SoFi Wealth Management Review 2017

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SoFi burst onto the Wealth Management scene with a fee-schedule that competes aggressively with pure robo-advisory firms and a service level that rivals what is offered by dedicated financial advisors.

SoFi began in 2011 as a student lender targeting Ivy leaguers and prime borrowers. Since then, the company has expanded to offer Personal Loans, Mortgage Loans, Life Insurance and now Wealth Management.

A primary reason SoFi has grown its lending business so rapidly is its refreshing transparency when it comes to fees as well as its focus on innovating products, such as helping borrowers to find jobs when they lose work. SoFi’s Wealth Management offering continues the trend of offering products that are refreshingly unlike the status quo. For example, SoFi offers an innovative fee structure that is free to existing borrowers and a customer-focused offering that excludes hidden fees.

SoFi Spotlight

SOFI SPOTLIGHT
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InvestorMint Rating

5 out of 5 stars

  • Management Fees: 0.25% of assets invested
  • Account Balance Minimum: $500

SoFi Customers

SoFi began by serving prime borrowers from Ivy League and top tier colleges like Stanford, Harvard, University of Pennsylvania and others. SoFi targets HENRYs, which are defined as High Earners Not Rich Yet. With its Wealth Management solution, SoFi aims to serve customers who began as borrowers and have progressed in their careers to build sufficient assets to invest. As such, SoFi partners with its clients throughout their entire financial life-cycle, from students in debt to equity-rich executives.

SoFi’s Wealth Management solution is designed for the hands-off investor who wants the personal touch offered by traditional financial advisors and the low fees charged by robo-advisors. When it comes to fees, SoFi rivals competitors, such as Betterment, Personal Capital and Wealthfront but offers even more bang for the buck.

For a fee of just 0.25%, which Wealthfront charges for a pure robo-advisor experience, SoFi also allows clients access to live advisors, who are not commission based and not incentivized to upsell you as a result. With this combination of low fees and high service, SoFi takes direct aim at established robo-advisor firms, such as Personal Capital, which has higher fees for a similar level of service, and Betterment, which introduced its premium service connecting clients to live advisors, also for higher fees than SoFi.

SoFi is best for:

  • Existing SoFi borrowers
  • Hands-off investors
  • Fee-conscious investors
  • Investors who want access to human advisors

SoFi Management Fees

SoFi fees has among the most competitive fee schedules of all technology powered advisors; 0.25% of assets invested, which also provides access to live advisors.

  • Management Fees: 0.25% of assets under management

SoFi imposes a $500 account balance minimum or lower for those investing $100 monthly. And it charges 0.25% of assets under management, in line with competitors, such as Wealthfront.

SoFi Investment Method

SoFi has an experienced investment committee, including its CEO and co-founder, Mike Cagney, as well as Chief Economist, Michael Dooley, and former CEO of KKR Financial, Nino Fanlo.

SoFi uses Modern Portfolio Theory to spread investments over many asset classes, business sectors, industries, and countries to statistically optimize the mix of stocks, and bonds, as well as real estate and precious metals, such as gold.

SoFi recommends model portfolios with a mix of low-cost, index-based exchange-traded funds, based on assets, income and age. ETF portfolios are curated by SoFi’s investment team and automatically rebalanced monthly.

While SoFi portfolios are actively managed and markets are monitored to adjust for changing economic conditions, customers seeking tax-loss harvesting and tax-optimized portfolios may be better served elsewhere, such as at Wealthfront.

SoFi avoids conflict of interest by not receiving compensation for selecting certain funds or families of funds, meaning that funds are selected based on merits alone.

SoFi Tools

SoFi provides a goal-based retirement calculator to assess the likelihood that retirement goals will be met.

SoFi applies a goal-based approach to wealth management. Based on age, income and investable assets, SoFi recommends an investment portfolio to achieve investment goals that it maps out. Clients can adjust their own level of risk tolerance to update selections.

A risk simulator in SoFi’s goal planner helps assess risk and probability of reaching set retirement goals. Savings adjustments that increase timeline to retirement and amounts deposited will reflect on the probability of reaching retirement goals.

SoFi Pros and Cons

SoFi offers a wealth management solution with a highly competitive fee structure, combining a personal touch with technology powered investment methods.  Plus, it has perhaps the best customer experience of any financial institution having fostered a true community feel, regular offline social meet-ups, educational events and much more.

SoFi Pros SoFi Cons
Management Fees: 0.25% of assets under management with a $500 account balance minimum (lower if contributing $100 monthly). Notably for a fee similar to rivals, its service level is greater in allowing customers access to live advisors. Tax Optimization: Unlike Wealthfront and some other robo-advisory services, SoFi doesn’t employ Direct Indexing to optimize tax-loss harvesting benefits.
Live Advisors: Across its product suite, SoFi begins with a customer-first focus and their Wealth Management offering is no different, combining the low fees associated with technology powered robo-advisors and the human touch of dedicated financial advisors to produce a hybrid, best-of-both-worlds, offering. 529: Like Betterment and Personal Capital, SoFi does not offer 529 Plans yet. For those wishing to get a head start saving on college tuition expenses for beneficiaries, Wealthfront might be a better option.
Customer Experience: SoFi excels in almost every dimension of customer experience, from rewarding existing borrowers with low fees, to combining live advisors with a low-fee solution, to inviting members to its Facebook group and sharing information about live educational meet-ups close by, to promoting a social community and much more.
Live Chat: In our customer support evaluations, we found SoFi to be highly responsive; it took less than 2 minutes to reply comprehensively to Live Chat queries and email responses were received within a day.
Tools: SoFi offers a retirement tool to assess the likelihood that a client will be able to retire and maintain their lifestyle objectives.

SoFi Fees & Minimums

SoFi has the lowest fees we found among both robo-advisory firms and traditional personal financial advisors.

Category Fees
Account Management Fees 0.25% of assets managed
Investment Expense Ratio Low
(only ETFs)
Account Minimum $500
(lower if contributing $100 monthly)
Annual, Transfer, Closing Fees None

SoFi Accounts

SoFi supports individual accounts, Roth IRA, Traditional IRA and SEP IRA accounts.

Type Capability
Individual Non-retirement YES
Roth IRA YES
Traditional IRA YES
SEP IRA YES
Rollover IRA NO
529 Plans NO

SoFi Summary

Among technology-powered robo-advisors with hybrid offerings that include dedicated financial advisors, SoFi stands out from the crowd. While most robo-advisors offer purely wealth management solutions, SoFi has numerous lending options, including mortgages, personal loans, student loans, student loan refinancings, and insurance products. Having earned trust among existing customers for its transparent fees and refreshing community-feel, SoFi can more easily win business as a trusted wealth manager among its existing customers as they progress from cash-strapped borrowers in the early stages of their careers to wealthier investors in senior career roles.

Although SoFi’s tax optimization is not as advanced as competitors yet, SoFi has a demonstrated history of innovating products that put customer experiences and interests first.

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