SoFi Automated Investing Review 2024
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Our Take
4.4
Reviewed in: Nov. 2024
Period considered: Oct. - Nov. 2024
The bottom line:
on SoFi Invest's website
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Pros & Cons
Pros
Access to certified financial planners.
1% match on IRA rollovers and contributions.
Range of portfolio options.
Access to socially responsible investments and alternative investments.
Cons
No tax-loss harvesting.
Compare to Similar Brokers
Fees 0.25% management fee | Fees 0.25% management fee | Fees 0.25% with a balance over $20K or qualifying recurring deposit. Otherwise, $4/month. |
Account minimum $50 | Account minimum $500 | Account minimum $0 $10 to start |
Promotion 1% match on rollovers and contributions Terms and conditions apply. Roll over a minimum of $20K to receive the 1% match offer. Matches on contributions are made up to the annual limits. | Promotion Get a $50 customer bonus when you fund your first taxable investment account | Promotion Get 1% match of your net Roth and traditional IRA contributions until December 30, 2024. Terms apply. |
Learn more on SoFi Invest's website | Learn more on Wealthfront's website | Learn more on Betterment's website |
AD Paid non-client promotion | AD Paid non-client promotion | AD Paid non-client promotion |
NerdWallet doesn’t invest its money with this provider, but they are our referral partner – so we get paid only if you click through and take a qualifying action (such as open an account with or provide your contact information to the provider). Most importantly, our reviews and ratings are objective and are never impacted by our partnerships. Our opinions are our own. Here is a list of our partners and here’s how we make money.
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Full Review
In this review of SoFi Automated Investing
Where SoFi Automated Investing shines
Broad range of low-cost investments.
Access to certified financial planners.
1% match on IRA contributions.
Where SoFi Automated Investing falls short
No tax-loss harvesting: SoFi does not offer tax-loss harvesting, a service offered by many of its competitors that can reduce taxes owed on investment gains.
Account management fee. SoFi now charges a 0.25% account management fee for its robo-advisor service.
Alternatives to consider:
For tax-loss harvesting: Wealthfront and Betterment
For no account management fee: Schwab Intelligent Portfolios
What type of investor should choose SoFi Automated Investing?
Beginning and younger investors.
Hands-off investors.
Investors who need financial planning guidance.
Investors who want a robo-advisor to manage alternative investments or socially responsible investments.
Changes to SoFi Automated Investing
Starting in November 2024, SoFi rolled out a revamp of its Automated Investing service — this review has been updated to reflect the new product. The primary change includes splitting portfolios into three themes based on investment type and risk level — Classic, Classic with Alternatives and Sustainable — and introducing a management fee of 0.25%. The previous service charged no management fee.
Existing SoFi robo-advisor clients will see their portfolios migrated into the Classic portfolio theme type with no change to their risk level. Once completed, there will be an option to switch to either the Classic with Alternatives or Sustainable portfolio type.
IRAs will be migrated first, followed by taxable accounts. As part of the migration, most investments in IRAs and roughly one-third of the investments within taxable accounts will be sold and reinvested in new funds based on long-term and risk-adjusted returns, according to SoFi . While this won't incur any taxes for IRA investors, SoFi estimates that taxable accountholders may realize some taxable gains, typically 0.70% or less of the account's value.
Investors who don't wish to migrate to SoFi's new robo-advisor can take the steps listed here based on their account type. If SoFi is no longer a fit for you, see our list of the best robo-advisors for other options.
What the Nerds think 🤓
June Sham, lead investing writer
"SoFi's changes to its robo-advisor simplifies the portfolios offered into three categories based on investment type and risk level: Classic, Classic with Alternatives, and Sustainable. The new Sustainable option now allows investors to invest in companies that prioritize environmental, social, and corporate governance policies, which wasn't available through SoFi before.
"There are a few drawbacks — the $1 account minimum has been replaced with a $50 minimum, and there is now a 0.25% management fee. There also isn’t an option for tax-loss harvesting, which can help with offsetting capital gains taxes, and is offered by many of SoFi’s competitors. While this might not be a deal-breaker for everyone, more experienced investors might find SoFi less attractive because of this limitation.
"For other investors, knowing you can tap an advisor for help is a big plus, especially for those who prefer to have their portfolio managed but would rest easier knowing they still have access to CFPs."
SoFi Automated Investing at a glance
Reviewed: Nov. 2024.
Period considered: Oct. - Nov. 2024.
Account minimum | $50. |
Account management fee | 0.25%. |
Investment expense ratios | Expense ratios vary depending on the portfolio theme and risk level. Classic ranges from 0.05% to 0.21%, Classic with Alternatives ranges from 0.18% to 0.51%, and Sustainable ranges from 0.13% to 0.22%. |
Account fees (annual, transfer, closing) | $100 for outgoing ACAT transfer to move assets out of account. |
Portfolio mix | Three portfolio themes, each with five risk levels and a difference between taxable and IRA accounts to optimize for after-tax returns:
|
Socially responsible portfolio options | Available within the Sustainable Investing Portfolio theme. |
Accounts supported | Individual and joint non-retirement accounts. Roth, traditional, SEP and rollover IRAs. |
Tax strategy | To help reduce the tax impact on portfolio updates and withdrawals, SoFi uses a tax-minimization strategy to select which investments to sell first. Additionally, allocations in taxable and IRA portfolios differ to optimize after tax returns. |
Automatic rebalancing | Portfolios are automatically rebalanced if there's a 5% drift from its target. |
Human advisor option | Access to licensed and credentialed financial planners. |
Savings account/cash management account | Members have access to SoFi checking and savings account, which has a competitive APY for direct deposit members. |
Customer support options | Customer support is available by chat and phone Monday – Friday 8am-8pm ET. No support available on Saturday and Sunday. |
How to sign up for a SoFi Automated Investing account
Some readers may already be familiar with SoFi because of other financial services the company offers, such as loans and banking. To sign up for an automated investment account, you'll need to navigate to SoFi's website, create an account if you don't already have one, and then choose the automated investing option.
SoFi Automated Investing supports several types of accounts. You can open individual or joint taxable brokerage accounts, as well as retirement accounts — Roth or traditional IRAs, rollover IRAs and SEP IRAs.
Those looking for a wider selection of account types, such as 529 plans or the ability to link their 401(k) account, may not find SoFI's current collection satisfactory.
To gauge which type of portfolio might be best for you, SoFi asks how long you plan to invest, what you're investing for, and how comfortable you are with risk in order to suggest an investment strategy. From there, you'll be able to choose portfolios that range from conservative to aggressive (more on this below).
Once your strategy is set, you'll need to fund the account in order to start investing.
How much does SoFi Automated Investing cost?
As of November 2024, SoFi Automated Investing now charges a 0.25% management fee. This is typical of most major robo-advisors, such as Axos Managed Portfolios, which charges a 0.24% management fee, and Wealthfront, which charges 0.25% for automated investing. However, previously SoFi did not charge any management fees.
SoFi's portfolios carry a range of expense ratios, depending on the theme of portfolio chosen and the risk level. The breakdown is as follows:
Classic: 0.05% to 0.21%
Classic with Alternatives: 0.18% to 0.51%
Sustainable: 0.13% to 0.22%
It is common for robo-advisors to pass expense ratios on to investors, as these fees are charged by the funds used in portfolios and not the robo-advisor itself. Some of the expense ratios charged by funds SoFi uses are on the high side, but that is because SoFi offers access to alternative investments that many competitors do not.
Another notable fee from SoFi is a $100 outgoing transfer fee, which is also on the high side compared to other advisors. A range of $50 to $75 is more typical. However, this fee is only charged when you want to move investments out of your account.
SoFi Automated Investing portfolio selection
When it comes to investing your account, SoFi clients can now choose from three different portfolio types based on risk tolerance and investment objectives. The portfolios are managed by SoFi's investment committee alongside global asset manager BlackRock.
Within the Classic portfolio theme, investors will find a mix of low-cost stock and bond ETFs. Those who want to add alternative assets, such as real estate and private markets to their portfolio can opt into the Classic with Alternatives theme.
The third theme option is Sustainable investing, which is for investors that want to focus on positive environmental, social, and corporate governance practices.
Other key SoFi Automated Investing features
Automatic rebalancing
As with some of the most popular robo-advisors, SoFi Automated Investing provides automatic rebalancing. Every time money enters or leaves your account (for example, a deposit), SoFi checks your portfolio against the target allocation and rebalances it as close as possible. In addition, the advisor monitors your portfolio daily to see if it's more than five percentage points off-target and, if so, will adjust the portfolio back to the target.
Human advisor option
SoFi stands out here in a big way: All clients have access to the company's financial advisors at no extra charge. These advisors are CFPs or pursuing their CFP designation, which holds them to a fiduciary standard that binds them to operate in your best interest. They’re also noncommissioned advisors, meaning they don't make money off of specific trades or actions they recommend.
On top of this, advisors are available at a range of hours and through various contact methods. You can schedule a phone or video appointment Monday through Friday 4 a.m to 5 p.m. Pacific time. This is a great advantage for newer investors or those looking to access certified financial planners.
IRA contribution match
SoFi now offers a match on IRA contributions — when you make a contribution, SoFi will add an extra 1%. That means if you contribute $6,000 to an IRA at SoFi this year, SoFi will add an extra $60 as a bonus.
SoFi's offer applies to rollover contributions as well, such as from a 401(k) — however, to receive the 1%, you must rollover $20,000 or more through their rollover partner, Capitalize. If you're able to rollover from a 401(k), that 1% could quickly add up on higher rollover amounts.
Savings account/cash management options
SoFi members have access to SoFi's checking and savings account. The account pays a competitive interest rate, especially for customers who have direct deposit or more than $5,000 in monthly deposits.
Other features of the online bank include no account fees, which include overdraft, minimum balance, and monthly fees. Customers can also take their paycheck up to two days early, and the savings features include Vaults, or separate baskets that can be designated for specific savings goals.
Customer support options
Customer support for technical issues is available via phone and chat 8 a.m. to 8 p.m. Monday through Friday, Eastern time. There is no support on Saturday or Sunday.
Other features you should know
SoFi offers goal planning to help you save for retirement, a down payment on a home, college or something else. The robo also offers bonuses to all members and there is no monthly minimum to be a member. Members can receive complimentary career coaching as well as members-only events such as dinners and talks. They’re also eligible for reduced interest rates on SoFi loans. If you already have your student loans or a mortgage with SoFi, or are planning on taking out a loan, extending your relationship with the company could be worth something extra to you.
Good to know about SoFi Automated Investing
No tax-loss harvesting
SoFi doesn't offer the option for tax-loss harvesting, which is a strategy where underperforming assets are sold at a loss to offset taxable capital gains, reducing an investor's tax liability. For some investors, this could be a key disadvantage with SoFi.
Is SoFi Automated Investing safe?
There is always a risk with investing, as the stock market can be volatile and investment returns aren't guaranteed. SoFi carries all the appropriate protections, including SIPC insurance, and is a member of FINRA.
If utilizing SoFi's checking and savings account to store cash before investing, there is up to $1.5 million in FDIC coverage included.
Is SoFi Automated Investing worth it?
SoFi's updated Automated Investing product sees some expansion for investors when it comes to investment options, particularly when it comes to ethical investing. While it has added an account minimum, the amount is fairly low and could still be worthwhile for new investors to experiment with the service. Additionally, SoFi offers access for all clients to meet with licensed financial advisors and career counselors, making it a solid choice for beginning and younger investors.
However, more advanced investors who are utilizing taxable accounts may want tax-loss harvesting, which SoFI doesn't provide. Additionally, a new 0.25% management fee and higher average expense ratios than the previous SoFi Automated Investing iteration could be a drawback for others.
on SoFi Invest's website
