SoFi Investing Review

Do you like the idea of building wealth automatically?

I’m pretty sure we all do. SoFi can’t gaurantee such an automation, but its robo-advisor aims to do just that.

SoFi got its start in 2011 as a student loan platform. Now, it’s investment platform, dubbed “SoFi Invest”, allows users to invest in stocks, ETFs, mutual funds, and cryptocurrencies. There’s an automated option as well, for those who prefer kicking their feet up and letting something else take over. 🎯

SoFi is considered to be a safe since it’s regulated by top-tier regulators such as Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). The broker takes it’s customers safety very seriously so your funds are protected by through Securities Investor Protection Corporation (SIPC) investor protection scheme in case the broker goes bust. The limit of SIPC protection is $500,000, and the limit for cash is $250,000.

Think SoFi Invest is right for you? Let’s take a deeper dive.

SoFi Invest started as a student loan platform but has continually expanded. The platforms robo-advisor, SoFi Automated Investing, is great for socially conscious investors seeking low fees.

Fast Facts

• Account Minimum: $0
• Fees: No Fees Required
• Best for: Younger investors seeking low fees
• Highlight: Automatic rebalancing with access to certified financial planners

Ratings

• Commissions & Fees: 8.5/10
• Investment Selection: 6/10
• Account Options & Features: 8.5/10
• Usability: 6.5/10
• Educational Resources: 7/10
• Customer Service: 8/10
• Overall: 7.5/10

Visit SoFi Invest on SoFi Invest’s website

SoFi’s Automated Investing Robo-Advisor Product: Pros & Cons 📜

Of all the products in SoFi’s continually expanding customer portfolio, one of the freshest and most exciting is SoFi Automated Investing (formerly named SoFi Wealth). SoFi Automated Investing is among the new breed of so-called “robo advisor” digital automated investing platforms.

The platform is great for younger investors who do not have a lot of capital to start with and are fee-conscious. It uses Modern Portfolio Theory (MPT) to provide a solid — yet automated — approach to building wealth.

What does all that even mean, anyway?

A robo advisor platform makes use of two key elements to drive consumer investing success.

1. Digital algorithm 👨‍💻

Digital algorithms are a key facet of any robo advisor platform’s viability in this rapidly expanding segment of the fin-tech marketplace.

Each investment platform has its own proprietary in-house algorithm. The algorithm works quietly, continuously, in the background, issuing predictions and probabilities based on past averages and up to real-time market movements.

The digital algorithm is a big part of how a digital online automated investing product can help investors meet their profitability goals even if they are brand-new to investing.

2. Human advisors ☎

The second key facet of any robo advisor investing product is still good old-fashioned human beings with advanced financial and brokerage knowledge.

After all, even if you have learned a ton about investing basics, portfolio building, retirement options and diversification of assets, there is always more to learn.

As well, as you move through different life stages, your investing needs and goals may (and often do) change.

This is where having access to human financial and investing advisors at no additional charge to you can really come in handy. It is a huge selling point for any robo-advisor investment product worth participating in.

SoFi Compared

Accounts & Fees

Management fees

0%

0.25%

Account Minimum

$0

$0

Account Types

• Traditional, Roth, SEP, & rollover IRAs
• Joint and individual and non-retirement accounts

• Cash account
• Traditional, Roth, SEP, & rollover IRAs
• Joint and individual and non-retirement accounts
• Trusts

General

Best for

• Low fees
• Younger investors

• Hands off investors
• Retirement accounts

Promotion

None

1 year of free management, with qualifying deposit

Human advisor?

Yes, certified financial planners available at no cost

Yes, but only with Betterment Premium (0.40% fee)

Rating

7.5/10 Visit SoFi Invest on SoFi's website

9.5/10 Visit Betterment on Betterment's website

Accounts & Fees

Management fees

0.25%

$3 or $12/month

Account Minimum

$0

$5

Account Types

• Cash account
• Traditional, Roth, SEP, & rollover IRAs
• Joint and individual and non-retirement accounts
• Trusts

• Individual non-retirement accounts
• Traditional & roth IRAs

General

Best for

• Hands off investors
• Retirement accounts

• Hands-off investing
• Investors who have difficulty saving

Promotion

1 year of free management, with qualifying deposit

None

Human advisor?

Yes, but only with Betterment Premium (0.40% fee)

Rating

9.5/10 Visit Betterment on Betterment's website

7.0/10 Visit Acorns on Acorns' website

Accounts & Fees

Management fees

0%

0.25%

$3 or $12/month

Account Minimum

$0

$0

$5

Account Types

• Traditional, Roth, SEP, & rollover IRAs
• Joint and individual and non-retirement accounts

• Cash account
• Traditional, Roth, SEP, & rollover IRAs
• Joint and individual and non-retirement accounts
• Trusts

• Individual non-retirement accounts
• Traditional & roth IRAs

General

Best for

• Low fees
• Younger investors

• Hands off investors
• Retirement accounts

• Hands-off investing
• Investors who have difficulty saving

Promotion

None

1 year of free management, with qualifying deposit

None

Human advisor?

Yes, certified financial planners available at no cost

Yes, but only with Betterment Premium (0.40% fee)

Rating

7.5/10 Visit SoFi Invest on SoFi's website

9.5/10 Visit Betterment on Betterment's website

7.0/10 Visit Acorns on Acorns' website

Goal Planning Features are a Major Plus 🏁

SoFi Automated Investing is reaping seriously high marks for goal planning.

With an ultra-low barrier to entry (you can open an investment account with a deposit of just $1) and an encouraging assortment of zero-fee investment options, SoFi’s robo advisor hits the bulls-eye when appealing to younger capital-poor investors.

This is a major win, especially when you factor in the rapid digital on-boarding process – you can have your account set up and activated in a few clicks and voila! You are an investor! This limits new-investor anxiety and back-tracking. Before you know it, the algorithm will go to work to set up your portfolio and allocate your assets. Overall, this is a good thing.

However, because of the self-directed nature of the platform, it will be up to you to reach out to the human advisors who are there to serve you and answer your questions.

Rather than sitting back and scratching your forehead while wondering “why is that asset in my portfolio?” you will need to remind yourself to take action if you want to see changes in your portfolio allocations.

Feature-Rich, Hands-Off Investing Platform 🖥

Truthfully, there is little not to love about SoFi’s new robo advisor platform, even going so far as to say it beats out its more established competitors.

Here again, SoFi’s robo advisor gets top marks for appealing to younger, less savvy and capital-poor investor segment. They may not have plush funds as of yet, but with a little hand-holding and encouragement, they someday will.

SoFi’s platform also scores a win in terms of investors seeking a truly automated (i.e. hands-off) investing option. After all, not everyone loves to sit and stare at portfolio projections, but everyone wants to retire with a nest egg someday.

With a nice selection of no-fees required and low-fee assets, zero management fees and a team of crack financial advisors available for fee-free investment guidance, it is hard not to appreciate what SoFi has put together with this platform.

One key drawback that is mentioned again and again, however, is the lack of tax loss harvesting. If you are not familiar with tax-loss harvesting, this is a term that refers to the practice of selling securities that are posting a loss to help offset potential capital gains at tax time.

While many robo advisor platforms automatically include tax-loss harvesting in their services packages, SoFi is not yet one of them.

This may be due to SoFi’s focus on appealing to younger investors with lower-value portfolios, who may not see the immediate impact such a service can provide at tax time. However, it will likely represent a continued barrier to entry for more seasoned investors who will expect automated tax loss harvesting assistance.

Easy Setup and Account Activation 📱

One of the most interesting aspects of studying how SoFi’s new automated investment platform is received is to witness the disparity between how different independent reviewers perceive the same features.

Take, for example, account opening. SoFi’s robo-advisor account opening process has been simultaneously praised and criticized for the rapidity with which you can be up and running and on to investing.

What is the key takeaway here?

Ultimately, what works perfectly well for one investor may be the wrong fit for another investor. Here, it is vital to remember that along with ease of on-boarding may come a glossing-over of certain finer points of asset allocation.

The more data that a robo-advisor platform gathers from you up front during the account creation part of your on-boarding process, the longer the account creation itself will take.

However, on the flip side, this data can then be factored in to how and how well the in-house algorithm (and any human advisors you choose to work with) will invest on your behalf.

In other words, a more generic (i.e. quicker) account creation process is likely to generate more generic investing results. In contrast, a more detailed (i.e. lengthier) account creation process is likely to generate more personalized investing results.

Another example is customer service. SoFi’s robo-advisor customer service team has garnered very low and very high reviews.

Here, it doesn’t take an algorithm to realize that a faster on-boarding process with lower investment minimums and zero management or advising fees is going to deliver less hand-holding from a human customer relations team.

With lower barriers to entry and a customer base of inexperienced investors seeking a hands-off investment experience, occasional customer service contact will likely still generate high satisfaction scores and high ratings.

Conversely, for more experienced investors seeking and expecting a highly individualized, hands-on experience, any lag time or lack of personalized contact (i.e. use of FAQ or email versus live chat and phone support) is going to attract low satisfaction scores and consequently lower satisfaction ratings.

Once again, the disparity in ratings is less about the service SoFi is offering and more about what each customer requires and whether SoFi is the right investing platform to deliver on your investing needs.

SoFi’s Hybrid Platform Beats Out Traditional Robo-Advisor Competitors 💻

Because SoFi’s Automated Investor robo-advisor platform includes both automated (digital algorithm-based) investor guidance and the option for working with human financial advisors, some are calling it a “hybrid” robo-advisor platform.

This is also part of the SoFi platform’s appeal and, it could be argued, a successful strategy by SoFi to diversify its own offerings to both newbie and experienced investors. As such, it exists in company with only a handful of similarly structured platforms.

Overall, however, the SoFi platform aims to draw in younger (millennial) investors with $10,000 or less to invest who are seeking a platform that will automatically optimize their investment results.

As such, it offers a fairly standard menu of investment options, each of which can be managed via the desktop portal or via an iOS/Android app along with the more traditional email, live chat and telephone assistance as needed.

Missing are certain higher-level features like tax-loss harvesting, 401k product support and options for Coverdell, custodial, non-profit and limited/partnerships.

As of August 15, 2019, SoFi did move to include 529 contributions as a part of its menu of investment offerings – a new and welcome offering for individuals and families in need of college savings and planning support.

Easy, Fast, Convenient Robo-Advisor 🤖

If you are seeking an easy, fast, convenient and essentially free robo-advisor platform, SoFi may just be the perfect fit.

Despite some of the not-insignificant hurdles the corporation has had to overcome in recent years, there is no doubt this reportedly $4.8 billion giant is sitting on some pretty stable financial ground.

In fact, SoFi’s position in the marketplace is such that competitor Charles Schwab even made a play to buy SoFi outright in mid-2019. The deal never went through, however.

With SoFi, you get two modes of investing operation to choose from, automated and active. This means you can be as hands-off or hands-on with your online portfolio as your time and interest permits.

As a side note: as SoFi’s platform continues its fast-paced evolution in a similarly-paced industry, it is worth committing to a more active role to avoid certain less-wanted automatic portfolio rebalancing actions.

As well, not all investment assets are completely fee-free – most notably certain ETF products (ETF stands for “exchange traded funds”). Here again, reading the fine print matters, however dull it may be while it lasts.

SoFi is Granted a Coveted BitLicense ⭐

At the end of 2019, the New York Department of Financial Services (NYDFS) granted Sofi’s application for a BitLicense.

Shiny new BitLicense in hand, SoFi now offers customers the option to trade crytocurrency within its SoFiInvest product.

Why is the NYDFS license so important for SoFi’s public/customer reputation? Only applicants that can demonstrate commitment to uphold a particularly stringent set of security, fraud protection and consumer prevention are approved for a BitLicense. SoFi passed the test with flying colors.

SoFi Secures Naming Rights for New Stadium 🚀

As of January 2020, SoFi excitedly announced landing naming rights for the new stadium.

This is the stadium that will house the Los Angeles Chargers and Los Angeles Rams, host the 2022 Super Bowl and host the 2028 Olympic Games opening and closing ceremonies.

Conclusion 💭

There’s no doubt SoFi Invest has a lot to offer. If you’re looking for a world-class robo-advisor with no management fees, SoFi Invest should absolutely be at the top of your list.

There simply isn’t a lot you can’t like when it comes to SoFi Invest’s offering. If you’ve read everything above, you now know why!

SoFi Investing and the Competition

See how SoFi Investing compares to the top investing platforms by reading one of the reviews below.

• Acorns Review
• M1 Finance Review
• Personal Capital Review
• Betterment Review
• Stash Invest Review
• Robinhood Review
• Blooom Review

About the author

Tim Fries

LinkedIn Email

Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate on the investment team at RW Baird's US Private Equity division, and is also the co-founder of Protective Technologies Capital, an investment firm specializing in sensing, protection and control solutions.