Betterment vs. SoFi Invest— Overview
One of the biggest hurdles to investing is having enough money upfront. For new investors, some robo-advisors— like Vanguard’s robo-advisor, with its $50,000 minimum— are completely out of reach.
The two robo-advisors we are comparing today both boast affordable initial investments. Far from being basic robo-advisors, however, Betterment and SoFi Invest have something to offer novice and seasoned investors alike.
- Betterment vs. SoFi Invest— Overview
- Betterment vs. SoFi Invest— Top Features
- Betterment vs. SoFi Invest— Who Benefits?
- Betterment vs. SoFi Invest— Fees and Minimums
- Betterment vs. SoFi Invest— Robo Investing Deep Dive
- Betterment vs. SoFi Invest— Human Financial Planners
- Betterment vs. SoFi Invest— Tax-Loss Harvesting
- Betterment vs. SoFi Invest— Investments
- Betterment vs. SoFi Invest— Rebalancing
- Betterment vs. SoFi Invest— Customer Support
- Betterment vs. SoFi Invest— Cash Management
- Betterment vs. SoFi Invest— Which is Best? The Takeaway
What is Betterment?
Betterment is a goals-based advisor that has been around for nearly a decade, making it one of the original robo-advisors. Over the years, Betterment has shown its willingness to grow with its clients— they have since developed new financial planning services, as well as increased client access to human financial planners.
What is SoFi Invest?
Social Finance, or SoFi for short, made a name for itself as a place for well-qualified borrowers to refinance their student loans. However, SoFi has long since moved beyond loan refinancing services. SoFI has exploded it’s offerings including money management, investments, and insurance.
As a robo-advisor, SoFi Invest is quite competitive. In addition to allowing users to select active or passive account management, SoFi Invest is one of the most affordable robos on the market.
Betterment vs. SoFi Invest— Top Features
|Overview||Goals-based digital investment manager with access to financial advisors and cash management.||Free automated investment management robo-advisor platform with financial advisors. Active or passive account management available.|
|Minimum Investment Amount||No minimum for Betterment Digital. $100,000 minimum for Betterment Premium.||$1|
|Fee Structure||Digital-0.25% AUM up to $2 million; 0.15% fee over $2 million|
Premium-0.40% AUM up to $2 million; 0.30% fee over $2 million.
|No account management fees.|
|Top Features||Digital and hybrid investment management (with financial advisor access) options. All investors can text with financial advisors. Socially-Responsible Investing, income and smart beta portfolios available. Tax loss harvesting available.||Live advisors with personalized service; access to SoFi member benefits; career planning.|
|Free Services||Free portfolio review.||In addition to free account management, SoFi Automated Investing users have access to a free mobile app and financial professionals.|
|Contact & Investing Advice||Phone support M-F. Email support 7 days per week. Financial advisor access available.||Available by email and phone, Monday through Thursday, 4:00 AM to 9:00 PM, Pacific time, and Friday through Sunday, 4:00 AM to 5:00 PM, Pacific time. Financial advisor access for all clients.|
|Investment Funds||Low fee exchange traded funds from diverse asset classes.||Diversified low-fee exchange traded index funds-ETFs; stock bit purchases available through SoFi Active Investing.|
|Accounts Available||Single and joint taxable brokerage. Roth, traditional, rollover and SEP IRA. Trust.||Individual and joint taxable accounts; traditional, Roth and SEP IRAs.|
|Promotions||N/A||Free $25 in Stock Bits account after funding a SoFi Invest automated investing robo-advisor account.|
Betterment Top Features:
- Texting access to financial planners
- Tax-loss harvesting
- Smart-Beta portfolios
- Financial planning a la carte packages
SoFi Invest Top Features:
- Active and passive investing strategies
- An opportunity to have multiple financial products under one company
- No account management fees
- Financial advisor access for all
Betterment vs. SoFi Invest— Who Benefits?
Anyone who is looking for a free robo-advisor would benefit from SoFi Invest. While Betterment’s low fees certainly make it one of the more affordable robo-advisors available, you just can’t beat zero account management fees!
Investors who are looking for a robo-advisor with a long history will benefit from Betterment’s long-term work in the industry. Betterment launched in 2010, making it one of the oldest and most well-established robos on the market.
For those want to get started investing with robo-advisors but don’t have a lot of money to invest from the start, either Betterment or SoFi Invest will be beneficial. With their virtually non-existent minimum investment requirements, both robo-advisors are accessible to anyone.
Betterment vs. SoFi Invest— Fees and Minimums
Betterment and SoFi Invest are essentially tied in the minimum investment category, with minimum investments of $0 and $1 respectively. Their account management fees, however, differ.
Betterment Fees and Minimums
Betterment has two account types, each with its own minimum investment amount and account management fees.
Betterment Digital has no minimum investment requirement. Fees are 0.25% AUM for accounts valued under $2 million and drop to 0.15% AUM for accounts over that amount.
Betterment Premium has a $100,000 minimum investment. Investors will pay 0.40% AUM for accounts under $2 million, and 0.30% for accounts over $2 million.
A la carte financial planning sessions are available as well and range from $199 to $299 depending on the number of sessions purchased.
SoFi Invest Fees and Minimums
SoFi requires only $1 for an initial investment, which makes the difference between SoFi Invest and Betterment negligible. After all, any robo-advisor needs something to invest!
The real difference between Betterment vs. SoFi Invest is that SoFi does not have any account management fees. Free robo-advisors aren’t that rare, but not many of them offer multiple other financial services under the same company— something that gives SoFi Invest a competitive edge.
Although, Schwab Intelligent Portfolios also lacks account management fees, and belongs to a broad-based financial firm with decades of history.
SoFi invest takes the fee trophy with zero account management fees. The SoFi Invest vs. Betterment minimum competition is a tie.
Betterment vs. SoFi Invest— Robo Investing Deep Dive
Betterment vs. SoFi Invest— Human Financial Planners
Betterment clients have the opportunity to text with human financial professionals at any portfolio level, digital or premium. Betterment also gives Premium clients unlimited access to Certified Financial Planners, a top certified advisor designation.
For those who want some access to human professionals but aren’t looking to pay the Premium account management fee, Betterment’s a la carte financial planning sessions might be the right choice.
SoFi Invest offers live investment advisors to answer client questions or concerns. This is a huge selling point for SoFi, since few free robo-advisors offer human financial professionals. For more complex questions, and to help develop a personalized financial plan, SoFi has a team of financial planning professionals.
Choose a robo-advisor in under one minute: ROBO-ADVISOR SELECTION WIZARD
The SoFi vs Betterment financial advising win goes to SoFi investing as their financial planning access is free.
Betterment vs. SoFi Invest— Tax-Loss Harvesting
Betterment clients will get tax-loss harvesting, regardless as to whether they are Digital or Premium clients. Betterment claims to beat other automated tax-loss harvesting algorithms by around 1%, and believes their strategy has the potential to increase portfolio returns by 0.77% per year.
Betterment is the clear victor here, because SoFi Invest does not offer tax-loss harvesting. SoFi clients do have the option to open a SoFi IRA account, some of which may be tax-advantaged.
A quick reminder, tax loss harvesting only applies to taxable accounts, not retirement accounts.
Betterment vs. SoFi Invest— Investments
Betterment offers a wide range of investments, including:
- US. Total Stock Market Stocks
- US. Large-, Mid-, and Small-Cap Value Stocks
- International Developed and Emerging Market Stocks
- US. High Quality Bonds
- US. Municipal Bonds
- US. Inflation-Protected Bonds
- US. High-Yield Corporate Bonds
- US. Short-Term Treasury Bonds
- US. Short-Term Investment-Grade Bonds
- International Developed and Emerging Market Bonds
- Socially responsible investment funds
- Income portfolio
- Smart beta portfolio
SoFi inestments can include:
- Real Estate
- High-Yield Bonds
- SoFi Select 500 ETF
- SoFi Next 500 ETF
- SoFi 50 ETF
- SoFi Gig Economy ETF
- Small-Cap ETF
- Developed and Emerging Markets ETFs
- Total Bond Market ETF
In the SoFi vs Betterment investment duel, Betterment takes the win due to the well-researched fund selection. We don’t understand the justification for including the Gig Economy or Cryptocurrency in the SoFi portfolio. It seems a bit speculative.
Betterment vs. SoFi Invest— Rebalancing
Rebalancing is a core feature with all robo advisors. This automated task buys or sells specific investment funds at periodic times so that your investment mix, or asset allocation remains in accord with your initial preference.
Simply, if you chose a 60% stock vs 40% bond allocation and it drifts to 65% stock and 35% bond, then 5% of your stock funds would be sold and reinvested in bond funds. That keeps your investment mix constant.
Studies show that rebalancing reduces portfolio volatility and may even boost returns.
Both SoFi Invest Automated Investing and Betterment offer rebalancing. Betterment monitors your asset allocation daily and rebalances whenever your allocation drifts 3% from its target. SoFi rebalances quarterly.
In the SoFi vs. Betterment rebalancing competition, we call a tie. There is a minimal distinction which shouldn’t make a significant difference in your robo-advisor choice.
Betterment vs. SoFi Invest— Customer Support
Customer support doesn’t matter, until you need it, and then – it’s important.
Monday through Friday, Betterment offers daily phone customer service with separate numbers for help with the Betterment Everyday cash management products and investing/general questions. On week-ends, email customer service is available.
SoFi Invest offer phone support seven days a week. This is helpful when you want to talk to someone on the week-end.
SoFi Invest wins the customer support contest.
Betterment vs. SoFi Invest— Cash Management
If you’re seeking high yield cash accounts, then Betterment EveryDay and SoFi Money will both abide. Both offer high yield cash accounts which means that your money earns higher than average interest on the balance. The SoFi savings account offers high yields, similar to those of the Betterment EveryDay savings account. The SoFi checking account is offered through Wilmington Savings Fund Society and also issues a debit card.
While Betterment EveryDay’s checking account and debit card are in the works and expected to launch soon.
Betterment vs. SoFi Invest— Which is Best? The Takeaway
Aross the internet investors ask, “Is SoFi Legit?” or “Is SoFi worth it?” While the same questions might also apply to Betterment.
In the Betterment vs. SoFi Invest head-to-head, it appears as if the robo-advisors are pretty evenly matched. Yet, we always implore you to consider your own needs first and then to evaluate which robo-advisor is a fit for you.
If account management fees are not your main concern, SoFi Invest and Betterment offer unique investment options that can set them apart:
- Betterment offers Socially-Responsible Investment (SRI) options and Smart-Beta portfolios. Investors who want to invest in line with their ethics or who want a chance to beat the market may end up choosing to go with Betterment— provided the 0.25% or 0.40% AUM fees are not prohibitive. Betterment also offers an income option.
- SoFi Invest offers cryptocurrency investment options. This is not common currently, so investors who are interested in cryptocurrency investing have limited options.
Investors who want access to human financial planners can choose either Betterment or SoFi Invest— however, those who want tax-loss harvesting will need to rely on Betterment, as SoFi Invest does not currently offer this service.
Betterment is one of the oldest robo-advisors with a proven record of success and robo investing is their main business. The firm has top notch advisors and a tested strategy.
While SoFi Invest is a newer entrant to the arena with less time in the robo advisory genre.
Clearly, both robo-advisors provide a lot of value to investors. That being said, SoFi Invest’s free account management pushes it ahead in many cases. Unless clients are specifically looking for SRI options, Smart-Beta portfolios, or tax-loss harvesting, SoFi is the clear victor, although we recommend caution when investing in cryptocurrency.
Read the complete Betterment Review.
Direct access: Betterment
Read the complete SoFi Invest Review.
Direct access: SoFi Invest
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Disclosure: I have an account with Betterment.