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Betterment vs. SoFi Invest – Round 3

If you’ve ever played “fighting games”, a video game genre that pits two players against one another and involves elements such as blocking, counter-attacks, and chain combos, you know how pivotal round three is. This final round determines who ultimately wins the match. Did one player manage a “flawless victory” in round two? It’s really of no consequence: these are trials of inches and waning seconds.

And Betterment vs. SoFi Invest just has to come down to round three, right? As stalwarts in the field of robo-advisors, both have been in the game for many a year and have proven track records of success. Betterment is one of the very first robo-advisor platforms, born out of founder Jon Stein’s vision to make investing easier and more accessible for the everyman. Likewise, Sofi Invest was originally billed as an affordable solution for managing student debts. Their robo-advisor platform is directed towards helping average folk invest wisely.

But which one is actually better? Modest Money’s comparison of the two notes that while they are similar products, there are some key differences. As they are both market-leading robo-advisors, it’s important to know which one packs features best suited for you.

Common consensus would have it that SoFi Invest is better for active traders, those who want to grow into market trading and perhaps eventually day trading. With a slew of asset classes ranging from electronically traded funds (ETFs) to cryptocurrencies, SoFi has the budding investor covered. On the other hand, Betterment is considered by many to be the best automated investing option, their algorithms and artificial technologies so powerful that you can essentially leave your portfolio on auto-pilot.

Betterment vs. SoFi Invest: let’s take a closer look at the two in order to determine just what separates them.

Betterment – Simple and Automated

Betterment is one of the oldest and most popular options for those looking to invest in stocks and bonds. Modest Money’s review of Betterment makes specific mention of how easy it makes investing; in fact, Chris Sacca, a well-known startup investor and TechCrunch judge, complained that Betterment felt “a little [too much] like a toy”. But Betterment is not in the business of making investing more complicated and obscure; they wanted to bring the financial markets home to millions who would otherwise not think of investing a dime.

Getting started with Betterment is simple: you need only fill in an onboard questionnaire that pertains to things like personal risk tolerance, income, and financial goals, and you are already well on your way to owning a successful portfolio.

Betterment Features

  • Account Types: Betterment offers users an array of account types, including brokerage, saving, checking, trust, Roth IRA, Traditional IRA, and SEP IRA.
  • Specialized Portfolios: Betterment has select “specialized portfolios” to achieve different investing goals, such as BlackRock Target Income, Climate Impact, Goldman Sachs Smart Beta, and Social Impact. As you can see, these portfolios range from the cutthroat to the progressively ethical, so that investors of all stripes and persuasions are covered.
  • Fees: Betterment fees are some of the lowest around, another reason it’s recommended for beginner investors. You pay a management fee of between 0.25% and 0.40%, depending on your membership status, and electronically traded funds (ETFs) come with expense ratios which range from 0.07% to 0.15%.
  • Pros and Cons: Betterment features tax-loss harvesting and automatic rebalancing, options which help lax investors save money in the long-run. Alas, on the flip side, Betterment offers little in the way of customization and is incompatible with external platforms.

SoFi Invest – More Than Student Loans

Though SoFi was launched just three years after Betterment, it’s robo-advisor was not unveiled until 2019. As a relative newcomer, their robo-advisor, “SoFi Invest”, has since taken the investing world by storm; one of the most advanced robo technologies on the market, thousands of investors have flocked to its service of late.

Another great platform for beginners, SoFi comes with a complete lack of financial hurdles and the ability to trade stocks and ETFs without having to pay a commission. All of this is combined with a greater degree of customization than Betterment, making SoFi’s platform more appealing to those with prior experience in trading stocks.

SoFi Features

  • Account Types: SoFi Invest offers a fair amount of account types, including traditional IRA, Roth IRA, SEP ITA, and individual and joint taxable accounts.
  • Financial Advisors: unlike Betterment, who stays true to their fully automated heritage, SoFi Invest gives its subscribers free access to real, live qualified financial advisors.
  • Fees: what we like most about SoFi Invest is that it can claim full transparency when it comes to fees. There are no monthly fees, no minimum investments, and no commissions. The only fee one need worry about is when trading ETFs, where an expense ratio of just 0.05% is involved.
  • Pros and Cons: SoFi Invest comes with zero management fees and offers commission-free trading. On the other hand, it does lack tax-loss harvesting and is only open to U.S. investors.

Betterment vs. SoFi Invest – Is There a Winner?

Betterment and SoFi Invest are both worthy robo-advisors for the uninitiated and experienced alike. Where SoFi Invest gives you the option of trading actively while sporting a greater number of asset classes (including cryptocurrencies), Betterment supports a greater number of account types. You must also consider the added bonus of tax-loss harvesting, a feature which could save investors a significant amount of money in the long run.

In a nutshell, we think Betterment is better for passive investors, and SoFi Invest more suited for active investors who would still lean on algorithmic technology. Both platforms are trailblazing pathways into a more democratically oriented investing future.

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