SoFi Wealth Management vs. Wealthfront: Which Robo-Advisor Is Better?

sofi vs wealthfront

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Along with Betterment and Personal Capital, Wealthfront is one of the early, pioneering robo-advisor firms. It was founded in 2008 by Andy Rachleff and Dan Carroll, and like its rivals, has grown fast and acquired billions of dollars of managed assets by offering a compelling value proposition to clients: low fees, automated portfolio management and free tax-loss harvesting services.

Wealthfront, Betterment and Personal Capital have raced so far ahead of many robo-advisor rivals that they may not have paid a great deal of attention to the financial company that could well become their biggest threat over time, SoFi. At first glance, it is hard to spot how SoFi, a company that began by refinancing student loans, could pose a serious threat to established robo-advisors who began years earlier. But SoFi has established a fervently loyal community of borrowers, who become customers early in their careers before they have acquired wealth.

The danger for Wealthfront and its major rivals is that SoFi will convert customers from borrowers to wealth management clients as they grow in their careers and squirrel away more savings. By winning customers’ mindshare when struggling financially before they even search for wealth management solutions, SoFi can acquire customers that might otherwise consider Wealthfront later in their careers, long before the established robo-advisors even get a chance to pitch them on their own value propositions. And SoFi makes this transition from borrower to wealth management client easy by charging no management fees to borrowers.

For most financial institutions competing for these customers, the playing field might be level, but SoFi has established a community of members so loyal that it is virtually unmatched in the financial industry; SoFi’s one-of-a-kind community is an intangible asset that will make it even more difficult for Wealthfront to win these customers over as time go by.

But for now, which offers you the better investing service: SoFi or Wealthfront?

SoFi Wealth Management Vs. Wealthfront

sofi brokerage trading system investing

wealthfront brokerage trading system robo advisor

Wealthfront co-founder, Andy Rachleff, and his team have stayed true to their vision of providing a fully automated portfolio management service with low fees and low account minimums so that it is accessible to almost anyone. As one of the early robo-advisor innovators, Wealthfront has accumulated billions in assets under management, far ahead of SoFi, who launched its wealth management platform years after the early robo-advisor industry pioneers. With greater longevity in the industry, Wealthfront has had the time to build its reputation as an automated investing services provider that specializes in tax-loss harvesting via its “Direct Indexing” technique.

SoFi is the new kid on the block in the robo-advisor industry but that hasn’t stopped it from rolling out a highly competitive, customer-centric wealth management platform that rivals the fee schedules of industry leaders, and includes perks to customers of its lending business: free portfolio management to existing borrowers. For investors looking for a little more hand-holding, and a personalized investing service, SoFi includes access to human financial advisors.

Management Fees

SoFi Wealth Management Vs. Wealthfront

Robo-Advisor Management Fee Account Minimum Rating Best for Open Account
wealthfront brokerage trading system robo advisor
Full Review
$0 for first $10,000
0.25% thereafter
$500 Tax-loss harvesting expertise
sofi brokerage trading system investingFull Review $0 for first $10,000
0.25% thereafter
$500 Low Cost & Live Advisors

Wealthfront pioneered the model of low advisory fees but SoFi has matched Wealthfront on fees and included access to live advisors at no extra cost. For 0.25%, Wealthfront delivers a purely automated portfolio management solution while SoFi also includes access to live advisors.

Wealthfront and SoFi stand toe-to-toe on fee charges. Both offer free portfolio management to clients up to the first $10,000 and both charge a fee of 0.25% of assets managed thereafter. On the surface, they seem indistinguishable, but when you look under the cover you find different services for the same fees.

Wealthfront stands apart from SoFi in delivering a tax-loss harvesting service as part of its product, a feature SoFi does not yet offer. Wealthfront describes this service as tax-optimized Direct Investing. It is a way to replace stocks that comprise a diversified portfolio as part of an enhanced form of tax-loss harvesting that reduces investment costs.

The way it works is that instead of using a single ETF or Index Fund to invest in US stocks, Wealthfront purchases up to 1,001 individual stocks as part of its Tax-Optimized Direct Indexing service. This process allows you to take better advantage of tax saving opportunities on account of the movement of individual stocks to improve performance. Wealthfront claims its daily tax-loss harvesting service can boost annual returns by as much as 2.03%.

Where Wealthfront shines with respect to tax-loss harvesting, SoFi stands out with respect to live advisors. The SoFi wealth management service is powered by technology and guided by human experts. It includes access to live advisors who offer personalized advice, automatic rebalancing, goal planning, and investing in diversified index funds. For investors looking for a personal touch, SoFi’s wealth management platform distinguishes itself from the purely automated service at Wealthfront.

Who Is Better on Fees? Both Wealthfront and SoFi offer clients free portfolio management up to the first $10,000. And both charge 0.25% in fees on assets managed above the $10,000 threshold. For similar fees, Wealthfront stands out by providing industry-leading tax-loss harvesting services while SoFi comes out on top for personalized service by making live advisors accessible to clients. SoFi also offers a perk to borrowers: free portfolio management to customers of its lending services.

Account Balance Minimums

SoFi Wealth Management Vs. Wealthfront

SoFi and Wealthfront both impose an account balance minimum of $500 on new clients, though SoFi will waive that minimum threshold for clients willing to commit to regular monthlby deposits of at least $100.

Just as SoFi and Wealthfront are virtually indistinguishable when it comes to fees charged, so too is it hard to separate them on account balance minimums. Both companies impose a $500 account balance minimum on clients, though SoFi will waive that hurdle for investors willing to contribute $100 monthly.

Where both SoFi and Wealthfront earn brownie points is that neither complicates prospective clients with variable account balance minimums for tiered service levels. Instead, the value proposition offered by both robo-advisors is simple: on account balances from $500 up to $10,000, both companies will manage your portfolio free. Above $10,000 of assets managed, both companies will charge 0.25%.

In contrast to the simple fee structure charged by Wealthfront and SoFi, rival robo-advisor Betterment charges variable fees depending on the extent of access you want to live advisors and the amount of assets managed. Betterment has low minimums for its core offering but some other competitors, such as Personal Capital, impose much higher account balance minimums; at Personal Capital the minimum account balance is $100,000.

Who is Better on Account Balance Minimums? Both SoFi and Wealthfront have low account balance minimums of $500 but SoFi has the slight edge in waiving its minimum for clients who contribute $100 monthly.

Live Advisors

SoFi Wealth Management Vs. Wealthfront

SoFi’s wealth management service is technology-powered but also includes access to live advisors for clients who want financial advice from certified trained experts. Wealthfront does not include live advisors in its platform offering, but it does offer a service, called Path, which allows clients to query the impact of financial decisions on future retirement savings and lifestyle quality.

Although Wealthfront and SoFi appear neck and neck on the topics of fees and account balance minimums, they diverge on the element of human touch. While some investors will be completely satisfied with a purely automated approach, others will want the comfort of knowing a professionally trained financial advisor is contactable, especially when markets are volatile or financial concerns crop up.

SoFi offers the hybrid robo-advisor service that clients seeking a little more hand-holding will want. Live advisors are accessible to clients and significantly, they are not commission-based, so they are not incentivized to sell you on products.

While the human addition at SoFi sets it apart, Wealthfront is aware that clients have queries and doesn’t leave them hanging. As opposed to scheduling phone calls and meetings with advisors, Wealthfront puts Path at your fingertips. Path is a service that directly links to your accounts, analyzes spending data, updates you, and answers the “what if” financial scenarios you may have so you can visualize how changes today may impact your wealth in the future.

Questions like “if I save more today, how will it impact my projected retirement saving?” or “when I retire, can I live the same lifestyle as today?” or “what should I do with extra savings?” are all answerable in Path. Plus, Path is downloadable on your phone to both iPhone and Android devices, so you can visualize your financial situation on-the-go.

Who Provides The Better Hybrid Robo Service? SoFi claims its technology-powered service is “not a robot” and includes a human dimension. SoFi delivers on its claim by connecting clients to live advisors. Wealthfront has a service, called Path, which answers questions clients may have but SoFi wins this category by connecting clients to live financial advisors.

Account Types

SoFi Wealth Management Vs. Wealthfront

Wealthfront stands aparts as a leader in the robo-advisor industry by catering to a broad range of account types, such as taxable accounts for individuals and married couples, as well as most IRA account types and 529 Plans, which few robo-advisors support. SoFi caters mostly to individuals with taxable and IRA accounts.

Wealthfront doesn’t just beat SoFi on the range of account types it supports, it virtually beats the entire industry. The range of accounts supported by Wealthfront includes individual and joint non-retirement accounts, as well as Roth IRA, traditional IRA, Rollover IRA, and SEP IRA accounts plus Trusts and 529 Plans. Many other robo-advisors, such as Schwab Intelligent Portfolios and Personal Capital, offer a broad range of account types but few cater to 529 Plans.

The SoFi wealth management platform is still young compared to more mature robo-advisor platforms, such as the one offered by FutureAdvisor, and the comparatively limited range of account types SoFi supports reflects that. SoFi currently supports individual non-retirement accounts as well as Roth IRA, traditional IRA, and SEP IRA accounts but does not support 529 Plans, Rollover IRAs, joint non-retirement accounts, Trusts or 401(k) plans.

Who is Better on Account Types? Wealthfront wins hands down thanks to the extensive range of account types supported, including standard taxable accounts for individuals and married couples, as well as IRA and Trust accounts, plus 529 Plans. Comparatively fewer options are offered by SoFi: individual non-retirement accounts and a limited number of IRA accounts.

Type sofi brokerage trading system investing wealthfront brokerage trading system robo advisor
Individual Non-retirement YES YES
Joint Non-retirement NO YES
Traditional IRA YES YES
Rollover IRA NO YES
Trusts NO YES
Custodial Accounts NO YES
529 Plans NO YES
401(k) NO NO (rollovers supported)

Tax Loss Harvesting

SoFi Wealth Management Vs. Wealthfront

Wealthfront is an industry leader in providing tax-loss harvesting services to all clients at no extra charge, and providing a more sophisticated form of tax-loss harvesting, called Direct Indexing, to clients with account balances over $100,000. Tax-efficient portfolios are not yet offered on the SoFi wealth management platform.

Type wealthfront brokerage trading system robo advisor sofi brokerage trading system investing
Tax Loss Harvesting YES NO
Free Account Rebalancing YES YES

Tax efficiency is a core focus for Wealthfront, and it provides clients tax-advantaged portfolios through daily tax-loss harvesting and Direct Indexing. Tax-loss harvesting is a technique that seeks to lower your taxes while maintaining expected returns for your risk profile.

Wealthfront claims that enhanced tax-loss harvesting via Direct Indexing could improve annual investment performance by as much as 2.03%. This tax-optimized investing process is an advancement on index investing, and involves directly purchasing as many as 1,001 individual securities on your behalf. Because of the higher number of stocks, more tax-loss harvesting opportunities exist than would otherwise be possible if an index fund were used.

Although tax-loss harvesting is a free service at Wealthfront to all clients, Direct Indexing is only available to clients with account balances of $100,000 and higher. As part of its core wealth management offering, SoFi provides free account rebalancing but tax-loss harvesting is not yet offered to clients.

Who is Better on Tax-Loss Harvesting? Wealthfront takes tax-loss harvesting a step further than most through a process it calls Direct Indexing, which allows for more opportunities to harvest tax-losses by purchasing up to 1,001 individual securities. Although only available on account balances over $100,000, Wealthfront does provide basic tax-loss harvesting services to all clients, and wins this category given that SoFi has yet to provide an equivalent tax-optimized offering.

Overall Winner

SoFi Wealth Management Vs. Wealthfront

Clients who are keen to invest money in automated tax-optimized portfolios should choose Wealthfront while individuals who care more about having access to live advisors should look to SoFi. On many other dimensions from fees to account balance minimums to portfolio rebalancing, it’s virtually a tie between both robo-advisors.

SoFi Wins Wealthfront Wins
Portfolio Management Fees: Both SoFi and Wealthfront charge no fees for the first $10,000 managed and both charge 0.25% thereafter. Though it’s a tie between the two robo-advisors when it comes to fees, we give SoFi an extra brownie point for providing borrowers in its lending division free portfolio management services. Selection of Account Types: Wealthfront supports a wide variety of taxable and retirement account types, including individual and joint non-retirement accounts, Roth IRA, traditional IRA, SEP IRA and Rollover IRA accounts, as well as Trusts and 529 Plans. SoFi only offers individual taxable accounts and a reduced selection of IRA account types.
Account Balance Minimums: It’s a tie on account balance minimums with both robo-advisors imposing a low threshold of $500, but SoFi eeks out a small victory here too by waiving the $500 minimum for clients who contribute $100 monthly. Tax Loss Harvesting: Wealthfront beats not only SoFi but most of the industry in tax-loss harvesting. Wealthfront’s Direct Indexing service allows for the purchase of up to 1,001 individual securities in order to increase the number of tax-loss harvesting opportunities available. Direct Indexing is available only to clients with account balances above $100,000 but its core tax-loss harvesting service is available to all clients. SoFi does not yet support automated tax-optimized portfolio management.
Free Rebalancing: Both SoFi and Wealthfront provide free portfolio rebalancing as part of their core portfolio management service offerings, so it’s a dead heat on this feature. AUM: Wealthfront was founded in 2008 and has accumulated billions of dollars in client assets since then. By contrast, SoFi began as a financial lender and added wealth management as a service almost a decade later so it doesn’t yet have all the bells and whistles of more established players, such as Fidelity Go, Vanguard, or Schwab, nor a comparable level of managed assets.
Human Advisors: Clients looking for something more than a purely automated investing solution are left with SoFi only. Wealthfront does not connect clients to human financial advisors as SoFi does.

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

The choice between SoFi and Wealthfront boils down to whether you care most about having a tax-optimized portfolio or having the option to connect with human financial advisors. Wealthfront is the better choice for investors who care about optimizing their portfolios for taxes while SoFi will connect clients to live advisors who are commission-free and not incentivized to up-sell you on more products.

On many other dimensions, SoFi and Wealthfront compete aggressively which is to your benefit as a customer. Both companies charge management fees of 0.25% after the first $10,000 and both robo-advisors offer free portfolio management up to that level. Both have low account balance minimums of $500, though SoFi will waive that for clients who contribute $100 monthly. And both offer free portfolio rebalancing services as part of their core wealth management platform services.


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