’d like to have (conservative, moderately conservative, moderate, moderately aggressive and aggressive). And then you’re done in a few minutes. (If you need to, you can always go back and quickly edit your model portfolio with a couple clicks.)
Then you’ll be prompted to transfer funds, where you can connect your SoFi account to your bank account. You can do this with instant verification, and you’ll be prompted to set up a recurring deposit. Or you can make a one-time deposit and be on your way. It only takes $1 to get started, so don’t worry if you don’t have a lot to contribute at first.
The money will be invested in your portfolio as soon as it arrives in the account.
Cash management account
You won’t get a cash management account as part of Automated Investing, but that may be a moot point, since you can open one on the SoFi site anyway. Since you already have a SoFi account, you can open this account quickly and move money between your accounts easily.
A SoFi Banking account offers core bank functionality – mobile banking, money transfer, a debit card and more – without a monthly fee. You’ll also be able to earn interest on the account with a recurring monthly deposit of $500 or more.
So you’ll get much the same functionality as a cash management account through your robo-advisor account, though you won’t enjoy some features, such as margin loans.
SoFi membership benefits
Using SoFi may entitle you to become a member, giving you access to a number of benefits. These benefits include rate reductions on SoFi loans, local networking events, career coaching and more. You don’t necessarily have to use Automated Investing to receive these benefits, and SoFi offers them to others who use one of its many financial services.
SoFi Automated Investing gives investors a solid robo-advisor option that will keep costs to a minimum. But the lack of certain features such as tax-loss harvesting may leave some feeling like SoFi’s robo offering is just another financial services account in the broader SoFi universe.
Contrast it with dedicated robo-advisors such as Wealthfront and Betterment or Schwab Intelligent Portfolios, each of which feels more focused on robo-advising. But for SoFi customers who are looking to expand their relationship quickly and easily, it’s an easy way to consolidate your accounts in one place, move money and have an investment plan that gets the basics right.
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