SoFi Wealth Management vs. Schwab Intelligent Portfolios: Which Robo-Advisor Is Better?

robo advisors investing wealth management

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SoFi Wealth Management and Schwab Intelligent Portfolios both offer highly attractive automated portfolio management solutions to customers. Among robo-advisors, few rivals can compete with SoFi and Schwab on fees for the level of service they provide, because both SoFi and Schwab leverage existing business models to offer automated wealth management solutions at low costs.

At Schwab, customers are charged no portfolio management fees which may lead you to wonder how they make money? Schwab populates portfolios with its own funds, and makes money from fund expense ratios, ranging from 0.08% to 0.24% of assets under management.

SoFi offers a comparatively low-cost white-glove wealth management service to clients that combines technology, low-cost funds and access to human advisors. Few robo-advisors can compete as aggressively on management fees as Schwab and SoFi. Most robo-advisors make money simply by charging a fee on assets under management whereas SoFi and Schwab can offer a higher value service for the same or lower cost because their other core businesses, lending and traditional asset management respectively, are so successful.

SoFi Wealth Management Vs. Schwab Intelligent Portfolios

charles schwab

sofi brokerage trading system investing

Where Schwab earns brownie points is that management fees are zero no matter how much a customer invests. At SoFi, wealth management customers are charged 0.25% which, on the surface, seems comparable to rivals, such as Wealthfront and Betterment. But for the same 0.25%, those competitors only provide a basic, automated service whereas SoFi provides clients access to human advisors too for a more personalized investing experience.

Management Fees

SoFi Wealth Management Vs. Schwab Intelligent Portfolios

Robo-AdvisorManagement FeeAccount MinimumRatingBest forOpen Account
charles schwabFull ReviewFree$5,000No Management Fee
sofi brokerage trading system investingFull Review0.25%$500Low Cost & Live Advisors

Schwab has a highly compelling fee structure that has attracted billions in assets under management: no portfolio management fees whatsoever no matter how much is managed. SoFi has a more traditional fee schedule: 0.25% of assets under management, but notably it provides a higher level of service than most rivals for this cost.

Schwab is unbeatable when it comes to management fees, charging 0.0% no matter how much is invested. WiseBanyan also offers a no-fee basic portfolio management service but it does charge fees for optional add-on services, such as tax-loss harvesting, that are in line with portfolio management fees charged by robo-advisors, such as Betterment and Wealthfront.

SoFi doesn’t quite match Schwab toe-to-toe on fees but it does have a highly compelling value proposition. For just 0.25%, the amount Wealthfront and Betterment charge for basic robo-advisory services, SoFi includes access to live advisors too. Few robo-advisors can compete with such a low-fee offering. For example, Personal Capital, which made its name serving higher net worth clients with an automated portfolio management solution combined with access to human advisors, charges a much higher fee of 0.89%.

A simple way to think of how Schwab, SoFi and other robo-advisors make money is as follows:

  • Schwab: makes money on expense ratios incurred on Schwab funds in client portfolios, which typically range from 0.08% – 0.24%.
  • SoFi & most robo-advisors: make money from standard portfolio management fees.

Who Is Better on Fees? Schwab has the edge on SoFi when it comes to fees because it has innovatively figured out how to make money from expense ratios on funds used in client portfolios, thereby enabling it to offer portfolio management at no cost. Compared to most other robo-advisory firms, SoFi is virtually unparalleled in offering a technology-powered investing service with a high personal touch.

Account Balance Minimums

SoFi Wealth Management Vs. Schwab Intelligent Portfolios

SoFi comes out ahead when comparing account balance minimums. SoFi has just a $500 account balance minimum while Schwab Intelligent Portfolios imposes a $5,000 minimum (lower if clients contribute $100 monthly).

Schwab imposes higher account balance minimums than SoFi. Where SoFi has no account balance minimum, Schwab imposes a $5,000 account balance minimum. Although Schwab’s minimum exceeds the minimums at some rival firms, such as at Wealthfront, which has a $500 minimum, and Betterment, which has no minimum, it’s very competitive in the industry as a whole.

Personal Capital, a leader in the robo-advisory industry, imposes a $25,000 minimum while Rebalance IRA has a $100,000 minimum.

Who is Better on Account Balance Minimums? When comparing account balance minimums, SoFi beats Schwab which has the higher minimum of $5,000.

Hybrid Robo Service

SoFi Wealth Management Vs. Schwab Intelligent Portfolios

SoFi and Schwab both offer a hybrid robo-advisory model: technology-powered portfolio management combined with live advisors. Schwab imposes a minimum $25,000 threshold to access human advisors and certified financial planners, whereas SoFi has just a $500 minimum.

For a company that started out as a lender, SoFi achieved what many would have thought was unthinkable pre-2008; it built a community of borrowers who are highly loyal. SoFi has applied the same customer-centric model that brought it so much success in lending to its wealth management division. This is exemplified by combining its technology-powered portfolio management solution with live advisors. From time to time, customers want a more personal touch or a hand-holding experience, and SoFi offers this to clients.

In late 2016, Schwab introduced a hybrid model also, connecting higher net worth clients with over $25,000 of assets under management to human advisors, who provide clients a customized financial plan and ongoing advice. Although this threshold is a lot higher than what SoFi imposes, it’s more competitive than rivals, such as Vanguard Personal Advisor Services, which has a $50,000 minimum for an equivalent service.

Who is Better on Hybrid Robo Service? For smaller-sized nest-eggs, SoFi comes out ahead on the hybrid model of providing technology-powered portfolio management and live advisors because it imposes a $500 account balance minimum, unlike Schwab which has a $25,000 threshold.

Account Types

SoFi Wealth Management Vs. Schwab Intelligent Portfolios

Schwab caters to a broader range of account types than SoFi. Schwab supports custodial accounts in addition to non-retirement, IRA and trust accounts.

As a financial services leader for many decades, it’s not surprising that Schwab wins the battle with SoFi over number of account types supported. Where SoFi caters to Roth, Traditional and SEP IRA plans as well as individual non-retirement accounts, Schwab serves all of those plus joint non-retirement accounts, trusts and custodial accounts.

Who is Better on Account Types? Although Schwab wins this battle, keen observers of SoFi should not bet against it catching up in the near future.

Typecharles schwabsofi brokerage trading system investing
Individual Non-retirementYESYES
Joint Non-retirementYESNO
Roth IRAYESYES
Traditional IRAYESYES
Rollover IRAYESNO
TrustsYESNO
Custodial AccountsYESNO
SEP IRANOYES
529 PlansNONO

Tax Loss Harvesting

SoFi Wealth Management Vs. Schwab Intelligent Portfolios

Schwab supports both free tax-loss harvesting and free portfolio rebalancing. SoFi does actively monitor changing economic conditions but does not provide a tax-loss harvesting service.

Typecharles schwabsofi brokerage trading system investing
Tax Loss HarvestingYESNO
Free Account RebalancingYESYES

Some robo-advisors claim tax-loss harvesting can add as much as 2% annually to performance results. Over time, this becomes ever more important and it’s no surprise that Schwab includes this feature in its portfolio management service at no additional cost.

Even though SoFi does monitor changing economic conditions and dynamically adapts portfolios accordingly, it does not yet provide a tax-loss harvesting service as many rivals, such as Schwab and Wealthfront, do.

Who is Better on Tax-Loss Harvesting? Schwab beats SoFi on tax-loss harvesting services offered, though both companies include portfolio rebalancing services in their standard offerings.

Overall Winner

SoFi Wealth Management Vs. Schwab Intelligent Portfolios

Clients with smaller nest-eggs, should favor SoFi, while higher net worth clients and those keen to create tax-optimized portfolios should look to Schwab.

SoFi WinsSchwab Wins
Account Balance Minimums: SoFi’s $500 account balance minimum makes it more attractive to account holders with smaller nest-eggs than Schwab, which imposes a $5,000 account balance minimumPortfolio Management Fees: Schwab is virtually unmatched in providing free portfolio management but, for the service SoFi offers, it compares favorably to most other robo-advisors.
Human Advisors: Although both Schwab and SoFi offer a hybrid robo service connecting clients to live advisors in addition to their technology-powered portfolio management offerings, SoFi has the edge because it imposes such a low minimum threshold, unlike Schwab’s $25,000 minimum.Account Types: Schwab supports a broader range of account types than SoFi; custodial, trust, IRA and non-retirement accounts.
Free Rebalancing & Tax-Loss Harvesting: Both SoFi and Schwab offer portfolio rebalancing services, but Schwab has the edge in providing tax-loss harvesting services too.

Which Robo-Advisor Is Best For You: SoFi or Schwab?

For fee sensitive investors, Schwab is almost unbeatable, though WiseBanyan gives Schwab a run for its money. Schwab also appeals more to investors who are keen to optimize their portfolios for tax-efficiency. But SoFi, with its lower account balance minimums, is a better solution for investors who still want a highly personalized service yet have fewer assets available to invest.

  

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