SoFi Review and Profile March 2020

Ranked #2 for First Time Investors

Overview

Originally a consumer lending platform, SoFi has since expanded to offer investment management services.  Although it is significantly smaller than SoFi’s lending platform, SoFi Invest has attracted $79 million in assets under management and over 19,000 accounts, according to its latest ADV filing. SoFi has also introduced four proprietary ETFs, two of which are included in their SoFi Invest portfolios.  SoFi has recently partnered with two fintech insurance firms to offer homeowners, renters, and auto insurance.  Additionally, SoFi offers its customers a zero-commission, self-directed trading platform.   

SoFi Invest is a compelling offering for the cost-conscious or first-time investor, regardless of account size.  SoFi also offers a free checking and high-interest savings account through SoFi Money and free budget tracking and planning with SoFi Relay.  With its wide breadth of financial services offered, SoFi is positioning itself as a comprehensive provider for all of its users’ financial needs.

Pros:

  • Zero investment management fees
  • Additional financial services offered by SoFi
  • Access to advisors at all service levels

Cons:

  • Weak online planning tools
  • No performance benchmarks

Platform Facts

Account Minimum$1
Advisory FeeNo Management Fee
Average Weighted Expense Ratio0.05%
Accounts SupportedTaxable, Joint, IRA, Roth IRA

Performance Figures (as of 12/31/19)


2-YR Trailing (annualized)Sharpe Ratio
SoFi Taxable6.03%0.51

Digital Advice Ratings

Access to Advisors (3.5/5)

With no minimum investment and access to live advisors, SoFi is a great option for cost-conscious investors.  Advisors are not required to hold a CFP or other relevant professional designation and clients are unable to work with a dedicated advisor.  If clients are looking for more tailored or complex advice, they may want to look elsewhere for a digital advice product

Financial Planning (1/5)

SoFi scores below average in regards to financial planning tools made available online.  While clients are able to model a single goal plan, they are unable to model “what if” scenarios or receive help determining how much to spend during retirement.  Clients are unable to incorporate Social Security assumptions or additional retirement income, such as a pension benefit.

Transparency and Conflicts (2/5)

SoFi ranks low in terms of transparency, as they do not provide access to both traditional or blended benchmarks to assess performance.  They do provide white papers detailing investment strategy. However, they do not detail the performance of their models online. Portfolio models are made available before account opening, based on the planning goal and results of the risk tolerance questionnaire.  They do lose points for conflict of interest as they invest their portfolio in proprietary funds, which has caused taxable gains for clients, as detailed in our previous blog post. They have since paid investors back for their questionable trades

Features and Customer Experience (3.5/5)

SoFi is rated above average in regards to features and customer experience.  They offer a range of financial services in addition to investment management, all on one integrated platform.  In addition to a high-yield cash account, they provide smart dividend reinvestment and offer tax-loss harvesting.  When assessing customer experience, they do have a mobile app and educational material available for those interested in financial planning and investment topics.  They also provide the ability to include outside accounts for a holistic financial picture.  

Costs (5/5)


Management FeeFund ExpensesTotal Cost
Digital Only Access*$0$5$5

*Per $10,000 invested

With no minimum and no management fee, SoFi is a great option for the cost-conscious investor.  While clients will not receive the white-glove service available at other digital advice offerings, SoFi is a great introduction to wealth management for those who may not require advanced assistance.