Robo Advisor Reviews

SoFi Invest Review 2019 – (formerly SoFi Wealth) – Expert Analysis

Staff Columnist, Kevin Mercadante

SoFi Invest – SoFi Automated Investing Review

SoFi Wealth recently rebranded as SoFi Invest!

The newly launched SoFi Invest adds 3 verticals to the SoFi platform.

The SoFi Invest category includes:

  • Active Investing – This SoFi stock investing platform allows you to buy shares of stock or even partial shares and get started investing on your own, for free.
  • Automated Investing – The SoFi robo-advisor invests your money in diversified exchange traded funds, or ETFs and manages it for you.
  • SoFi ETFs – SoFi offers four ETFs: SoFi Select 500 (SFY), SoFi Next 500 (SFYX), SoFi 50 (SFYF) and SoFi Gig Economy (GIGE).

In this SoFi Investing Review you’ll learn about the legacy Sofi Wealth robo-advisor platform now called Sofi Invest Automated Investing. You’ll discover the Sofi Invest features, fees (there aren’t any!), and find out who SoFi Invest automated investing is best for. We’ll also touch on a brief overview of the other SoFi Invest platforms; active investing and SoFi ETFs.

The SoFi Story

Short for Social Finance, Inc., SoFi is best known for providing student loan refinances. SoFi was founded in 2011, as an online lending platform. In fact, SoFi has grown to be one of the most innovative and comprehensive financial platforms in the industry. In addition to SoFi Invest, the company has various loans, insurance, and cash management options.

The platform has grown to more than 600,000 members and funded more than $30 billion in loans. SoFi is making a name for itself.

The SoFi Invest automated investing platform recently placed number one in the “best robo-advisor performance” in two categories. Recently, SoFi became the first startup online lender to receive an AAA rating from Moody’s.

For only $1, you can open up an account with SoFi Wealth Management. And better still, your account will be managed for free! This gives SoFi a seat at the free robo-advisors table. 

SoFi Automated Investing Review – Features at a Glance

OverviewFree automated investment management robo-advisor platform with financial advisors
Minimum Investment Amount$1
Fee StructureNo management or transaction fees
Top FeaturesLive advisors with personalized service; access to SoFi member benefits; career planning.
Free ServicesIn addition to free account management, SoFi Automated Investing users have access to a free mobile app and financial professionals.
Contact & Investing AdviceAvailable 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
Investment FundsDiversified low-fee exchange traded index funds-ETS; stock bit purchases available through SoFi Active Investing
Accounts AvailableIndividual and joint taxable accounts; traditional, Roth and SEP IRAs
PromotionsNone at this time.

What Differentiates the SoFi Investing Robo-Advisor from Competitors?

No SoFi Invest Fees

SoFi Automated Investing portfolios are managed for free. This is a perfect arrangement for investors who are looking for professional investment management but don’t want their investment returns reduced by fees.

Compare SoFi with two similar robo-advisors, M1 Finance and Betterment.

Popular independent robo-advisors, such as Betterment and Wealthfront, frequently charge around 0.25% AUM to manage accounts, so SoFi is a competitive alternative for investors who don’t want to pay someone to manage their money. In addition, SoFi Invest robo-advisor has no trading, transfer, custodian or commission fees.

Learn; Robo-Advisor Q + A

SoFi Invest Offers Live Advisors with Personalized Service

Though SoFi Automated Investing is a robo-advisor, they nonetheless offer live advisors to handle your questions and concerns. 

Even though you’re turning your money over to the platform for professional investment management, it often helps to have a live person to talk to about your portfolio. This can be particularly important during times of market turbulence and decline. Market drops are perfectly normal events, but sometimes it helps to have someone available to remind you just that.

This is a welcome feature, given that many robo-advisors limit live customer contact in an attempt to keep investment management fees as low as possible.

Bonus: Robo-Advisors with Financial Advisors 

SoFi Invest Offers Broad Investment Allocation – Real Estate and High Yield Bonds

While robo-advisors typically restrict investment allocation to just two broad categories – stocks and investment grade bonds – SoFi Invest adds a few other asset classes that are not typically on the menu with other investment services.

SoFi investors portfolios’ include up to 20 exchange traded funds, for broad diversification.

These include real estate and high-yield bonds. The real estate position can be significant because it represents a diversification away from stocks and bonds. Real estate also represents a potential inflation hedge. Meanwhile, high-yield bonds offer the opportunity to improve fixed income investment returns, in this very low interest rate environment. Be aware that high yield bonds also pose a higher risk than investment grade.

SoFi Investors Lose Tax-loss Harvesting

SoFi Wealth Management does not offer tax loss harvesting at this time. This can be a major negative for some investors, particularly since it is now offered by an increasing number of SoFi’s robo-advisor competitors such as Personal Capital and Wise Banyan.

SoFi Loan Services 

One of the advantages to investing with the SoFi robo-advisor that you will have access to SoFi’s various loan programs. SoFi is fast becoming one of the most popular options to refinance student loans. But apart from these, the company also offers personal loans and mortgages.

If you don’t have any student loans to refinance, the personal loan program can be particularly attractive. SoFi offers personal loans for up to $100,000, with low rates. In addition, while other P2P lenders typically charge between 1% and 6% for a loan origination fee, SoFi doesn’t have one.

SoFi personal loans are unsecured and can be used for just about any purpose. They may not be what you’re thinking about when you’re looking for an investment management service, but they are an excellent option to have nonetheless.

Who Benefits from the SoFi Robo-Advisor?

Wondering who SoFi is best for?

SoFi Invest can work for anyone who is seeking free professional investment management.

“SoFi’s investment adviser representatives and hold the Series 65 or another qualifying examination or designation. We hold them to a fiduciary standard, meaning they are required to act in our clients’ best interests. We also have a team of planning professionals available to answer more complex questions and to help develop a personalized financial plan,” SoFi website

More specifically, the service seems particularly well-suited for new and small investors since the SoFi investment minimum is one dollar and there are no management fees. The investment advisors are helpful yet not all have the prestigious Certified Financial Planner credential available at Betterment and Personal Capital. 

The SoFi robo-advisor is a no-brainer robo-advisor for anyone with a SoFi loan and wants to consolidate loans, cash management and investing with one firm.

sofi invest review

 

SoFi Invest Automted Investing Drill Down

How SoFi Invest Works

Next come details about the specific Sofi Invest features.

Diversified Investment Mix

Your SoFi Invest automated investing portfolio is based on your risk tolerance. Your portfolio will be comprised of  a broad range of low cost investments. These distinct  ETFs are managed by the platform’s portfolio team.

When you open a SoFi Automated Investing portfolio, there is no ability to purchase investments beyond those that are recommended by the service. That means that you will not be able to include individual stocks, or funds of your own choosing, within your portfolio.

The SoFi robo-advisor invests in diversified ETFs. The mix of these funds is proactively managed and will be changed as either world economic conditions change or the outlook of platform management changes.

Your portfolio is built from a mix of low-fee ETF’s that follow more than 20 indexes, each tracking the performance of different asset classes. Those classes include US stocks, international stocks, high-yield bonds, real estate, short-term treasury bonds, and the stock markets of various countries and regions.

Your investment fund fees start at zero for the SoFi ETFs. While the Vanguard ETFs are all very low fee.

Your individual investment portfolio is based on a mix of factors, including your investment goals and age. And like other robo-advisors, SoFi Automated Investing uses Modern Portfolio Theory or MPT in building your portfolio. MPT emphasizes systematic diversification, rather than chasing “hot stocks”. 

In case you’re wondering – and given that SoFi is a well-established P2P lender – SoFi Wealth Management does not invest any part of your portfolio in the loans that are offered by the lending platform.

SoFi Stock Active Investing

If you’re looking to invest on your own in stocks and ETFs, there is another option: the SoFi Active Investing option allows you to purchase stock bits. Stock bits are fractions of stocks. Instead of buying a certain number of shares, for instance, stock bits allow investors to purchase a set dollar amount.

SoFi ETFs

Another component of SoFi Invest are their four ETFs:

  • SoFi Select 500 (SFY) -currently fee-free and included in the SoFi Automated Investing Portfolios
  • SoFi Next 500 (SFYX) – currently fee-free and included in the SoFi Automated Investing Portfolios
  • SoFi 50 (SFYF)
  • SoFi Gig Economy (GIGE)

The SoFi Select 500 and the SoFi Next 500 promise zero fees for the short term. While the SoFi 50 and the SoFi Gig ETFs charge .29% and .59% expense ratios, respectively.

We don’t see any reason to choose these ETFs over other similar offerings at more established firms such as Fidelity, Vanguard or Schwab.

Periodic Rebalancing 

Your portfolio will be reviewed at least quarterly and will be rebalanced back to your preferred investment mix in the event that one asset is more than five percentage points above its intended allocation. Rebalancing is done more frequently in the event that one asset class moves in a major way, or if management decides to change the mix of the funds within your portfolio.

SoFi Mobile App

Your SoFi Invest account can be accessed by mobile app. You can download their mobile apps for iOS and Android either through the App Store or on Google Play.

Once your account has been set up, you will be guided through a process to set up a four-digit pin number that is specific to your mobile device.

You can even set up a Touch ID/Fingerprint sign-in on both Apple and Android devices that have fingerprint scanners. You must also enable Touch ID/Fingerprint on the app. Once you do, any fingerprints stored on the device can be used to access your account.

SoFi Investing Accounts

SoFi offers individual and joint investment accounts.

The SoFi retirement accounts include:

  • SoFi IRA
  • SoFi Roth IRA
  • SoFi Rollover IRA
  • SoFi SEP IRA

SoFi Investment Returns

During 2018, SoFi demonstrated outstanding performance in the Nummo robo-advisor performance evaluation, clocking in at number one in both the moderate and conservative taxable account categories. The SoFi investing Moderate portfolio earned 9.52% last year, while the Conservative portfolio earned 10.61%.

Your returns will vary based upon when you begin investing and your asset allocation. Although, past returns aren’t an indicator of your future investment returns.

Is SoFi Invest Safe?

Though your account is held with SoFi Wealth Management, a Registered Investment Advisor, the actual broker for the account is SoFi Securities, LLC, while the account custodian is Apex Clearing. Both are members of the Securities Investor Protection Corporation (SIPC), which protects your account from broker failure for up to $500,000 in cash and securities, including up to $250,000 in cash.

These are protections against company failure or malfeasance. All investments are subject to losses that arise from asset price declines.

 Sign Up – How to Invest in SoFi

SoFi Invest is available to US citizens and permanent resident aliens. If you are a permanent resident alien, you’ll have to provide passport information as well as a US taxpayer ID containing a physical address to verify your identity. SoFi Wealth Management will also need to confirm your bank information, which is a typical requirement for investment brokerages of all types.

The SoFi automated investing sign-up process is completed entirely online:

  • Name and account set up
  • Choose between Auto Investing, which is the robo-advisor – or Active Investing where you choose and manage your own stocks and funds (we chose auto investing)
  • Select your goals and list your birthdate:
    • General investing
    • Emergency fund
    • Retirement

From this information, you can see the portfolio that SoFi recommends for you. The five investment portfolio include various percentages of stocks and bonds, depending upon your goals and age. Younger retirement-saving investors will have greater amounts of  stock investments while older investors and those saving for emergencies will have greater amounts of cash and bonds.

  • Conservative
  • Moderately Conservative
  • Moderate
  • Moderately Aggressive
  • Aggressive

The moderate taxable and retirement portfolios includes a 60% stock – 40% bond asset mix.

SoFi investing moderate asset allocation

The aggressive Strategy was 100% invested in stocks. We believe that a 100% stock portfolio is too risky for most investors. Fortunately, you can select your asset allocation after viewing the SoFi robo-advisor recommendations.

The SoFi Automated Investing sign up continues by choosing an account, completing your profile and verifying your identity.

Once the account is set us, you can transfer funds and begin investing.

SoFi Invest Review Pros and Cons

SoFi Automated Investing Pros

  • The zero management fee is a huge advantage. 
  • Access to financial advisors/consultants is attractive. Although, if you’re invested with Schwab Intelligent Portfolios you’ll enjoy zero fees and access to financial consultants for similar advice.
  • SoFi Wealth Management invests in stocks and bonds, the way robo-advisors typically do, but they also offer real estate and high-yield bonds which are rarer in the robo-advisory sphere. 
  • SoFi only requires one dollar to get started, making it the only robo-advisor with zero fees, $1 minimum, and financial advisors. 

Bonus; Top 5 Robo-Advisors With Low Investment Minimums

SoFi Automate Investing Cons

  • No tax-loss harvesting. This strategy has been shown to provide a substantial improvement in net annual return on investment but is not offered by the service at this time.
  • The aggressive portfolio is 100% invested in stocks while the conservative portfolio is 100% invested in bonds. The 100% stock aggressive portfolio is too risky for most investors. While the 100% fixed investment portfolio is too conservative for all but relatively short term investors. 
  • Limited account options. Many robo-advisors offer greater account selection.

SoFi Wealth Management Robo-Advisor Review Wrap Up

SoFi Invest could be an excellent choice for new and small investors. You can open up an account with as little as $1. The $0 account management fees are also beneficial for all investor—small or large alike.

SoFi also offers social events in large communities. Especially enticing for younger investors is the opportunity to chat with career counselors. Ellevest is the only other robo-advisor with this benefit.

Larger more seasoned investors may want to look elsewhere. While free account management is certainly appealing, the platform currently does not offer tax loss harvesting. This will be a decided disadvantage for investors with large positions in taxable investments.

As mentioned in this review, SoFi is also a P2P lending powerhouse. Since student loan refinances are SoFi’s specialty, this could be the perfect robo-advisor for recent college graduates with student loans they want to refinance, and who are looking to begin investing.

If you’d like to learn more about the SoFi robo-advisor, or if you’d like to open up an account, check out the SoFi Invest website and see if this robo-advisor fits your needs.

Visit our Robo-Advisor Selection Wizard, answer 4 questions and get a personally curated list of robo-advisors that meet your criteria.

Kevin Mercadante is professional personal finance blogger, and the owner of his own personal finance blog, OutOfYourRut.com. He has backgrounds in both accounting and the mortgage industry. He lives in New Hampshire and can be followed on Twitter at @OutOfYourRut.

 

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Barbara A. Friedberg, MBA, MS

Barbara A. Friedberg, MBA, MS

2 Comments

  1. Bon Bon
    April 11, 2019 at 4:57 pm — Reply

    Sofi does not charge AUM fee anymore. You might want to update your review for that. In addition, they also have no fee ETFs. Can you do a review of their ETFs vs other ETFs that they have in their portfolio?

    • April 22, 2019 at 12:41 pm — Reply

      Hi Bon Bon, I’m in the process of updating all of the review articles for 2019. Thanks for the reminder about SoFi. I appreciate it. I’ll get to the update very soon!

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