SoFi Wealth Management vs. Vanguard Personal Advisor Services: Which Robo-Advisor Is Better?

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Vanguard earned its stripes in the financial industry as the largest mutual fund provider and second largest provider of exchange-traded funds. Vanguard founder, Jack Bogle, is a staunch advocate of low-cost investing, and this philosophy has been adopted by many robo-advisory firms, who use Vanguard funds in their portfolios.

SoFi started out in the lending industry, initially specializing in student loan refinancing, and subsequently branching out to mortgage lending, personal loans, life insurance and wealth management.

Both SoFi and Vanguard provide hybrid robo-advisory services that combine automated portfolio management with human advisors. But which solution is better for you, SoFi Wealth Management or Vanguard Personal Advisory Services?

SoFi Wealth Management Vs. Vanguard Personal Advisor Services

sofi brokerage trading system investing

vanguard investments

For the extensive services Vanguard offers, the fees it charges are among the most competitive in the robo-advisor industry. Leading robo-advisors, such as Betterment and Personal Capital, who both have much lower fees than traditional advisors, are still more expensive than Vanguard for a similar level of service that combines automated portfolio management with human advisors.

As low as Vanguard’s management fees are, SoFi has found a way to beat them on cost. SoFi has carved out an innovative business model whereby it can provide a high level of wealth management service at low cost to clients . SoFi combines automated portfolio management with access to human financial advisors at the same cost as other robo-advisors who provide a purely automated service.

Management Fees

SoFi Wealth Management Vs. Vanguard Personal Advisor Services

Robo-AdvisorManagement FeeAccount MinimumRatingBest forOpen Account
sofi brokerage trading system investingFull Review0.25%$500Low Cost & Live Advisors
vanguard investmentsFull Review0.30%$50,000Low Fees

For amounts invested below $50,000, SoFi is the only option between the two because Vanguard does not accept accounts below that threshold. On amounts higher than $50,000, Vanguard charges a fixed 0.30% fee of assets under management while SoFi charges 0.25%.

Comparing Vanguard and SoFi on fees can only be done on amounts over $50,000, the minimum account balance threshold at Vanguard. SoFi wins hands down when it comes to smaller account sizes by offering low-cost wealth management to account holders with amounts over $500

An apples-to-apples comparison can be made on amounts over $50,000, the threshold where Vanguard begins accepting new customers. At this level and above, SoFi still edges out Vanguard. For example, on a $100,000 investment, Vanguard management fee is $300, compared to $225 at SoFi.

Who Is Better on Fees? In spite of Vanguard having some of the most competitive fees in the industry for the level of service offered, SoFi comes out ahead on a direct fee comparison with Vanguard for both small and large amounts invested.

Account Balance Minimums

SoFi Wealth Management Vs. Vanguard Personal Advisor Services

Investors with smaller nest-eggs would be better suited at SoFi because SoFi has a $500 account balance minimum compared to the $50,000 account balance minimum that Vanguard mandates.

Among robo-advisors, Vanguard has one of the highest account balance minimums; only amounts above $50,000 are accepted. Even Personal Capital, which has a higher account balance minimum of $25,000 than most, has a lower threshold than Vanguard. In the group of robo-advisors we reviewed, Rebalance IRA is one of the very few robo-advisors that imposes a higher threshold than Vanguard; it is set at $100,000.

Vanguard has also stipulated a very high account balance minimum of $500,000 before clients get access a dedicated human advisor. Account holders with lower amounts invested do have full access to Vanguard’s team of human financial advisors.

Who is Better on Account Balance Minimums? On the criterion of account balance minimums, SoFi is more attractive than Vanguard on two counts:

  1. SoFi has a $500 account balance minimum while Vanguard has a $50,000 minimum.
  2. Vanguard imposes a $500,000 account balance minimum to connect to a dedicated financial advisor – though any account holder with less than $500,000 has access to Vanguard’s team of advisors.

Hybrid Robo Service

SoFi Wealth Management Vs. Vanguard Personal Advisor Services

Vanguard Personal Advisor Services and SoFi Wealth Management both offer a hybrid robo-advisory service that includes  technology-powered portfolio management and access to human advisors. Vanguard has arguably the better service because it works so closely with clients to craft a financial plan and track progress towards goals. But fee-sensitive investors will find SoFi’s service more than adequate and a better fit for their budgets.

SoFi has built a loyal community of customers, an unusual and commendable achievement for a financial firm, particularly one that began as a lender. SoFi offers borrowers perks, such as helping them to find a job when laid off. This focus on customer satisfaction improves SoFi’s service offerings compared to many other firms. For example, SoFi recognizes that many investors want a personal touch as opposed to a fully automated investing solution and provide access to human advisors without imposing high minimum thresholds, such as those implemented by Vanguard and Personal Capital.

Although Vanguard does stipulate to customers a high account balance minimum of $500,000 before being assigned to a dedicated financial advisor, all clients do have access to both its automated portfolio management solution and a team of advisors – a combination even some of the pioneering robo-advisors, such as Wealthfront, don’t offer.

Vanguard offers this hybrid service at much lower fees than most competitors. For example, Betterment charges 0.50% for Betterment Premium, its top tier offering that includes account monitoring by a team of advisors as well as unlimited phone and email support. When compared to Betterment, Vanguard’s 0.30% is attractive but still higher than the 0.25% fee SoFi charges.

For investors who want more hand-holding and are not as fee sensitive, Vanguard may be a better solution. Vanguard creates a custom financial plan for clients and invites clients to be as involved as they wish in the portfolio management process. Advisors help clients work towards financial goals and track progress along the way. Unlike most robo-advisors who take full control over the investing process, Vanguard partners with clients.

Who Provides The Better Hybrid Robo Service? Both SoFi and Vanguard offer a hybrid service that combines human advisors with technology-powered portfolio management. For fee-conscious investors, SoFi is a better choice while investors looking for more input into the investing process and a more personal touch will find Vanguard to be superior.

Account Types

SoFi Wealth Management Vs. Vanguard Personal Advisor Services

Vanguard caters to a broader range of account types than SoFi, which supports individual non-retirement and IRA accounts.

With over $4 trillion in assets under management, Vanguard caters to a broad range of account types in its established asset management business and leverages its extensive expertise to serve a wide variety of account types in its robo-advisory service too, including Roth, traditional, SEP and rollover IRAs, as well as Trusts and non-retirement accounts, both joint and individual. Vanguard will also advise on 401(k) accounts and 529 Plans, though it won’t manage either.

As a newer entrant in the wealth management field, SoFi supports fewer account options, serving individual non-retirement, Roth IRA, traditional IRA and SEP IRA accounts.

Who is Better on Account Types? Vanguard wins easily when it comes to the breadth of selection of account types. Investors with Trust and joint accounts as well as those with 401(k) or 529 Plans would be best served at Vanguard.

Typesofi brokerage trading system investingvanguard investments
Individual Non-retirementYESYES
Joint Non-retirementNOYES
Roth IRAYESYES
Traditional IRAYESYES
Rollover IRANOYES
TrustsNOYES
Custodial AccountsNOYES
SEP IRAYESYES
401(k)NONO
(advisory only, no management)
529 PlansNONO
(advisory only, no management)

Tax Loss Harvesting

SoFi Wealth Management Vs. Vanguard Personal Advisor Services

Vanguard offers free non-automated tax-loss harvesting and account rebalancing quarterly. SoFi does not yet have a tax-optimization service but does automatically rebalance portfolios regularly as needed.

Typesofi brokerage trading system investingvanguard investments
Tax Loss HarvestingNOYES
Free Account RebalancingYESYES

For investors keen to incorporate an automated tax-loss harvesting strategy into their portfolio management strategy, Vanguard is a better solution than SoFi. SoFi doesn’t yet support automated tax-loss harvesting while Vanguard does provide the service, albeit it is not automated. Other robo-advisors offering a purely automated tax-loss harvesting service include Wealthfront, which claims the process can improve returns by as much as 2% annually.

SoFi has the edge on Vanguard when it comes to portfolio rebalancing, which it does on an as-needed basis – as opposed to Vanguard, which rebalances portfolios quarterly.

Who is Better on Tax-Loss Harvesting? Vanguard offers tax-loss harvesting to clients, albeit the service is not automated. SoFi has yet to include this feature in its wealth management service. Both SoFi and Vanguard rebalance portfolios at no additional cost to clients; SoFi rebalances portfolios regularly as needed while Vanguard does so quarterly.

Overall Winner

SoFi Wealth Management Vs. Vanguard Personal Advisor Services

Fee-conscious investors with smaller nest-eggs will be best served at SoFi, which provides a hybrid robo-advisor service like Vanguard at lower cost. For investors with many account types, who want a more personal service, and who care about optimizing a portfolio for tax efficiency, Vanguard is the better choice.

SoFi WinsVanguard Wins
Portfolio Management Fees: Remarkably, SoFi has the edge over Vanguard, which is known for low-fee asset management services.
SoFi’s 0.25% fee is marginally better than Vanguard’s 0.30% of assets under management.
Selection of Account Types: Vanguard caters to individual non-retirement and joint non-retirement accounts as well as IRAs and Trusts. Plus Vanguard advises on 401(k) accounts and 529 Plans.
By contrast, SoFi supports individual non-retirement accounts and a few IRA accounts only.
Account Balance Minimums: With a low $500 account balance minimum in place, SoFi clearly wins with investors holding smaller sized accounts.
Vanguard has some of the highest account balance minimums in the industry: $50,000 to open an account and $500,000 to be assigned to a dedicated financial advisor.
Human Advisors: Both SoFi and Vanguard offer hybrid robo-advisory  services that combine human advisors with automated portfolio management services, but Vanguard has a more complete service that creates customized financial plans for clients and sets financial goals, while monitoring and tracking progress.
Free Rebalancing: SoFi rebalances portfolios more frequently, on an as needed basis, compared to Vanguard, which does so quarterly.Tax Loss Harvesting: SoFi does not yet offer a tax-loss harvesting solution while Vanguard provides this service, albeit it is not automated.

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

For investors with smaller-sized accounts, SoFi is the only choice available due to the $50,000 account balance minimum imposed by Vanguard. To its credit, SoFi also has lower fees than Vanguard, who is renowned as a low-cost asset manager, so fee-conscious investors would be better served as customers of SoFi’s wealth management platform.

Investors with numerous accounts, especially those with Trusts, 529 Plans and 401(k)s will be better served at Vanguard, who advises on 529 Plans and 401(k)s and manages Trusts – none of which are supported at SoFi. Both companies support IRA and individual taxable accounts.

For investors looking for a more personal touch which rivals what traditional financial advisors can offer, especially those who are keen to optimize their portfolios for tax-efficiency, Vanguard is the better choice.

  

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