A Beginner's Guide To Sofi Automated Investing

SoFi's robo-advisor service is a compelling choice for investors, particularly those new to the game. With no management fees, a low minimum deposit, and access to financial advisors, it's a cost-effective way to begin investing.

SoFi's automated investing service uses computer algorithms to generate tailored financial advice based on an investor's risk tolerance and goals. This data is collected via an online survey, and SoFi then recommends and manages a portfolio for the investor.

SoFi's automated investing platform is ideal for those who want a hands-off, low-cost approach. However, it may not be suitable for everyone, especially those seeking a more sophisticated robo-advisor with advanced features like ESG investing or tax-loss harvesting.

SoFi's service is safe to use and is operated through SoFi Wealth LLC, with SoFi Securities as the brokerage. It's also worth noting that while there's no management fee, investors will have to pay the fees charged by the ETFs included in their portfolio, including SoFi's proprietary ETFs, which may become more expensive once fee waivers expire.

How to get started with SoFi automated investing

SoFi's robo-advisor service is an attractive option for those new to investing, with no management fee, a low minimum opening deposit, and access to financial advisors. Here's how to get started with SoFi automated investing:

Sign up for an account

Go to SoFi's website and create an account. You'll need an email and a password.

Complete a survey

After creating your account, you'll fill out a quick survey to determine your risk tolerance and financial goals. This will help SoFi recommend an investment strategy.

Choose your account type

SoFi offers several account types, including individual taxable accounts and standard retirement accounts such as Roth or traditional IRAs and SEP IRAs.

Enter your personal information

To complete the account setup, you'll need to provide additional personal information, including your Social Security number.

Fund your account

Once your account is set up, you'll need to fund it to start investing. There is a minimum deposit of $5 to begin investing.

Choose your portfolio

SoFi offers several model portfolios based on your risk tolerance, including Conservative, Moderately Conservative, Moderate, Moderately Aggressive, and Aggressive.

Access financial advisors

SoFi provides access to licensed financial advisors at no extra cost. You can schedule phone or video appointments with advisors who hold Series 7 and 66 licenses and are CFP professionals.

SoFi automated investing is a good option for those new to investing due to its low fees, low minimum deposit, and access to financial advisors. However, it may not offer the level of customization and advanced features that more experienced investors seek.

The benefits of SoFi automated investing

SoFi's automated investing service is a great option for those who want a low-cost, low-effort way to build wealth. Here are some of the benefits of using SoFi's automated investing:

• Low fees: SoFi's automated investing platform has no management fees, and the expense ratios on the ETFs in your portfolio are relatively low, ranging from 0.02% to 0.07% per year. This makes it a very cost-effective way to invest, especially compared to traditional financial advisors, who typically charge a 1% investment fee.
• Low minimum balance: SoFi only requires a $1 minimum opening deposit and a $5 minimum to start investing, making it accessible to younger and newer investors who may not have a large amount of capital to start with.
• Easy to use: SoFi's platform is user-friendly and intuitive, allowing users to access all their SoFi accounts, including automated investments, bank accounts, and loans, in one place.
• Access to financial advisors: SoFi gives all its clients access to licensed financial advisors at no extra charge. These advisors are CFPs or pursuing their CFP designation and are held to a fiduciary standard, so they are legally required to act in your best interest. This is a significant advantage, especially for newer investors who may want more guidance.
• Goal planning: SoFi provides goal planning resources and calculators on its website to help users save for retirement, a down payment on a home, college, or other financial goals.
• Additional perks: SoFi offers a range of additional perks, including complimentary career coaching, members-only events, and discounts on other SoFi products, such as reduced interest rates on SoFi loans.

SoFi's automated investing service is a compelling choice for those looking for a simple, low-cost way to invest, especially those who are already within the SoFi ecosystem or who want access to financial advisors without paying extra fees.

The drawbacks of SoFi automated investing

SoFi's automated investing platform has been praised for its low-cost management and funds, ease of use, and access to certified financial planners. However, there are several drawbacks to the platform that potential users should be aware of:

• No tax-loss harvesting: SoFi does not offer tax-loss harvesting, which is a valuable feature that allows investors to optimize their tax bill while remaining invested. This is a key disadvantage compared to competitors such as Wealthfront and Betterment, which offer this feature.
• Lack of transparency: SoFi's website lacks transparency regarding costs and other important information. It can be challenging to find details about the fees associated with different portfolios before signing up for an account.
• Conflict of interest: SoFi may invest your portfolio in its own in-house funds, creating a potential conflict of interest. While the company discloses this conflict, it may still influence the investment recommendations made by the platform.
• Limited customization: SoFi's automated investing platform offers limited customization options for investors. Portfolios lack exposure to real estate or REIT funds and do not offer socially responsible or ESG investment options.
• Basic portfolio construction: Compared to other robo-advisors, SoFi's portfolio construction is relatively basic, with five model portfolios for taxable accounts and five for retirement accounts. While simplicity may be beneficial for some, others may find it limiting.
• Account fees: While SoFi does not charge an investment management fee, there may be miscellaneous fees associated with certain actions, such as an IRA closing fee of $20 and an automated customer account transfer (ACAT) fee of $75. Additionally, there is a $100 outgoing transfer fee for moving investments out of your account, which is higher than the typical range of $50 to $75 charged by other advisors.

How SoFi automated investing compares to other robo-advisors

SoFi's robo-investing platform offers a range of low-cost investments, making it an attractive option for cost-conscious investors. The platform does not charge a management fee and has a low minimum balance requirement, allowing anyone to get started with automated investing.

SoFi's robo-advisor service constructs portfolios using a range of low-cost ETFs, including some of its own funds and those from well-known providers such as Vanguard. The portfolios are designed to be well-diversified, with asset allocations varying based on the client's risk tolerance and investment objectives.

One of the key advantages of SoFi's robo-advisor platform is the access it provides to certified financial planners. Clients can schedule appointments with these advisors by phone or video call, allowing for more personalized guidance. This feature sets SoFi apart from other robo-advisors, which often limit access to human advisors.

However, there are some areas where SoFi's robo-advisor platform could improve. Firstly, it does not offer tax-loss harvesting, a feature provided by many of its competitors, which can help reduce taxes owed on investment gains. Additionally, SoFi does not offer a socially responsible investing option, which has become a common feature among robo-advisors. The platform also lacks transparency regarding the fees associated with the ETFs in the portfolios, making it difficult to determine the total cost of investing.

Overall, SoFi's robo-advisor platform is a solid choice for beginning and younger investors, especially those who are cost-conscious or already have existing SoFi accounts. It offers a range of low-cost investment options, access to human advisors, and a user-friendly interface. However, more advanced investors or those seeking specific features like tax-loss harvesting and socially responsible investing may prefer other robo-advisor platforms.

How to transfer to SoFi automated investing from another platform

To transfer to SoFi automated investing from another platform, you will need to contact an Investment Specialist at 855-525-7634 or chat with them online. For IRA accounts, you can transfer between Automated and Active IRA accounts. However, you can only transfer between the same types of IRA, for example, Roth IRA to Roth IRA or Traditional IRA to Traditional IRA. For non-IRA accounts, you must transfer funds to your linked bank account and then to the account you wish to credit.

If you are transferring a brokerage account with a total asset value of over $5,000 through the ACAT system, SoFi will reimburse up to $75 of ACAT fees from your outgoing brokerage firm.

Frequently asked questions