Review of: SoFi Wealth Management
Reviewed by: Eric Rosenberg
Last modified: December 13, 2017
SoFi Wealth Management is an investment management service that combines robo investing with access to a human financial advisor. Accounts are free for SoFi borrowers and those with a portfolio below $10,000. SoFi Wealth Management focuses only on index fund investments to meet your financial goals, and you won't find tax loss harvesting.
SoFi (short for “social financing”) has been around only since 2011, but in the space of those years, it’s created quite a name for itself. Best known for offering education loans to Ivy League students, SoFi also offers services to help them network, buy houses and find jobs post-graduation. So it makes sense that the company has rolled out SoFi Wealth Management, a service geared toward helping these well-educated Millennials take the next step: investing.
What Is SoFi Wealth Management?
SoFi Wealth Management is a hybrid robo investing service with human financial advisors on standby to help you manage your investment plan. This wealth management product combines the familiar automated investing of some major robo advisors with professional advice typically reserved for full-service, human-assisted investing. (Other hybrid robo advisors include M1 Finance and Vanguard Personal Advisor Services.)
Like many other robo advisors, SoFi Wealth Management uses Modern Portfolio Theory (MPT) to create and manage your portfolio’s asset allocation. Proponents of MPT assert that this strategy decreases your risk by diversifying into many uncorrelated assets. Basically, this means not keeping all of your investing eggs in one basket.
For many young professionals, SoFi is the best of both worlds. It brings the ease of self-service and online financial management. And it provides human assistance whenever you want that too.
Please note, though, that SoFi Wealth Management is open to everyone to use — even if you’re not a 22-year-old straight out of Harvard.
SoFi Wealth Management Features
|Fees||Free under $10k and SoFi Borrowers; 0.25%/year|
|Tax Loss Harvesting|
|Automatic Deposits||— Weekly, Biweekly, Monthly and Bimonthly|
|Socially Responsible Investing|
|Access||Website, iOS App, Android App|
|Customer Service||Phone: M-Th 7A-5P, F 7A-4P PT; Live Chat: M-Th 7A-5P, F 7A-4P PT; Email|
How SoFi Wealth Management Works
SoFi is not a bank. It is a technology-first finance company. Advisors are paid a salary, not a commission. So you won’t run into issues with conflicts of interest or crazy fees. Pricing is simple and straightforward.
The following button will send you to a SoFi signup page:
Or you could call 855-525-SOFI (7634) for a free advisor consultation to get your account set up.
The online signup process is quick and easy. Just answer some simple questions, enter your goals, select a custom strategy for your goals, choose your account’s tax status, enter your personal information and fund your account.
When signing up for your account, you choose how much you want to contribute, how frequently, and an annual increase. This automatic investing is a top strategy to ensure you meet your financial goals, like buying a home or saving for retirement.
You can open an account with as little as $100. Generally, to maintain an account, you’ll need to keep a balance of $500. However, this balance requirement is lowered if you contribute $100 on a monthly basis.
On the next screen, you enter your birthdate, savings progress so far and intended savings rate. Next, you choose an investment strategy. One will be suggested for you based on your age and goals. The Aggressive portfolio, the most aggressive of the five portfolio options, was suggested to me when I signed up.
Finally, you set up your account type. Choose taxable or retirement account. Then choose if you want an individual account, joint account or other legal status.
After that, just enter your personal information and fund your account. That’s all there is. I went through the entire process in about five minutes.
Live Advisors With Personal Advice
Once your account is set up, you have access to your human financial advisor. You can talk with an advisor to make sure your financial plan aligns with your goals and get help deciding on a portfolio and investment strategy.
SoFi Wealth Management Alternatives
|Fees||Free under $10k and SoFi Borrowers; 0.25%/year||Digital – 0.25%/year; Premium – 0.40%/year||First $10k managed free; 0.25%/year for $10k+|
|Promotions||None||Up To 1 Year Free||$15k Managed for Free|
|Review||—||Read the Review||Read the Review|
Knowing what path to take to meet your goals can be confusing. It’s easy to say, “I want to buy a house” or “I want to save for my kids’ college.” But how are you going to get there?
If you don’t have a strong background with investing, SoFi’s tools, plus access to an advisor, can help you set goals and make sure that they make sense.
Index Fund Investing
Most advisors point their clients to high-fee mutual funds, risky stocks and complicated bonds. SoFi points clients only to index funds. Such funds historically outperform actively managed funds.
Index funds follow major indexes like the S&P 500 or Dow Jones Industrial Average. Index funds do not require fund managers who pick stocks. So they generally charge the lowest fees of any investment fund.
When you set up your account, you will end up with a portion of your assets invested in stocks and a portion in bonds. For example, a moderately aggressive portfolio may be 75% stocks and 25% bonds.
Over time, though, your portfolio may grow to 80% stocks and 20% bonds. If this happens, you need to rebalance back to your 75/25 ratio. With SoFi, that rebalance happens automatically. You don’t have to think about it, remember it or lift a finger. Rebalancing happens for you.
SoFi Wealth Management Pricing
SoFi offers some of the best, most transparent pricing in the industry. The base cost is $0 for anyone with an existing SoFi loan or anyone with less than $10,000 in assets invested at SoFi. If you have more than $10,000 to invest or aren’t a current SoFi borrower, you’ll have to pay a very competitive rate: 0.25% per year.
Pros and Cons
- Competitive Fees — SoFi is one of the most affordable investment products available.
- Free to Current Borrowers — If you currently hold a SoFi loan, you can use Wealth Management for free.
- Access to Human Advisor — You can call an advisor at any time for no extra cost if you have a SoFi Wealth Management account.
- Goal-Setting Tools — Setting a goal and figuring out how to meet it can be a challenge, but SoFi offers tools to help.
- Retirement Analysis Tools — SoFi offers analysis tools to help you determine if you're on a good path to achieve the retirement you desire.
- Friendly Customer Support — SoFi has a specific customer service team to address Wealth Management concerns by phone, live chat and email. When we called, our agent was friendly and helpful.
- Limited Investment Options — While index funds are a great way to invest, your investment options at SoFi are fairly limited.
- No Tax-Loss Harvesting — SoFi lacks tax-optimization features such as tax loss harvesting.
SoFi might not be a great fit for everyone. Where it pales in comparison to some of the other robo advisors is that it doesn’t offer any sort of optimization when it comes to taxes. Sophisticated investors might be especially find the lack of tax loss harvesting (TLH) disappointing. Tax loss harvesting can help you recoup some loss from an underperforming investment. (Check out our primer on TLH here.)
If you would like to enjoy benefits of this feature, here’s a list of the robo advisors that currently offer TLH:
|Robo-Advisor||Tax Loss Harvesting||Minimum Deposit|
|Charles Schwab Intelligent Portfolios||Yes||$50,000|
|TD Ameritrade Essential Portfolios||Unknown|
However, thanks to its easy-to-use platform, access to a human advisor, and low cost, SoFi Wealth Management is a great choice for investors who are just starting out. We look forward to watching the service develop as its targeted audience transitions from recent grads to steady wealth builders.