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Updated on Wednesday, October 23, 2019
SoFi has become well known for its lending products, including student loan refinancing and mortgages, as well as its life insurance offerings. SoFi Automated Investing is the company’s robo-advisor platform, offering both beginners and hands-off investors a great way to reach their financial goals.
Using sophisticated investing strategies as well as personal judgment, SoFi’s financial advisors have baked five different portfolio strategies into this robo-advisor platform. You can choose one strategy based on your risk tolerance, or fund multiple portfolios for different goals — all of which will help you build wealth consistently over time.
Who should consider SoFi Automated Investing?
SoFi Automated Investing is ideal for beginning investors looking to get their feet wet without a large amount of money. You can open an account with as little as $1 and set up recurring investments. Plus, it’s up to you to decide whether you want to make one-time investments or create an on-going investment plan — this makes it easy for newbies to get their feet wet.
Additionally, SoFi Automated Investing is well-suited for long-term investors looking to do very little of their own portfolio management. Thanks to broad-based ETFs that don’t rely on individual stock picking, there is very little effort required on the investor side, which makes SoFi Automated Investing ideal for financial goals such as retirement.
The platform asks you to choose from different types of portfolios, ranging from conservative to aggressive. The latter types are good for saving for short-term goals, including weddings and down payments for a house.
SoFi Automated Investing isn’t ideal for active traders or those who prefer a more hands-on approach to investing. Investors can’t trade individual stocks, or choose the components that make up their investments. If you’re looking for a more active, hands-on approach, you might consider SoFi Active Investing.
SoFi Automated Investing fees and features
|Amount minimum to open account|
|Account fees (annual, transfer, inactivity)|
|Mobile app||iOS, Android|
|Customer support||Phone, Email, 4 branch locations|
Commissions and fees
SoFi Automated Investing charges no management fees, and its investments have some of the lowest ETF expense ratios. Compare SoFi Automated Investing with the costs associated with other robo-advisors:
|Robo-advisor||Annual Management Fee||Average Expense Ratio (portfolio with moderate risk)|
SoFi Automated Investing
|0.25% (up to $100,000), 0.40% (over $100,000)||0.11%|
|0.00% (up to $10,000), 0.25% over $10,000)||0.15%|
|$12/yr||0.03% to 0.15%|
SoFi Automated Investing offers some of the lowest costs in the robo-advisor space, allowing you to keep more of your money in your account, earning compounding returns over time.
SoFi Automated Investing offers five different types of portfolios designed to help investors reach their goals. Portfolios include:
- Conservative: Created using assets that carry a lower risk. They are designed for those who have a timeline of six months to three years. Paying for a wedding is a goal that might fit this portfolio.
- Moderately conservative: These portfolios include assets that have a fairly low risk, but are designed with a little growth meant to help investors reach goals that are three to five years out. Saving up for a home down payment is a goal that might fit this strategy.
- Moderate: With this type of portfolio, an investor might be a little more comfortable with risk, and the assets reflect that. There won’t be too much risk, but there is enough to help work toward a variety of goals that fall within the next 10 years.
- Moderately aggressive: For investors hoping to reach goals within five to 20 years, these portfolios include assets that are considered higher-risk, and that offer higher potential returns. Goals like early retirement can be included in this type of portfolio.
- Aggressive: Investors with the highest level risk tolerance — and more time to recover from market events — can use an aggressive portfolio. Goals, like saving for a child’s education, that are more than 10 years out can benefit from this type of strategy.
SoFi Automated Investing can help you decide which type of portfolio is most likely the best for your needs, and allow you to tweak it a bit. Additionally, it’s possible to change your strategy at any time if you feel the need.
Financial planning features
It’s possible to consult with a financial planner, at no cost to you, when you have a SoFi account. These financial professionals are fiduciaries, meaning they have to put your needs first when giving you advice.
It’s fairly easy to set up a time to meet with an advisor for a 30-minute session. SoFi has a calendaring app that allows you to click on a subject and then schedule a time to speak with someone. Once you choose a time, the available advisor will pop up and you can confirm the appointment. In general, the advisor you speak with is based on the topic and time slot you choose.
Some of the topics you can choose to speak with someone about include:
- Planning for children
- Managing debt
- Buying a home
- Retirement and financial independence
- Getting a financial checkup
Each time you sign up to talk to someone there’s a chance you’ll be speaking with a different advisor, unless you coordinate to ensure that you speak with the same professional each time.
In addition to providing portfolio management, SoFi also offers a cash management account called SoFi Money. Basically, it’s a brokerage account that offers many of the same benefits as a checking account.
With SoFi money, you can make deposits, pay bills and even transfer money to others. Plus, there is also the ability to write checks and use a debit card connected to the account. In addition, money in this account earns a higher rate of interest than traditional savings accounts.
One of the most interesting features of the SoFi Money account is the fact that there are no overdraft fees and all ATM fees are reimbursed. So, even if you end up with a negative balance, you won’t be charged a fee.
Your SoFi Money account is integrated with the company’s other products, so you can utilize it seamlessly with your SoFi Automated Investing account.
Because SoFi isn’t a bank, it makes use of partner banks to hold deposits and provide FDIC insurance to cover the balances up to the legal limit.
Strengths of SoFi Automated Investing
- No management fees: SoFi doesn’t charge any management fees, and the average ETF expense ratio (for a moderate risk portfolio) is 0.08%, which is lower than many competing platforms.
- Diverse investments: This robo-advisor offers a wide range of ETFs in more than 20 different asset classes. This makes it possible for you to diversify your portfolio and customize it to your risk tolerance. You can get exposure to U.S. and international stocks, bonds and real estate, with automatic rebalancing when needed.
- Automatic rebalancing: Every quarter, SoFi Investing automatically rebalances your portfolio to help ensure that your asset mix remains on track to help you meet your financial planning goals. SoFi makes changes when an asset varies by more than five percentage points from its original allocation.
- Free access to financial advisers: It offers unlimited access to financial planning professionals at no additional charge. SoFi’s financial advisers are fiduciaries, which means they must adhere to your best interest and they don’t make commissions based on recommendations.
- Bonuses: Being a “member” of SoFi allows you access to some special bonuses. For example, SoFi often holds in-person events for which you can receive an invitation to join. On top of that, if you use SoFi Automated Investing, you can get rate discounts on other SoFi products. Finally, you can access career advice on top of financial planning help.
Drawbacks of SoFi Automated Investing
- No tax-loss harvesting: SoFi investing doesn’t offer any sort of tax strategy beyond the fact that it offers ETFs. It doesn’t automatically harvest losses when you sell ETFs and it won’t distribute your assets across your accounts in the most advantageous way.
- Limited types of accounts: While you can open individual and joint taxable accounts, and set up retirement accounts, there aren’t a lot of other options. You can’t open a 529 account or set up a custodial account. If you’re looking to do a little more, you may want to explore other options.
Is SoFi Automated Investing safe?
Anytime you invest, it’s important to be careful and comfortable with your strategy. You always run the risk of loss whenever you put your money into any investment account. However, SoFi investing is as safe as any other robo-advisor. The use of index ETFs means that your portfolio follows overall market trends, which, over time, tend to head higher returns (despite short-term losses).
On top of that, SoFi Automated Investing carries SIPC insurance, which protects account holders in the event that the broker fails. However, realize that SIPC insurance doesn’t protect your portfolio from losses due to market and economic events.
Before you invest, check with resources like FINRA BrokerCheck and the Better Business Bureau to see what disclosures and complaints might be related to the company.
Is SoFi Automated Investing right for you?
SoFi Automated Investing is a good option for most investors looking for a simple way to manage a long-term portfolio. It’s very easy to open an account and you get free personalized financial planning help and advice to help you coordinate your portfolio to meet your various financial goals.
If you’re more interested in active trading, it might make more sense to consider a more traditional broker. Additionally, you might want to compare some of the features with other robo-advisors to see if SoFi Automated Investing has everything you require for long-term success. Consider your needs and compare SoFi with services like Betterment, Ellevest, and Wealthfront to see if it works for you.