SoFi Automated Investing: A low-cost robo-advisor for Millennials
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Updated: December 29, 2023
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We adhere to strict standards of editorial integrity to help you make decisions with confidence. Please be aware that some (or all) products and services linked in this article are from our sponsors.
SoFi (short for âsocial financeâ) has been around only since 2011, but in the space of those years, it's grown to over 3.5 million members.
With SoFi, you get a range of financial services, including personal loans, a checking and savings account, and investing. And with SoFi Automated Investing, the company's robo-advisor, you get a custom portfolio to help you reach your investing goals for no fees.
But is SoFi Automated Investing worth it? Our review is covering all of the features you need to know and how SoFi stacks up against other popular robo-advisors.
Pros
- Open an account with just $1
- Free access to human advisors
- Automated rebalancing for your portfolio
- Set financial goals and track your progress
- No annual management fee
Cons
- High fees for many SoFi ETFs
- Fewer portfolio options than some leading robo-advisors
- No ESG or SRI portfolios
- No tax-loss harvesting
What is SoFi Automated investing?
SoFi Automated Investing is a hybrid robo-investing service with human financial advisors on standby to help you manage your investment plan. This wealth management product combines the familiar automated investing of major robo-advisors with professional advice typically reserved for full-service, human-assisted investing.
Like many other robo-advisors, SoFi Automated Investing uses Modern Portfolio Theory (MPT) to create and manage your portfolio's asset allocation. Specifically, SoFi invests your money in various ETF portfolios to help provide diversification.
For many young professionals, SoFi is the best of both worlds. It brings the ease of self-service and online financial management. And it provides human assistance whenever you want that too. Plus, there's a $1 funding minimum, and you don't pay any account management fees.
This lack of fees is one of the main selling points for SoFi Automated Investing, and the $1 minimum is great if you're investing with little money.
Customers can also open a SoFi Active Investing account to trade stocks and ETFs, invest in crypto, and buy fractional shares. But if you want to put your investing on autopilot, SoFi Automated Investing is for you.
What makes SoFi Automated Investing great?
With a $1 funding minimum and access to human advisors, SoFi Automated Investing is appealing for new investors. Plus, there are several other features that make it a top robo-advisor.
Easy signup process
The online signup process is quick and easy. Just answer some simple questions, enter your goals, select a custom strategy for your goals, choose your accountâs tax status, enter your personal information and fund your account. You can open an account with as little as $1.
On the next screen, you enter your birthdate, savings progress so far, and intended savings rate. Next, you choose an investment strategy that SoFi suggests based on your goals and risk tolerance.
Of course, you can manually adjust your strategy. But it's nice that SoFi points you in the right direction.
As for accounts, SoFi Automated Investing supports:
- Taxable and joint accounts
- Traditional, Roth, SEP, and Rollover IRAs
Currently, SoFi doesn't support accounts like 401(k), 529 plans, or custodial accounts.
Variety of SoFi portfolios
With SoFi Automated Investing, you invest in portfolios of ETFs and bonds. Concentration of bonds and ETFs vary depending on your goals and risk tolerance. If fixed-income or less risk is your goal, you'll invest in more bonds. On the flip side, SoFi prioritizes various ETFs if you want higher returns.
Examples of SoFi Automated Investing portfolios include:
- Moderate: For investors who can stomach a bit of risk with investing goals 10 years or sooner.
- Moderate Conservative: Ideal for low-risk investors with short-term goals in the next 3 to 5 years.
- Conservative: Even more risk-averse and suitable for investing goals of 6 months to 3 years.
- Moderate Aggressive: A good portfolio for investors who want some risk for higher returns and have an investing horizon of 5 to 20 years.
- Aggressive: A good portfolio for investors who want to maximize returns and can take on more risk with a long-term investing horizon.
Portfolios also invest in a variety of SoFi ETFs. The company currently offers six different ETFs, ranging from a weekly dividend ETF or gig economy ETF to ones that mirror the S&P 500.
Finally, SoFi also invests in a variety of other ETFs from companies like Vanguard. Overall, this provides ample diversification and is similar to other popular robo-advisors.
Automatic rebalancing
When you set up your account, you invest a portion of your assets in stocks and a portion in bonds. For example, a moderately aggressive portfolio may be 75% stocks and 25% bonds.
Over time, though, your portfolio may grow to 80% stocks and 20% bonds. If this happens, you need to rebalance your portfolio back to your 75/25 ratio. With SoFi, that rebalance happens automatically. You donât have to think about it, remember it or lift a finger. Rebalancing happens for you.
Access to human advisors
One of the main selling points of SoFi Automated Investing is that you get access to SoFi Advisors who can help answer your questions and plan your financial goals.
Advisors, who are Certified Financial Planners, are paid a salary, not a commission. So you wonât run into issues with conflicts of interest or crazy fees. In fact, SoFi offers this advisory service at no additional cost. If you want a robo-advisor with human support, SoFi Automated Investing is one of your best options.
Plus, you also get access to other SoFi products and discounts. For example, members can get discounts on SoFi personal loans, use SoFi Money to earn interest on your cash, and open a rewards credit card.
Competing products from Betterment and Empower offer similar access to a human advisor, but this is not the standard in low-cost, automated investing.
Goal planning
Knowing what path to take to meet your goals can be confusing. It's easy to say, âI want to buy a houseâ or âI want to save for my kidsâ college.â But how are you going to get there?
If you donât have a strong background with investing, SoFiâs tools, plus access to an advisor, can help you set goals and make sure that they make sense.
Where could SoFi Automated Investing improve?
On paper, SoFi Automated Investing is a no-fee robo-advisor that also provides access to professional human help. However, there are some missing features and hidden fees investors should be aware of.
High SoFi ETF fees
SoFi claims it doesn't charge annual advisory fees, and this is true. In comparison, popular robo-advisors like Betterment and Wealthfront charge 0.25% annually.
However, SoFi has one massive downside: many of its ETFs have high management fees.
Not only is this unusual for ETFs that are often used by robo-advisors because they have low fees, but it makes SoFi's competitive pricing not so competitive.
For example, SoFi's Gig Economy ETF has a gross expense ratio of 0.59%, and so does the TGIF ETF. And while ETFs like Select 500 waive fees for the first year, you pay 0.19% afterwards.
All-in-all, this means SoFi's pricing is similar to many top robo-advisors. The fact you get free access to human advisors is the real selling point, but don't think you're not paying fees for using this robo-advisor.
No tax-loss harvesting
Tax-loss harvesting is a strategy that involves selling off assets at a loss to realize that loss. You can then repurchase similar assets to keep your portfolio's composition the same but potentially save money when filing taxes since you can declare capital losses.
Leading robo-advisors like Betterment and Wealthfront have automated tax-loss harvesting. You don't get this with SoFi Automated Investing which is a downside.
No Socially Responsible or ESG investing options
These days, many investors care about socially responsible investing (SRI) or ESG investing, which means investing in companies that value the environment, social wellbeing, and corporate governance.
Many robo-advisors are hopping on board. In fact, there are plenty of SRI-friendly robo-advisors like Betterment and Ellevest that support SRI portfolios. And even micro-savings apps like Acorns have an ESG option.
Some SoFi portfolios and ETFs let you invest in ESG companies. However, there isn't a standalone SRI or ESG portfolio at this time.
SoFi Automated Investing pricing
There aren't annual advisory fees for SoFi Automated Investing. You don't pay for access to financial advisors either.
However, expect to pay 0.20% to 0.30% in underlying ETF management fees. You could pay even more depending on the types of SoFi ETFs you invest in since many have high management fees.
Other potential account fees include:
- Account Transfers: $75.
- IRA Closing Fee: $20.
- Inactivity Fee: None.
- Wire Transfer: $25.
Best alternatives
We think SoFi Automated Investing is a competitive robo-advisor, especially if you use other SoFi services. The fact you get free access to human advisors is also a major selling point, and the $1 minimum is very beginner-friendly.
However, SoFi isn't as low-fee as it appears on the surface. And if you want more portfolio choices and features like tax-loss harvesting, certain alternatives are superior.
Here's how SoFi Automated Investing compares to some other major players in the industry: Betterment, Empower, and Wealthfront.
| Highlights | Empower | Betterment | Wealthfront |
|---|---|---|---|
| Rating | 4.75/5 | 4.5/5 | 4.5/5 |
| Minimum to open account | $100,000 | $10 | $500 |
| 401(k) | â | â | â |
| Two-factor authentication | â | â | â |
| Advice options | Automated, human-assisted | Automated, human-assisted | Automated |
| Socially Responsible Investing | â | â | â |
| - | Sign up | Sign up | Sign up |
Read our Empower review.
Read our Betterment review.
Read our Wealthfront review.
Betterment is our overall favorite due to the $0 minimum funding requirement and low 0.25% annual fee. Plus, Betterment has more portfolio options than SoFi and also includes automatic rebalancing and tax-loss harvesting. And for accounts over $100,000, you get access to a human advisor. Wealthfront is also an excellent robo-advisor if you want more control over the ETFs and assets in your portfolio. The main downside versus SoFi Automated Investing is that Wealthfront is completely automated so there aren't human advisors.
As for Empower, it's actually not a robo-advisor. Rather, clients with at least $100,000 in assets work with Empower's Wealth Management team to get personalized advice and build a custom portfolio. Empower also has plenty of useful free tools, like an investment fee analyzer and savings planner to help you save for retirement.
Summary
There aren't many robo-advisors that offer fee-free access to human advisors without requiring a large portfolio. But as a SoFi Automated Investing customer, you get access to the entire SoFi ecosystem, which includes a range of financial products and professional guidance.
That said, SoFi's competitive advantage isn't its lack of management fees as it advertises. ETFs from the company are steep, and it also lacks some features many leading robo-advisors have.
For a more well-rounded robo-advisor with more portfolio selection, we suggest Betterment. But if you want access to human advice and are new to investing, SoFi Automated Investing is still an excellent choice.
All rates, figures, estimates, terms, state availability, and savings calculations are current at the time this article was written. All of the above may update in the future.
Moneywise receives cash compensation from Wealthfront Advisers LLC (âWealthfront Advisersâ) for each new client that applies for a Wealthfront Automated Investing Account through our links. This creates an incentive that results in a material conflict of interest. Moneywise is not a Wealthfront Advisers client, and this is a paid endorsement. More information is available via our links to Wealthfront Advisers.
