SoFi Automated Investing review 2023
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SoFi Automated Investing: Best for
- Cost-conscious investors
- SoFi clients
- Newer investors
If costs are your primary concern, SoFi Automated Investing may be the robo-advisor for you. You won’t pay an annual management fee for SoFi managing your portfolio and most of the funds used to build portfolios come with a cost less than 0.10 percent each year. Overall, this puts SoFi as one of the cost leaders in the robo industry. You’ll also have access to human financial advisors for no additional cost and won’t have to worry about them trying to sell you on unnecessary products because they don’t work on commission. You can get started investing at SoFi with just $1, making it a solid option for those just starting out.
Unfortunately, SoFi doesn’t offer tax-loss harvesting, which has become industry standard among leading robo-advisors. You also won’t have access to socially-responsible funds, which is a feature that’s popular with younger investors.
Existing SoFi clients may appreciate having all their assets in one place, but others may find more comprehensive offerings from Wealthfront or Schwab, both of which offer tax-loss harvesting and advanced goal-planning tools.
SoFi Automated Investing: In the details
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 nine ETFs representing broad swaths of the market (emerging markets 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 just one exception) 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. In fact, 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. That puts SoFi among the cheapest portfolios out there.
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 a 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. SoFi buys fractional shares in your account, so your money will be fully invested.
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 an attractive interest rate on the account once you set up direct deposit.
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.
Cons: Where SoFi Automated Investing could improve
No tax-loss harvesting
SoFi doesn’t offer tax-loss harvesting, and it’s a valuable feature across the industry, so it’s surprising that SoFi doesn’t provide it. Tax-loss harvesting allows you to optimize your tax bill while still being invested, and it’s just a smart (and perfectly legal) way to use the tax code to your advantage. It’s a key disadvantage against rivals Wealthfront and Betterment, both of which do offer the tax-saving feature.
No socially responsible investing option
SoFi does not offer a socially responsible investing option as one of its portfolios used in the automated platform, which is a hole in SoFi’s lineup. This has become a common feature for many robo-advisors as younger investors express more of an interest in how their money is invested and the impact it has. Investors interested in taking this approach might consider robo-advisor options such as E-Trade Core Portfolios or Morgan Stanley Access Investing, each of which offers socially-responsible funds.
Lack of transparency
It’s not as easy as it should be to find information on SoFi’s site, and you may have to turn to the fine print and legal documents to find the particulars that you need to know.
When you’re dealing with money, you want the costs to be laid out very clearly, and that’s something that SoFi doesn’t do for its automated investing product. While it’s easy enough to see that it doesn’t charge any management fee (for now), it’s difficult, if not impossible, to find what a typical portfolio might pay in terms of fees. Naturally, each portfolio will pay something a little bit different, depending on the specific funds and how they’re weighted in the portfolio.
The company does disclose what you will pay for its in-house ETFs, both of which have no expense ratio (for now at least) and which may be included in some automated portfolios.
But as for which other ETFs you might invest in? That’s not clear before you actually open an account and click through to the fine print. Contrast this to Schwab Intelligent Portfolios and others, where you see every investible fund and its cost before you even sign up.
Conflict of interest
Because SoFi may invest your portfolio in its own in-house funds, it has a conflict of interest. It discloses this conflict and which of its funds its robo-advisor might invest in after you sign up. As noted above, at least for now the expense ratio on SoFi funds used in the automated investing plan is waived. This may change later on, however, so you may pay fees in the future.
That said, SoFi discloses that its financial advisors are salaried and not paid on commission. That’s an important factor to note, since it eliminates one of the most likely places for egregious misconduct, when an advisor tries to upsell a client on a product they don’t really need.
Compared to portfolios offered by other robo-advisors, SoFi’s portfolio construction will feel basic, with its five model portfolios for taxable accounts and five for retirement accounts. The allocations between stocks and bonds range from an all-bond portfolio (conservative) to all stocks (aggressive).
That said, the simplicity in the portfolios is not necessarily a bad thing, since so much in finance is unnecessarily complex. Given the sophistication of other robo-advisor platforms, you might feel a bit underwhelmed by SoFi’s platform, but don’t let that concern you too much.
Betterment5.0 Bankrate Score
Betterment offers a high level of service and features across every aspect of its robo-advisor, from its core investment management to low-cost funds to premium features such as tax-loss harvesting. You can also upgrade your service if you need unlimited access to human advisors, and get access to a feature-rich cash management account, too.
Axos Invest3.0 Bankrate Score
Axos Managed Portfolios offers a strong robo-advisor service with some premium features, all at a reasonable price. Clients also receive a wide choice of funds, including socially responsible funds, though the associated cash management account forces clients to jump through some hoops to receive what is only a mediocre interest rate.
Interactive Advisors4.5 Bankrate Score
Interactive Advisors has upped its game this year, with new features such as tax-loss harvesting that put it among the top robo-advisors. That’s on top of one of the widest range of investing choices, low-cost funds and low overall fees. As strong as all these features are, though, the robo-advisor doesn’t offer access to human advisors, not unusual among robo-advisors.
SigFig3.0 Bankrate Score
SigFig keeps costs low whether it’s account fees, fund fees or the annual management fee. You’ll also get access to human advisors and benefit from automatic rebalancing and tax-loss harvesting. But the lack of a cash management account and relatively high account minimums may cause some investors to look elsewhere.
E-Trade Core Portfolios3.5 Bankrate Score
E-Trade Core Portfolios offers a capable robo-advisor, one that may work best for customers looking to keep their accounts with the broker while having someone do the investing for them. Clients will get low-cost funds as well as less-common choices such as socially responsible funds, though the service doesn’t offer tax-loss harvesting or many tools.
Titan Invest3.0 Bankrate Score
Titan offers something unusual in the robo-advisor space: Titan combines its own actively managed investments with passively managed ETFs, something no other major robo-advisor does. It also hedges those portfolios, does not charge a management fee for the passive funds – a rarity among rivals – and has a low minimum, making it easy to get started.
Morgan Stanley Access Investing3.5 Bankrate Score
For younger investors looking to invest based on their values or certain themes, Morgan Stanley’s Access Investing provides a suitable option among robo-advisors. Investors can choose between impact portfolios that focus on environmental, social and corporate governance (ESG) issues, market-tracking portfolios that minimize fees and performance-based portfolios that attempt to outperform through active management.
J.P. Morgan Automated Investing3.0 Bankrate Score
J.P. Morgan Automated Investing provides portfolio management services with automatic rebalancing and may be a good fit for existing J.P. Morgan customers. But you’ll also pay above-average management fees and have limited account types to choose from. There’s also no tax strategy included in the offering.
Vanguard Digital Advisor3.0 Bankrate Score
Vanguard Digital Advisors keeps it simple: an investment portfolio comprised of four funds at a low all-in price, and then adds on helpful tools and educational components. The combination should do well for clients who don’t need a robo-advisor to provide everything under the sun but want competent investment management from a proven and knowledgeable leader.
Fidelity Go4.5 Bankrate Score
Fidelity Go offers a solid robo-advisor offering that beginning and cost-conscious investors will especially appreciate. However, investors looking for features such as tax-loss harvesting or comprehensive goal planning may be disappointed.
Personal Capital4.0 Bankrate Score
Personal Capital customers will get an experience that more closely resembles that of a traditional financial advisor than a robo-advisor, but you’ll need at least $100,000 to get started. You’ll also get a comprehensive tax strategy to help minimize what you owe to Uncle Sam. But this higher level of service does come at an above average cost compared to the rest of the robo-advisor industry.
Stash3.5 Bankrate Score
Stash’s managed portfolios might appeal to small investors who are looking to save as they spend, but the monthly fees can be high for investors who don’t have a large balance built up and there are only a few types of accounts available.
M1 Finance4.5 Bankrate Score
M1 Finance takes some of the best of what brokers and robo-advisors do and mixes it into a new service that provides automated investing in a fully customizable portfolio – all for no cost. If you want to take it up a notch, you can pay an additional fee and receive a host of upgraded features, including one of the best cash management accounts out there.
Wealthfront5.0 Bankrate Score
Wealthfront offers a strong lineup of features – sophisticated portfolio management using low-cost funds – that showcase why it’s one of the leading independent robo-advisors. It provides a strong cash management account, a robust planning tool and premium features such as tax-loss harvesting that may more than pay back your annual fee.
Ellevest3.5 Bankrate Score
Ellevest brings a competent and well-considered robo-advisor, pitching itself to women, whose financial needs are traditionally underserved. But don’t think it won’t work for anyone who needs nuanced investment management, since it offers low-cost funds, socially responsible funds and – unlike most rivals – a flat monthly fee, making it advantageous for those with more to invest.
Schwab Intelligent Portfolios5.0 Bankrate Score
Schwab Intelligent Portfolios provides a top robo-advisor experience that should be a good fit for many investors. The basic plan comes with no management fee and a low-cost portfolio, plus you’ll get Schwab’s top-notch customer support and easy-to-use platform. The premium plan comes with unlimited access to human financial advisors, but both plans come with above-average account minimums and tax-loss harvesting isn’t an option until you reach at least $50,000 in assets.
Acorns3.5 Bankrate Score
Acorns is a good choice for new investors who are starting with small sums of money, allowing customers to build a diversified portfolio with just a few dollars. However, the fees are above average for small account values, though they’ll decline as your portfolio grows, and you won’t find any tax strategy as part of the robo-advisor offering.
Wells Fargo Intuitive Investor4.0 Bankrate Score
Wells Fargo Intuitive Investor is a solid robo offering that gives customers easy access to human financial advisors at no additional cost along with tax-loss harvesting that can help you save on taxes. However, the management fee is above average unless you’re an existing Wells Fargo banking customer.
Ally Invest Managed Portfolios4.0 Bankrate Score
Ally Invest Robo Portfolios are a good option for new investors who pay particular attention to costs. Existing Ally clients may also appreciate having all their finances in one place. Unfortunately, Ally doesn’t offer tax-loss harvesting or provide human advisors to help with those especially difficult questions.
Merrill Guided Investing3.5 Bankrate Score
Merrill Guided Investing offers a credible investing service for Bank of America customers, but its high management fee makes it less attractive among a competitive field of robo-advisors. Merrill offers several positives, including access to human advisors and low-cost investment funds, but premium features such as tax-loss harvesting are missing.
Marcus Invest4.0 Bankrate Score
Marcus Invest offers the core feature of a robo-advisor – portfolio management – and then adds some twists, such as several portfolio types, all for a cost-competitive fee. It’s a great add-on for current Marcus customers, though some features of higher-end robo-advisors such as tax-loss harvesting and an expansive toolset are missing.