Wealthfront vs SoFi 2023
If you’re looking for a simple way to begin investing, chances are, you’re considering the online options. Using online brokers—which often double as a banking institution—offers first-timer investors many tools that they can use to improve their financial futures.
From providing basic financial planning tools to automated investing (and even personal loans!), these types of online services often provide a great way for the complete beginner to tackle their finances head-on.
In today’s Wealthfront vs SoFi comparison, we’ll be looking at two services that investors can use to easily build a diversified portfolio. Both have minuscule minimum account balance requirements, offer competitive banking APYs, and can be conveniently accessed via a mobile device.
However, there’s often more to these services than meets the eye. What are the actual differences between the two platforms (and how could they affect you)? We’ll discover these answers—and more—throughout this article.
|Wealthfront is Better for:||SoFi is Better for:|
|Hands-off investors||Active investors|
|Automated investing||Access to financial advisors|
|Socially responsible investing||Informational purposes|
There are many different factors you’ll want to consider when trying to select an online investing platform. Do they offer human financial advisors? What are the management fees? Will you have unlimited access to the stock market, or will there be certain limitations to the asset types you can acquire?
Keep these and similar questions in mind as we begin our comparison. Although one platform may outperform the other on paper, that doesn’t necessarily mean it’s the better option for you.
|Free Features||Cash account, robo investing, 529 education plans||Commission-free trading, access to human advisors, automated investing, fractional shares|
|Paid Features||Enhanced services available for balances above $100,000/$500,000||Outgoing transfers|
|Annual Subscription Fees||N/A||N/A|
|Securities Offered||UITs, ETFs, bonds, mutual funds||Stocks, ETFs, Crypto|
|Investing Approach||Can actively choose specific ETFs||Active & passive|
|Best Use||Passive investing & Banking||Meeting Multiple Financial Needs|
|Current Promotion||Learn More||Learn More|
|Modest Money Overall Rating|
Factor 1: Free Features
We’ll begin by comparing the free features between these two platforms. There are many different features offered such as robo-investing, active investing, retirement accounts, and the ability to make crypto trades.
SoFi is the More Capable Option
- SoFi allows the trading of individual stocks
- Wealthfront doesn’t support individual stock trading
- Both offer joint accounts
As with most investing services, creating taxable accounts is easy with Wealthfront. The main appeal of this investing platform is its hands-off approach to investing, but it also offers banking solutions.
Although Wealthfront Brokerage LLC doesn’t allow users to purchase individual stocks, it does have a wide portfolio of ETFs available for users to invest in. This makes portfolio management simple, as investors need only pick an EFT (or UIT) to invest in.
The minimum balance to start investing is $500, which seems a bit steep for someone who’s just started working towards their investment goal. Furthermore, this financial product doesn’t support purchasing partial shares.
Unfortunately, this means that deposited funds won’t actually be invested until the balance in your account is enough to cover the cost of a share. This method of investment management could be improved if purchasing fractional shares were offered, although users will still be able to reach their investment goal over time.
On the banking side of things, Wealthfront offers a basic financial product that includes a debit card with an account that earns an APY of 3.80%. Known as “Wealthfront Cash”, this account supports direct deposits and cash deposits (at participating retailers).
SoFi Invest offers unlimited access to various services including hands-on active investing, automated robo-investing, retirement accounts, and loan services. It also offers access to online banking solutions (with an APY of up to 3.25% and support for joint accounts). The ability to purchase individual assets—and fractional shares—instantly make SoFi the more appealing option.
Another selling point for SoFi is its advisory services. Members can talk to financial planners and financial advisors about a variety of topics. Although SoFi doesn’t offer tax advice, its human advisors provide investing and financial advice for free (as relevant to their products).
Factor 2: Paid Features
Next, we’ll compare the paid features between the two platforms. As primarily free services, the number of features you’ll have to pay for is minimal, but they’re still worth considering when trying to pick a service.
- SoFi only charges one fee
- Wealthfront charges a management fee
- SoFi’s ETFs may charge a management fee
When investing through Wealthfront, users are subject to a minimal fee. This fee is based on their assets under management and is charged as a percentage. Tax-loss harvesting (direct indexing) is available once a member’s cash balance exceeds $100,000.
Both SoFi Invest and SoFi money—which grants users fee-free ATM access at machines using the Allpoint® Network with their debit card—are free to use. However, while SoFi Invest’s trading services are free for active investing, users may incur fees if they use automated investing.
While the ability to make stock or crypto trades is commonplace in active investing, it’s non-existent in automatic investing. This is because automated investing uses ETFs, rather than individual assets.
Similar to mutual funds, these ETFs may charge fees for the assets under management. Fortunately, these fees aren’t high enough to prevent users from reaching their investment goal. However, concerned investors can talk to an investment adviser for recommendations.
SoFi itself only has a single fee, which is charged when users transfer their money to a different brokerage.
Factor 3: Subscription Costs
Lastly, we’ll compare the ongoing expenses between the two platforms.
SoFi Doesn’t Charge Any Ongoing Fees
- SoFi is free-to-use
- Wealthfront charges a few different fees
- SoFi charges an outgoing transfer fee
As previously mentioned, Wealthfront charges a management fee on all investing accounts.
This 0.25% fee is based on your AUM. Wealthfront doesn’t charge any management fees for cash accounts, although users can still incur $2.50 fees from SoFi for using out-of-network ATMs. It’s also important to note that the cash account charges a 2.75% fee on international transactions, making it unsuitable for travel.
Learn More About Wealthfront
SoFi Invest & SoFi Money are both fee-free services. Although you may be charged management fees for the ETFs you invest in through SoFi, these fees aren’t charged by SoFi itself: they’re charged by the ETFs.
The only fee you could be liable for is the outgoing ACAT fee, which is charged when you transfer funds to an alternative brokerage.
Learn More About SoFi
Wealthfront vs SoFi: Final Thoughts
Both services are excellent for beginning investors who want to learn more about investing while minimizing their risk level. One could argue that—due to the trading limits on its taxable brokerage accounts—Wealthfront is actually the better option for complete beginners.
If you’re looking for a platform that keeps your investments within your risk tolerance, handles the asset allocation process for you, and also offers basic banking services, then Wealthfront is the option you should go with.
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However, if you want a more capable platform, we definitely recommend SoFi instead. Offering financial advice, student loan refinancing, checking and savings accounts, automated investing, and hands-on investing for individual assets, SoFi is simply the superior service overall.
Click here to start investing without management fees!