Sofi Invest Rating:  

Review of Sofi investing: Automated Option and Active Option fees and commissions, pros and cons, minimum requirements and promotion offer for opening a new online account or IRA with the discount stock broker.

Sofi Invest Overview

Sofi is an online provider of many services traditionally fulfilled by banks. In addition to brokerage accounts where you can buy and sell stocks, ETFs, etc., they offer savings accounts, mortgages, student loans and student loan refinancing, personal loans, and insurance. Sure sounds like a bank, but even their automated answering system insists they’re not a bank. It probably doesn’t matter to most users, or “members,” as customers are called.

This review will focus on the investment brokerage service known as Sofi Invest.

Sofi Invest Automated Option

There are two options under the Sofi Invest umbrella – Active and Automated. The Automated option allows investors to answer a few questions, and based on their age, income, investment goals, and risk tolerance, be assigned to one of several investment profiles from conservative (all bonds) to aggressive (all stocks). Each classification has its own portfolio, which is really a collection of mostly Vanguard ETFs that track 20 or so major market indices.

The financial advisors at Sofi will openly tell you all of this in as much detail as you care to hear – more on that later. Investors can switch between these ready-made portfolios, but with the Automated option they can’t direct their investments at the individual stock or ETF level.

The great thing about this is, most investors have neither the knowledge nor the desire to make detailed investment decisions. Sofi takes care of that for their investors.

Both taxable and Roth IRA accounts can be opened under the Automated option, and Roth IRAs can only be opened under this option at present. However, Sofi advisors say that self-directed Roth IRAs are coming, and Sofi has a very good track record of keeping its promises.

For cost-conscious investors – is there any other kind? – the average expense ratio of the pre-made portfolios is just 0.08%, and there are no commissions. That’s zero transaction costs! With other platforms like TD Ameritrade charging in the ballpark of $6.99 per trade, investors on a budget can’t afford to invest small amounts of money. With Sofi, transaction costs don’t eat into your purchase or your sale.

Active Option

The other option under Sofi Invest is the Active option. Here, investors are in complete control of their trades. All of the individual stocks, ETFs, mutual funds, etc. available on the NYSE and NASDAQ are available. Just type the ticker symbol, and click “Buy” or “Sell,” and voila, you’re trading with the big boys.

Again, this point can’t be stressed enough: there are no commissions, so investors can buy or sell a single share of whatever stock or fund they’d like, and not worry about how much extra they’re paying in transaction fees!

Sofi really does keep their promise of not charging investors to use their own money. Speaking of which, linking a bank account is easy, and transferring money into your Invest account requires just a few clicks. The money can take up to four business days to become available, but depending on the amount being transferred and the bank involved, it can also be available for immediate use.

Sofi Invest Pros

As mentioned, zero commissions on trades is a wonderful feature for any investor. But Sofi offers other perks, such as Member Experiences. These are events sponsored by the company where “members” can meet and have a good time getting to know each other. Baseball games, movies, even axe-throwing – all paid for by Sofi. Register early and be sure to show up – events fill up fast, and they’re only free if the member actually attends.

As alluded to earlier, the customer service at Sofi is also second to none. Financial advisors are on call to answer any and all questions about the various services Sofi offers. Not only are their answers complete and correct, the advisors are personable and they often talk about Sofi features that aren’t available at the moment, but will be soon.

This isn’t just empty talk about “someday.” By the time the advisors are telling callers about it, it’s in the works. The Sofi Money® account – a high-interest savings/checking hybrid account – is just one example of a feature they said was coming, and sure enough, showed up just a couple of months later.

The advisors will even call you back if you can’t wait on hold. Unbelievably, there’s a link at the top of the Invest website that reads, “E-mail the CEO”... and all appearances and assurances are that Anthony, the actual CEO, reads the e-mails and has a staff dedicated to responding to them. 0In other words, that link works!

Sofi Invest Cons

Even with so much going for it, Sofi Invest has some less-than-perfect, even annoying, features. The most maddening is the lack of any real information about individual stocks and ETFs. With other truly robust trading platforms like TD Ameritrade and E-Trade, in-depth research on companies – including income statements, balance sheets, all of the profitability ratios, management effectiveness ratios; in short, everything you want to know about a company – is readily available.

On those platforms, the same is true of ETFs – they offer more information than a typical person is looking for. Maybe that’s the point, but at Sofi, there’s actually a dearth of information. Investors get a graph and some basic information about the stock or ETF, and that’s it. They’re left using one of those other platforms, or other tools available on the internet, to do their research.

Similarly, the “Buy” and “Sell” buttons allow the investor to do just that – buy or sell at the current market price. There is no feature for placing a limit order or putting an expiration on it, as there is with platforms like TD Ameritrade and E-Trade.

Short-selling and options trading (calls and puts) are also unavailable.

To compound the inconvenience, the stock prices quoted on Sofi are delayed 15 minutes, so it’s possible that trades don’t occur at the price displayed.

This next thing is nuanced, but important: it’s essentially impossible to day-trade on the Sofi platform with an account balance under $25,000. That’s because every account is technically a margin account (even though investors are investing their own money), so buying and selling the same stock in one trading day can only be done three times in a 5-trading-day period, by law. (A $25,000 balance qualifies an investor as a “pattern day trader,” and then the rule doesn’t apply.) These rules are something most people don’t run into, but if an investor wants to use Sofi’s commission-free policy to “buy low, sell high” many times a day, he/she will hit the limit right away, and trading will be temporarily frozen on the account.

Sofi Invest Review Conclusion

Sofi Invest is a great place to conduct the actual purchase of stocks and ETFs without paying any commissions. They’ve even started offering their own ETFs with zero expense ratios. (Expense ratios and commissions are not the same thing, by the way.)

Customer service is unparalleled, and the platform is simple and intuitive to use, especially for beginners. Its lack of sophistication might be a hindrance to more advanced investors, and it is unusable for wannabe day traders without the requisite $25,000 minimum account balance.

Then again, the Automated option allows a “set it and forget it” investing style that suits most busy people who want to invest with low (read: zero) transaction costs and still have access to a human financial advisor when they wish. For most “everyday” investors, that’s about as close to the best of all worlds as they’re likely to find.