SoFi Active Investing Review

Pros Explained

• SoFi offers commission-free trading online for ETF and stock trades, including fractional shares, just like many brokerages. ETFs can reduce your returns, but you should keep in mind that management fees may apply to them. To understand how these fees impact your bottom line, make sure you read the prospectus for your fund.

• The SoFi mobile app has a clean design and is easy to use. The app's investment-specific tools are not extensive. You'll only find basic charts and company details. There's also no order ticket. If you are a member of other SoFi offerings such as personal loans and credit cards, you can still keep track all your finances on one platform.

• All SoFi customers can access the "Get Your Money Right", which offers free, personalized financial advice from SoFi’s full-time financial advisors. The planners do not actually sell SoFi products and the meetings are virtual. The planners are employees who are not commissioned and are held to the fiduciary standard. This means that they must make recommendations in your best interest.

The Cons

• SoFi provides access to U.S. stocks and ETFs as well as fractional shares. There are also about 20 cryptocurrencies available (with plans for more). This means that you will need to find another place to trade any other type of currency, option, futures, mutual funds, or futures.

• SoFi's Active Investing platform provides just enough tools for basic research and simple trades. There are no short sales and advanced order types. SoFi's charts are very basic and have few customization options. There are very few technical analysis tools and you won't find any fundamental analysis.

• SoFi was founded in 2011, but the brokerage arm was launched only a few years later, in 2019. This could be a concern for investors looking to hire a more experienced broker to manage their money.

Useability

Opening a SoFi Invest Account online or via the app is easy. The app will provide step-by-step instructions for how to get started. If requested, you might need to upload a copy your driver's licence, passport, SSN card or bank statement. SoFi will contact you to inform you if any additional information is required and within a few days, if your account was approved or declined. Once approved, SoFi will email you to inform you if your account has been approved or declined. You can then fund your account and begin investing. You can only open an Active Investing account with SoFi if you are a U.S citizen or a green card holder.

Once you have set up your account and are ready to trade, stock, ETF and cryptocurrency trades can be placed from SoFi's mobile app or desktop platform. The platforms offer an easy-to-use investing experience, with limited customization options and tools. These platforms are best for beginners who know what they want to sell or buy. You won't find much technical or fundamental analysis.

Market quotes on SoFI Active Investing can be viewed in real-time, but they are not streaming. This means that you will need to update your browser or mobile app to see current prices. It is nearly impossible to assess intraday price movements because of the smallest chart interval. A news feed that is curated from multiple sources such as Invezz News and Fool.com provides periodic updates on symbol-related stories.

• Trade Experience

• SoFi Invest is a web-based trading platform that is geared towards beginners. Although it is clean and well-organized, it does not have the tools and features that more experienced traders and investors use. It is limited in terms of customization beyond the chart timeframe (one to five years). You can however create a watchlist with symbols and a chart overview. It also shows the current price, today's change in dollars or percentage. You can only place limit and market orders when it comes to placing orders. SoFi does not support trailing, conditional or stop-stop limit orders.

• Mobile Trade Experience

• SoFi's mobile app is available on both Android and iOS. The app trade experience on the mobile platform is identical to that found on the desktop. To view basic charts, company information, and news related to any symbol, you can create a watchlist by clicking on the symbol. The app watchlist allows you to place buy or sell orders by simply selecting the stock that interests you. Investors who use SoFI financial services are more likely to find the app useful as they can access their non-brokerage SoFi accounts from within the same app.

A wide range of offerings

SoFi Active Investing only offers U.S.-based stocks, ETFs, fractional shares and cryptocurrencies as its trading products. OTCBB, mutual fund, fixed income, options and commodities, futures, options options, forex, and other products are not included in the list.

Customers of SoFi Active Investing can trade:

• Stocks (long trades only).

• ETFs

• Fractional shares are approximately 150 stocks/ETFs that can be used in the fractional share program.

• 20 cryptocurrencies available through SoFi Crypto

• SoFi offers a Roboadvisory service called SoFi Automated Investing (read the review here).

• SoFi has added IPO (initial public offering) investing in 2021

Types of Order

SoFi's order types are easy to understand because you can only place limit and market orders to buy or sell. Both desktop and mobile platforms do not support stop, stop limit or bracket, conditional trailing, time/activity-based orders, nor does the mobile platform. It is not possible to enter multiple orders at once, stage orders, or select a tax lot for closing a position. Although SoFi isn't intended for traders, regular investors still find SoFi useful.

Trade Technology

SoFi didn't provide any details on its order routing processes or whether it uses spray or sequential technology. According to a company blog, "SoFi Invest routes member orders in order to deliver an execution that's either at or better that the equivalent price that would have been executed by going directly into a major exchange." However, it is difficult to assess that without more information.

Apex Clearing is SoFi Active Investing's clearing and custody partner. Apex Clearing routes orders to eight wholesalers or market marker suppliers. SoFi Active Investing received a modest order flow payment of $0.00102 per share, and a price increase of $0.00206 per shared on average.

SoFi Active Investing does not allow automated trading or backtesting because it is geared towards beginners. These features are available on trading platforms that are more robust and designed for active traders.

Prices

SoFi Active Investing allows you to trade stocks and ETFs without commission. These funds will charge management fees if you choose to invest in ETFs via SoFi Invest, whether by purchasing them yourself or through SoFi Invest's automated investment process. These fees are paid directly by the fund, not by you. However, they can reduce the fund's return. Here is a list of SoFi Active Investing's fees and commissions:

• Trade stocks and ETFs with no commission

• For cryptocurrency trades, 1.25% "markup"

• Margin loans are available at 4.5%

• IPO fees: $50 for first sale within 120 days after IPO. $5 for each subsequent sale

• There is no inactivity fee

• There is no brokerage account closing fee (IRA closing fee $20).

• $75 account transfer fee

• There are no withdrawal or deposit fees

• You can wire $0 to transfer funds to your account, though your bank or transferring company might charge a fee.

• $25 wire transfer out

• Electronic statements, trade confirmations and prospectuses are free. Tax forms, tax forms, and electronic statements are also free.

• $5 for paper statements

• Trade confirmations in paper $2

• $15 returned ACH/insufficient money

• $50 for voluntary corporate actions

• SEC Regulatory Trading Fee: $22.10 per $1 Million of transaction price (sells only), rounded up to the nearest penn

• FINRA Trading Activity Fee (TAF), $0.000119 per equity sale, rounded to the nearest penny and capped at $5.95 per trade.

How this broker makes money for you and from you

It's becoming less common for brokerages to charge commissions in order to stay in business. These are the secrets behind how SoFi Active Investing makes its money.

• Interest paid for cash:SoFi Active Investing earns an interest from cash that isn't yet invested. SoFi states that this is done via an FDIC program which also keeps members' cash safe. SoFi doesn't share the interest it earns with its customers, unlike other brokers.

• Portfolio loans are subject to interest:SoFi Active Investing offers margin loans starting at 4.5%

• Stock Loan Programs:SoFi makes revenue by lending stocks to your account for short-term sales. However, it doesn't share that income. Contact customer service to request an opt-out from share lending for Active Invest members.

• Order flow payment:Some market makers pay brokers to direct equity and option orders. This practice is called payment for flow (PFOF). SoFi Active Investing accepts order flow payments, but they are relatively small at $0.00102 per share.

• Price Improvement:SoFi Active Investing reports price increase of $0.00206 per Share

• Portfolio margining:Portfolio Margining calculates real-time margins for stock and option trades. It is based on risk rather than fixed percentages. SoFi Active Investing doesn't offer portfolio margining.

Account and Research Amenities

SoFi is a low-cost, no-frills investment experience. However, it lacks the account and research tools that you might get from a larger broker.

Stock Screener

SoFi Active Investing doesn't have a stock screener.

ETF and Mutual Fund Screener

SoFi Active Investing doesn't have an ETF screener. It doesn't offer mutual funds, nor a mutual fund screener.

Option Screener

SoFi Active Investing doesn't offer options trading nor an options screener.

Fixed Income Screener

SoFi Active Investing doesn't offer fixed income products.

Calculators and Tools

SoFi has a good selection of calculators, estimators and tools. These are all available on the tools and calculators pages. These tools and calculators are meant to assist you in general financial planning. They can help you create a budget or determine if your retirement plans are on track.

Trade Idea Generators

Social trading is a feature of the SoFi mobile app that allows you view the activities of other investors. To see the holdings and watchlists of other members, you can follow your friends, family, or other SoFi members. You can also compare them against the market. Participation is voluntary and must be enabled manually in the mobile application. Automated Invest accounts (robo) do not allow social trading.

News

SoFi curates news information from over 7,000 news outlets including Invezz News and Zacks Investment Research. You can click on any headline to view the complete story.

Research by a Third Party

SoFi does no third-party research.

Charting

Both desktop and mobile platforms offer charting. Charting is limited in both the desktop and mobile platforms. This is because it is not as advanced as what many brokers offer. It is possible to choose a symbol and a chart period (ranging from one day to five year), but that's it. All charts are displayed as line charts. You won't be able to see the market in detail if there aren't any intraday timeframes. There won't even be any chart overlays, technical indicators or drawing tools. Despite this, the charts are clear and easy to see, even in the small space available.

Cash Management

SoFi Active Investing doesn't offer an automatic cash sweepstakes program.

Fractional Dividend Reinvestment Plan - DRIP

DRIP programs are available to all Active Investing brokerage accounts and Active IRA accounts at SoFi. SoFi Automated Investing accounts cannot participate. Qualified dividends can be reinvest directly in the stock that paid them the dividend once you have enabled dividend reinvestment. The market determines the price at which the reinvestment is made. This usually happens within three business days from the date of the dividend payment. SoFi provides fractional shares for eligible stocks so that dividends can be reinvested into fractional shares of the same stocks.

SRI/ESG Research Amenities

SoFi Active Investing doesn't support screening based upon ESG/SRI factors.

Portfolio Analysis

Portfolio analysis tools are not available on the SoFi mobile and desktop platforms. SoFi members have unlimited access to financial advisors, who can review your portfolio and offer advice. SoFi Investment Specialists can be registered as investment advisor representatives. They also hold the Series 65 designation or other qualifying exam. Advisors must act in your best interests and are subject to a fiduciary standard.

Education

SoFi's SoFi Learn page has an expanding library of articles covering various financial topics. You can search by topic (investing, financial transparency, budgeting and goals, homeownership and debt payoff), or by life stage (building your career, starting your family, achieving financial independence, growing wealth, planning for retirement and going back to school). You can also use the search bar to enter keywords.

This investing-specific content is appropriate for beginners. It covers basics such as "What are Cyclical Stocks?" It also touches on more detailed topics like "A Guide to Options Trading", even though you cannot trade options with SoFi. SoFi also offers educational seminars, career counseling, and meetings with financial advisors. You can find additional content on the SoFi blog and a comprehensive list of FAQs. SoFi does not offer any investing glossarys or educational videos.

Customer Service

• Monday through Thursday, 5am-5pm PST and Friday, 5am-4pm PST via chat or phone.

• For help via Twitter, members can tweet @SoFiSupport

• No live broker

• Virtual assistants can answer your general questions and direct to the right web pages.

Security

• SoFi provides two-factor authentication for all platforms.

• Users can log in to mobile apps using biometric (face, fingerprint) recognition.

• Standard Securities Investor Protection Corporation coverage up to $500,000, $250,000 cash. There is no excess SIPC policy.

• There is no security guarantee. Security guarantees offered by some brokers may cover 100% of the losses from unauthorized activity. This is not offered by SoFi.

• The company reported no widespread or severe platform outages.

• There have been no data breaches reported.

Transparency

SoFi Active Investing makes it clear about its trading costs. You can trade stocks, ETFs and fractional shares for $0 and cryptocurrency for a 1.25% markup. SoFi claims that this fee is subject to change at anytime. While you don't have to pay a commission for trading ETFs, management fees are charged that can reduce the fund's returns. The fee disclosure page clearly outlines other costs such as paper statement fees or SEC Regulatory Trading Fees. SoFi now offers margin trading and publishes details on a dedicated margin investing webpage.

SoFi has been in the news for many things, including operating unlicensed mortgage servicing and its firing of Mike Cagney, former CEO, after a scandal involving sexual harassment. FINRA however shows that the brokerage has a clean track record, with no disclosures regarding criminal or regulatory matters.

There are many account types available

SoFi Active Investing offers a limited number of account types.

• Individual taxable accounts

• Traditional individual retirement accounts (IRAs).

• Roth IRAs

• Rollover IRAs

• Simplified employee pension (SEP) IRAs.

SoFi Active Investing offers a smaller number of accounts than the SoFi Automated Investing solution. However, most investors will still be able to use the accounts that are available. Custodial and joint accounts are the key omissions.

Final Verdict

SoFi is here to help you with all your financial needs, from credit cards and cash accounts to investing and home loans. The platform's mobile and desktop platforms are simple to use and will appeal to casual investors as well as beginners. If you are looking to manage your money more efficiently, it is possible to keep track of all your SoFi accounts from one mobile app.

However, this doesn't mean SoFi's brokerage is the right one for you. If you are looking to trade stocks, ETFs and cryptocurrencies, it is not the right choice. SoFi Active Investing doesn't offer retirement-friendly mutual funds, bonds, or other instruments such as options, futures and forex. SoFi Active Investing is not suitable if you need a strong trading platform, customizable charts or the ability to perform technical or fundamental analysis before placing a trade.

SoFi Active Investing is best suited to new investors who are looking for low fees, low minimum account balances and an easy-to use mobile app that allows them to invest on the go. Both experienced investors and active traders will be looking elsewhere.