Our Perspective

Established in 2011, SoFi introduced its no-fee Automated Investing service in 2019, aiming to simplify investing for beginners. Despite lacking customization and tax-loss harvesting features, SoFi Automated Investing stands out for its cost-effective approach, earning it the title of the best robo-advisor for low costs in 2024. With a minimum account opening amount of only $1 and no investment management fees, investors only bear the underlying ETF expense ratios.

The primary objective of SoFi Automated Investing is to assist members in creating a tailored strategy based on their risk tolerance and objectives. Beyond its affordable investment choices, users of SoFi Automated Investing also benefit from complimentary consultations with Certified Financial Planners (CFPs), a plethora of educational materials, events, discounts, and other privileges. Moreover, SoFi Automated Investing is integrated into the broader SoFi financial platform, offering self-directed trading, loans, bank accounts, and more. In 2024, a notable modification to the SoFi platform was the elimination of cryptocurrency from the Active Investing service, although it was never a feature of the Automated Investing robo-advisory. We will delve deeper into SoFi Automated Investing to determine its suitability for your investment needs.

Pros & Cons

Benefit of no investment management fee

Low minimum opening deposit of $1

Includes additional lending and cash management tools

All members have access to Certified Financial Planners

Drawback of no tax-loss harvesting option

No discounts available on other banking products

Lack of ability to customize portfolios

Account Overview

SoFi provides a comprehensive look at different types of accounts, including checking, savings, and investment accounts. Understanding the features and benefits of each account type is crucial for managing your finances effectively. Below, we delve into the specifics of each account to help you make informed decisions about where to keep your money.

SoFi Discontinues Cryptocurrency Services for Active Investing Members

Recently, on Nov. 29, 2023, SoFi made an announcement regarding the discontinuation of cryptocurrency services through its Active Investing service. Starting from Dec. 19, 2023, members will no longer have the ability to trade any form of cryptocurrency using SoFi. To facilitate a smooth transition, SoFi is offering members the choice to either transfer their crypto accounts and assets to Blockchain.com or sell off their holdings. Those members who opt not to transfer their holdings to a Blockchain.com account must complete the liquidation process by 11:59 p.m. ET on Dec. 18, 2023. Additionally, SoFi has committed to refunding all fees related to crypto sales until Dec. 19, 2023, ensuring a seamless migration process for all users.

Account Creation

Creating a SoFi Automated Investing account is a straightforward online process that allows seamless integration with other SoFi accounts. Simply provide an email and password to get started. Next, you’ll take a brief survey to determine your risk tolerance and financial objectives. The initial investment required is only $5, and new clients can preview portfolio options prior to account opening.

Various account types are offered, including individual taxable accounts and standard retirement accounts. Additional personal information, such as your Social Security number, is necessary to complete the setup process. Once your account is active, adjustments to your portfolio can only be made by modifying your risk tolerance.

Goal Planning

When using SoFi’s Automated Investing platform, investors have the flexibility to pursue a wide range of goals. While SoFi provides goal planning resources and tools in the Learn section of its website, the platform itself does not offer specific retirement planning tools or tools for major purchases like a home, car, or college expenses. However, members do have access to complimentary consultations with certified financial planners to discuss and strategize for their financial goals. Additionally, SoFi offers various tools such as credit score monitoring, expense breakdowns, financial insights, and asset tracking.

In addition to long-term goals, users can utilize SoFi’s checking and savings accounts to save for shorter-term goals. The savings account offers benefits such as zero account fees, a competitive APY (4.00% as of January 2025), and the option to create different “Vaults” to save for specific goals. These Vaults can be tailored for goals like purchasing a car, a home, or building an emergency fund. Members also have the option to use Autopilot to automate their savings process.

Account Services

SoFi Automated Investing offers support for various account types, including individual investment accounts, joint accounts, and tax-advantaged retirement accounts such as traditional IRAs, Roth IRAs, and simplified employee pensions (SEP-IRAs). Additionally, SoFi allows for rollovers from previous employer 401(k)s into an IRA.

Investors using SoFi can enjoy a combination of self-directed trading and robo-investing along with access to cash management and portfolio tools. Margin trading is available for SoFi Active Investing accounts at an 11.00% fee, and there are no charitable giving options for either account. Clients of SoFi Automated Investing do not receive discounts on other products or services, such as lower interest rates on loans.

Cash Management

SoFi Automated Investing platform does not provide automatic sweeps and does not include a cash allocation in its portfolios. Instead, the entire balance is invested in one of the recommended ETFs. However, for users who require cash management services, they can utilize checking and debit banking facilities and link their automated accounts with banking or brokerage accounts for convenient account transfers.

Users can request a withdrawal at any time if they need to access their funds. Transactions typically settle two business days after trades are executed. Once settled, the funds are automatically transferred to the designated account, although it may take a few days for the funds to reflect in the user’s bank account.

Portfolio Construction

When establishing a SoFi Automated Investing account, there are various model portfolios available for selection, including Conservative, moderately conservative, moderate, moderately aggressive, and aggressive. Each portfolio consists of a combination of asset classes, although the specific compositions are not revealed. The general outlines of the portfolios are in line with modern portfolio theory (MPT), where conservative portfolios could consist of 100% bond ETFs and aggressive portfolios could be composed entirely of stock ETFs. The remaining portfolios fall somewhere in between these two extremes.

Available Assets

Assets refer to anything of value owned by an individual or entity. They can encompass various forms, including cash, investments, real estate, vehicles, and more. SoFi provides comprehensive information on different types of assets and their significance in financial planning.

Portfolio Customization

When it comes to customization, Sofi Automated Investing has some limitations. Portfolios do not include exposure to real estate or REIT funds and cash, which are commonly found in competitors’ portfolios. Moreover, options related to environmental, social, and governance (ESG) criteria are noticeably missing. For a more customized experience, users may consider investing through the SoFi Active Investing platform. However, both SoFi Active and Automated platforms do not offer direct access to cryptocurrency.

Customers using Sofi Automated Investing are unable to trade individual stocks, mutual funds, fixed-income products, or other asset classes such as crypto and forex. Nevertheless, opening a SoFi Active Investing account provides access to a wide range of products and services within the SoFi ecosystem, including self-directed brokerage accounts for crypto, IPOs, approximately 4,000 individual stocks, and a variety of ETFs. For those seeking customization and margin, a detailed review of the self-directed SoFi Active Investing is available.

Portfolio Management

SoFi offers automated portfolio rebalancing through SoFi Automated Investing, which adjusts allocations as needed. Additionally, SoFi Relay consolidates various accounts into one comprehensive financial overview, although it does not impact portfolio rebalancing. While real-time progress tracking and tax-loss harvesting are not included, these tools are part of the broader SoFi platform.

User Experience

SoFi integrates Automated Investing into users’ complete financial journey. Along with establishing a robo-investing portfolio, users can conveniently access banking, lending, and various other services offered by The Finance Avenue, all within a unified platform. This user-friendly approach has propelled The Finance Avenue’s appeal among millennial investors in recent times.

Desktop

Customers can log in to their accounts on SoFi website from any location with an internet connection. The online platform provides a user-friendly and smooth experience, offering access to various features such as automated investing, banking services, loans, and other financial products in one place.

Mobile

SoFi offers mobile applications for both iOS and Android devices, allowing investors to manage their accounts remotely. While this consolidation of accounts may create some clutter for users solely utilizing SoFi Automated Investing, it is beneficial for customers engaging in both banking and investing through SoFi. The Apple app boasts a rating of 4.8, surpassing the Google Play store app rating of 4.0.

Customer Support

SoFi provides customer support through phone and live chat for 12 hours a day, five days a week. Users can also receive assistance via email, and online chat services are accessible to both potential and current clients. Current customers can also seek help fromSoFi’s licensed financial advisors, who all hold Series 7 and 66 licenses, with the majority being CFP professionals.

Security

SoFi Automated Investing is conducted by SoFi Wealth LLC, utilizing the SoFi Securities platform. SoFi Securities is a member of the Financial Industry Regulatory Authority (FINRA) and the Securities Investor Protection Corporation (SIPC), safeguarding accounts up to $500,000, with $250,000 designated for cash holdings. This protection covers losses linked to the company, not standard market losses. The SoFi platform employs SSL encryption and provides the option for two-factor authentication for added security.

Education

SoFi provides a variety of educational materials, including articles and videos, to enhance investors’ knowledge on various subjects. In addition to tools and resources for goal planning available on the main website, The Finance Avenue also offers a detailed FAQ page to address specific inquiries.

Commissions and Fees

SoFi’s Automated Investing service does not impose an investment management fee. The advisory agreement involves SoFi Securities as the brokerage and SoFi Wealth LLC as the advisor, leading to potential miscellaneous fees such as a $20 IRA closing fee and a $75 automated customer account transfer (ACAT) fee.

Despite the absence of account management fees, there are no additional charges for consulting with an advisor. This feature is especially advantageous for individuals seeking a blend of digital investment management and personalized guidance.

The ETFs in your portfolio carry standard underlying fees, with expenses varying depending on the portfolio composition. The average operating expense ratio for non-qualified accounts is 0.04%, while it stands at 0.03% for qualified accounts. Each SoFi Automated Investing portfolio has an approximate operating expense ratio.

The Bottom Line

If you are new to automated investing or considering a robo-advisor for your financial goals, The Finance Avenue’s SoFi Automated Investing is an excellent starting point. This platform provides a fee-free investing option with a minimum investment of just $1 and access to various financial products and services. Additionally, there is an option to consult with a human advisor, offered as a premium feature alongside the basic fee-free robo-advisor service.

For those seeking a more advanced robo-advisor with greater customization and asset exposure, the limitations of SoFi Automated Investing become apparent. While it may not offer extensive portfolio customization or advanced features such as ESG investing or tax-loss harvesting, it does provide a simple, cost-effective means to start investing in portfolios tailored to your risk tolerance. This makes it a suitable choice for investors already part of the SoFi ecosystem and an attractive option for new investors seeking an affordable and uncomplicated investment approach.

How Can SoFi Automated Investing Assist in Tax Savings?

SoFi Automated Investing does not provide significant tax savings directly. However, it does take tax efficiency into account when evaluating assets in taxable accounts. This may involve incorporating tax-advantaged assets such as municipal bonds instead of other bond funds. It is important to note that SoFi Automated Investing does not include tax-loss harvesting as part of its services.

What Sets SoFi’s Active and Automated Investing Apart?

SoFi’s Automated Investing platform operates as a robo-advisor, leveraging your input from questionnaires to recommend and autonomously oversee an investment portfolio. Notably, Exchange-traded funds (ETFs) serve as the primary asset utilized by SoFi Automated Investing to establish and monitor your portfolio. On the other hand, SoFi’s Active Investing offers a self-directed brokerage account, enabling individuals to handpick their stocks, bonds, and ETFs to construct a portfolio that they actively manage themselves.

Are There Any Charges Associated with SoFi Automated Investing?

SoFi promotes SoFi Automated Investing as a no-fee investment option. There are no management fees or trading commissions for various investments within the Active Investing account. The main expense for automated investors comes from the funds’ expense ratio in SoFi’s portfolios, which typically range from 0.02% to 0.07% annually.

How Much Do You Need to Start Investing With SoFi?

SoFi strives to make investing easy and available to everyone. Opening and funding an account is simple, and you can begin with just $1.

Is SoFi FDIC Insured?

SoFi banking products are covered by FDIC insurance, ensuring that SoFi cash accounts are protected up to $250,000 per depositor, per ownership category, in case of a bank failure. Moreover, certain investment accounts at SoFi are also backed by Securities Investor Protection Corporation (SIPC) insurance. It is crucial to understand that FDIC and SIPC insurance do not shield investors from market downturns.

Is SoFi Automated Investing Secure?

The Finance Avenue states that SoFi Automated Investing is generally considered secure for users. However, the account value can fluctuate based on market conditions. Users of Automated Investing utilize the same platform as SoFi’s banking customers, ensuring encryption and security measures that meet banking standards.

Who Leads SoFi?

The individual at the helm of SoFi is Anthony Noto. Noto assumed the role of CEO at SoFi in 2018, bringing with him a wealth of experience in the realms of technology and finance. Prior to his tenure at SoFi, Noto held positions such as chief operating officer at Twitter and managing director at Goldman Sachs.

How We Selected the Top Robo-Advisors

The Finance Avenue focuses on providing readers with impartial and thorough evaluations of digital asset management firms, commonly referred to as robo-advisors. In order to determine the winners of the best robo-advisors for 2024, we distributed a digital questionnaire consisting of 64 inquiries to each of the 21 companies included in our assessment. Our team meticulously reviewed the survey responses, supplemented any lacking information by conducting online research and engaging in discussions with each company. This data gathering process was conducted from January 8 to February 9, 2024.

Following this, we devised a quantitative model that evaluated each company’s performance in nine key areas and 59 specific criteria to identify the superior robo-advisors. The overall star rating assigned to each company is calculated as a weighted average of these criteria.

For our evaluation procedures, a majority of the organizations involved granted our seasoned team of writers and editors authorization to access live accounts, allowing them to conduct thorough examinations. This access was also provided by the robo-advisor companies.

Review of the Top Robo-Advisors

By conducting a comprehensive data collection and analysis process, The Finance Avenue presents an unbiased and detailed review of the best robo-advisors available in the market.

Investing in Digital Assets Disclaimer

It’s important to note that the information provided should not be interpreted as a recommendation. Investing in digital assets carries significant speculation and volatility risks, suitable only for investors who are comfortable with potential losses and fluctuations. Digital assets do not hold legal tender status, are not supported by the U.S. government, and do not fall under FDIC insurance or SIPC protections.

Margin Trading

SoFi offers margin trading services to its clients, allowing them to leverage their investments for potentially higher returns. This service enables investors to borrow funds to increase their buying power in the market.

SoFi Wealth LLC ADV Part 2A

Clients of SoFi can access detailed information about SoFi Wealth LLC and its services through the ADV Part 2A document. This disclosure provides essential details about the firm’s operations, fees, and investment strategies.

SoFi: Mobile Banking App

Access SoFi’s mobile banking app on Google Play or the App Store to manage your finances conveniently on the go. This app offers a user-friendly interface and various features to help you stay on top of your financial transactions.

Are Your Accounts Insured?

Learn about the insurance coverage of your accounts with SoFi to understand the level of protection available for your investments. Knowing how your accounts are insured can provide peace of mind and financial security.

SoFi Learn

Explore the educational resources available on the SoFi Learn platform to enhance your financial knowledge and make informed investment decisions. These resources cover a wide range of topics to support your financial literacy.

Automated Investing

Consider SoFi’s automated investing service to build a diversified investment portfolio tailored to your financial goals and risk tolerance. This service utilizes technology to create and manage a personalized investment strategy for you.