SoFi Wealth Review

Pros and Cons of SoFi Wealth

Types of Clients

SoFi’s primary financial advisory product is its robo-advisor service, which it exclusively offers to individuals, including those with both a high and average net worth. However, according to the firm’s most recent Form ADV filing, the bulk of its customers fall within the average category.

Robo-advisors are well-known for being accessible to a sweeping range of clients, including people without substantial assets. In line with this pattern, SoFi doesn’t require an account minimum before signing up. This means that, even if you’re just starting to build a portfolio, you can use the company’s services. Those with a large, more complex portfolio may also enroll.

Financial Advisor Services

As mentioned, SoFi specializes in providing automated portfolio management to clients. This involves entrusting the firm’s software to assemble and maintain your portfolio per your goals and risk tolerance. The company also offers financial planning on a smaller basis, as well as digital advice for a limited set of users.

Below is a full breakdown of the financial advisor services SoFi provides:

Automated Investing

SoFi’s robo-advisor service, Automated Investing, provides clients with portfolio management on a discretionary basis. After enrolling, you’ll answer a set of questions about your goals, time horizon, and financial situation. Then, according to the company’s Form CRS, a “computer algorithm” will get to work and construct your portfolio based on the information you’ve given it.

Per the firm, the robo-advisor will select a type of portfolio (e.g., aggressive, moderate, conservative) made up of diverse exchange-traded funds (ETFs). Periodically, the software will determine appropriate times to rebalance your portfolio, ensuring it stays in line with your objectives. The company also allows you to make recurring contributions to your account, letting you further increase your portfolio’s value.

Because the program is discretionary, the company’s software will have full authority to buy and sell securities on your behalf without receiving your direct approval. Keep in mind, as well, that you’ll likely have no interaction with a human advisor. Therefore, one of the most important details to consider before enrolling is whether you trust the company’s technology to manage your investments.

Financial Planning

Aside from its primary automated investing service, SoFi also provides a limited financial planning option. With this, you’ll work with a professional to build a plan for a specific area of your finances. As per the firm’s Form ADV Part 2A, this arrangement would take place over 90 days over the phone or through a video call.

The company says that you and your planner will discuss your financial situation; however, the plans aren’t comprehensive by default. They’ll typically involve aspects such as:

• Creating a budget
• Saving for various goals (e.g., retirement, education, or buying a home)
• Paying off debts
• Planning insurance
• Investment planning and asset allocation

If you require a full-fledged plan consisting of one or more of the above, SoFi says that your planner may recommend a more in-depth analysis. Then, they’ll help you put together a comprehensive financial roadmap.

Fee Structure and Cost

Unlike other firms, SoFi doesn’t charge clients any advisory fees, nor does it earn commissions from products it suggests or automatically adds to portfolios. Rather, the company makes money through management or brokerage fees via the investments within your account. So, while the Automated Investing product uses a wrap fee structure, which often includes advisory costs and brokerage fees, the only costs you’ll need to pay will be the ones associated with trades or securities in your account.

SoFi’s Investment Philosophy

Being acutely aware of a company’s investment philosophy and strategies is vital. It can help you understand how a firm will build and manage your portfolio, as well as the types of recommendations you may receive. This can be especially magnified when using a robo-advisor, like SoFi’s Automated Investing, as you must entrust a company’s proprietary software and technology to maintain your best interest and accomplish your goals.

In its client-facing brochure, SoFi says that as its algorithm constructs your portfolio, it will use the information you’ve provided in an initial questionnaire to decide which portfolio type to recommend. This might, for instance, include details such as your short- and long-term goals, risk tolerance, and time horizon.

SoFi favors using passively managed ETFs, each of which generally tracks global indexes; however, other options, such as those that follow the S&P 500, are also available. Per the firm, the strategy you receive from the robo-advisor may include anywhere from four to 12 ETFs.

Disclosures

SoFi Wealth is registered as an investment advisor (RIA) with the U.S. Securities and Exchange Commission (SEC), requiring it to make its disciplinary history, criminal proceedings, or arbitrations available to the public.

SoFi lists one disclosure on its Form ADV regarding an incident that occurred on April 12, 2019, where it moved client funds from third-party ETFs to ones it owned. Following this, the SEC claimed that SoFi “failed to provide its clients with full and fair disclosure of its conflicts of interest relating to the transactions,” violating Section 206(2) of the Investment Advisers Act (IAA). As a result, the company had to pay $300,000 and take steps to make investors aware of the situation.

Customer Service

SoFi provides several avenues to get in contact with a customer service representative. The most effective way to get in touch with support is to visit the firm’s contact page, which lists phone numbers and live chat options for each of its products. It also contains mailing addresses for its office locations and payment addresses for various services.

How to Start an Account

The most straightforward way to open an account with SoFi is by visiting its website and clicking on the “Get Started” button on the top right corner of the page. After this, you’ll be able to create an account and then will be free to choose any of the products you’re interested in using.

Methodology

The information in this review is based on publicly available information directly from SoFi’s website and the SEC. Neither the firm nor its representatives have any say on what we’ve included on this page.

Frequently Asked Questions

Is SoFi a fiduciary?

Because it’s registered with the SEC as an RIA, SoFi must strictly adhere to a fiduciary duty. This means its robo-advisor technology must act in your best interest as it manages your portfolio or recommends investments.

How does SoFi make money?

SoFi makes money through brokerage costs and trading fees associated with the products its clients use within their accounts. In somewhat of an unorthodox way, it doesn’t charge customers for financial planning or using its robo-advisory tools.

Are robo-advisors worth it?

Deciding to put your portfolio in the hands of a computer algorithm can feel like an unsettling leap. While there is no guarantee of gaining substantial returns or hitting your goals, robo-advisors often recommend investments that fit a set of information you give them. They can be a good option for people who want to build a portfolio but can’t afford in-person advisors, which often come with high account minimums and expensive fee structures. However, if you prefer meeting in person and building trust with a professional or have more complex needs, a robo-advisor may not be for you.