woman tablet advisor

Should You Consider a Financial Advisor?

As with any relationship, the scope and depth of engaging with a financial advisor can vary significantly from one person to the next. One person may seek a financial advisor for education or one specific need when someone else desires to have more comprehensive assistance with managing multiple aspects of their finances.

To help you to decide if working with a financial advisor makes sense for you, this article has information about:

•   Some key reasons people work with financial advisors
•   How these advisors typically get paid
•   Ways to determine if the services a particular advisor offers are the right fit for you

In general, financial advisors can help their clients to define their financial goals, prioritize them, and develop a plan to achieve them.

An advisor can also provide financially based education, which can help their clients identify whether they’re on track for achieving their goals. They can also help clients determine whether their habits are causing problems for their overall financial wellness.

Quality financial advisors can guide their clients through paying off debt, saving for the future, investing in a diversified portfolio, and aligning an investment approach with specific goals, timelines, and risk-tolerance levels.

What are the Typical Financial Advisor Fees?

When discussing financial advisor cost, it can be helpful to first look at the ways in which advisors can get paid.

Commission

When advisors are compensated on a commission basis, they receive pay based on the products they sell. The amount of commission paid can vary widely depending upon the product and the company.

Kiplinger.com notes that multiple arrangements can exist for advisors paid on commission, including receiving a percentage of a client’s assets before money is invested or being paid by the financial institution involved after a transaction takes place.

Or, the client might be charged each time that stocks are bought or sold.

The article cited above notes that, sometimes, this financial advisor may also sell life insurance, disability insurance, annuities, and so forth. And, if a client wants those products, then it can streamline the process to have one advisor handle multiple offerings.

On the downside, an advisor paid on commission may be “incentivized to churn accounts to generate additional commission, and there is potential for conflicts of interest when it comes to directing clients toward higher-commission products.”

Note that commission-paid advisors are held to what’s called a suitability standard . This means that recommendations they make to you must be suited to your financial needs, goals, and circumstances.

And while they are not held to the higher fiduciary standard they have an ethical and legal obligation to put their client’s interest ahead of their own), they are required to follow certain standards under FINRA Rule 2090 – The KYC Rule. This rule requires reasonable diligence on the part of the advisor to understand each customer and act on their behalf.

Advisory Fee

When an advisory fee is charged by the advisor, the general charge for the client is a percentage of the assets they manage. According to U.S. News & World Report , the average financial advisor fee, annually, is 1% of the assets being managed.

It’s reasonable to expect that an advisor can explain the reasoning behind the fee being charged, given a client’s specific circumstances—and if it’s higher than expected, it’s also reasonable to ask what added value the client is receiving.

Perhaps, for example, the advisor also helps with tax planning, or estate planning. They may be investigating a client’s financial vulnerabilities or otherwise going beyond standard money management services.

Actively managed portfolios may come with a higher fee because the advisor may charge more for putting more effort into getting the best value for their client.

Advisors using any fee-based model have a fiduciary responsibility to their clients, which is the higher standard.

With an advisory fee-based model, the more assets the client has to be managed, the more the advisor makes—which can be an incentive for your advisor to work harder for you. Under this model, there isn’t a readily seen benefit for advisors to steer clients to products with higher commissions because the advisor doesn’t get paid that way.

Planning Fee

With this type of fee, the advisor would charge an upfront fee, or a subscription-based one, to provide either a financial plan or ongoing advice. Prices vary, but on average, a financial advisor will charge between $1,000 and $2,000 for developing a comprehensive financial plan.

WealthManagement.com cites a report by Cerulli Associates that revealed that although asset-based fees are still the primary method (58%) of charging clients, the number of advisors who are going to a fixed planning fee for the actual financial planning they do is increasing.

Approximately 36% of advisors surveyed charge a fixed planning fee for financial planning, the article continues, with 62% of millennial-aged advisors charging these fees.

So, as a potential client considers financial advisors, they may find themselves talking to someone who charges a fixed planning fee to create an initial plan and then uses a different fee structure to actually manage the portfolio. What’s most important is to be clear about what will be charged, and how.

For clarity on how a particular advisor charges for services, a client can review the appropriate Form ADV , provided by the SEC where, among other things, the advisor must provide information about how they charge clients.

Hourly Fee

In this case, the financial advisor charges a straight hourly fee for their services. On the one hand, having an advisor charge an annual fee means that a client may not need to worry as much that their advisor is recommending products because of the income the advisor would earn off of that recommendation.

Choosing a financial advisor that charges per hour can be costly, though, especially if more investigation needs to be done to find a product that fits a client’s needs. This may or may not be a huge concern, but if resources are limited these fees can potentially be hefty.

Factors to Consider with Financial Advisors

As clients make their decision about whether to use a financial advisor or not—and, if so, which one will offer what they want and need—here are some items they could consider:

•   What type of help is needed from an advisor? Education? Coaching? Management?
•   What services can the financial advisors provide?
•   How well does this match up with your specific needs?
•   How does the advisor charge? In other words, how does your advisor get paid?
•   What context can be provided about fees? How does a percentage translate into real dollars, both today and in the future?

Active Versus Automated Investing

The term “active investing,” typically means investing with a consistent, hands-on approach—whether done by the individual investor or a portfolio manager.

With this method, a portfolio is actively managed, with the goal of outperforming the stock market’s current average returns. (At SoFi, you can be an active investor and still pay $0 in SoFi transaction fees, each and every time you trade!)

Automated investing takes a hands-off or “passive” approach, which seeks to maximize returns by minimizing costs associated with buying and selling. SoFi also offers automated investing, where a portfolio is automatically built and managed based on specific investment goals, then diversified and rebalanced, all without charging a SoFi management fee.

Not sure which is right for you? Take our quiz to see what type of investor you are so that you can invest in a way that dovetails with the way you think.

Using SoFi Invest

As you explore your options, you could consider leveraging SoFi’s complimentary financial planners. Our financial planning team is here to provide SoFi members objective education and advice when it comes to personal finances. SoFi members can learn more and schedule a one-on-one conversation with a SoFi financial planner.

At SoFi, you can invest in multiple ways. SoFi offers both active and automated investment options through SoFi Invest®. And no matter which way you choose to invest, SoFi can help you grow with you and your goals, no matter your knowledge level at the start.

As far as fees, you pay zero in SoFi fees: $0 in transaction fees and $0 in management fees.

If you’re ready to explore SoFi Invest further, download the app to get started.


Third Party Trademarks: Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.
Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.
External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
SoFi Invest®
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . The umbrella term “SoFi Invest” refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.

Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.
Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC Registered Investment Advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“SoFi Securities”).

SOIN19065

Read more
business man phone newspaper

Brokerage Account Transfer: How to Move Investments From One Account to Another

If an investor is unhappy with their current brokerage firms service or tools, they shouldn’t let the hassle of the transfer process keep them from switching to brokerages.

For one thing, putting off a transfer may keep investors from future portfolio growth if they don’t enjoy using the platform or tools.

For another, transferring brokerage accounts is not the huge hassle people might think it is. While it’s not as fast as a Venmo request, the process only requires a few forms and a touch of patience to get it done.

Step One: Confirming Account Information

Before an investor starts the transfer process, they should take some time to review their existing account, taking note of the assets they hold, total amounts held, and basics like account number and information on file.

Having a snapshot of account totals can serve as a backup in the event that anything goes wrong in the transfer. Investors might want to have proof of their assets for confidence before getting started.

Step Two: Contacting the New Broker

To kick off the process, an investor would reach out to their new broker, also known as the “receiving firm” in the transfer. Each brokerage firm will have a slightly different transfer process, but most accounts will be transferred in an automated process through the help of the National Securities Clearing Corporation (NSCC).

NSCC runs Automated Customer Account Transfer Service (ACATS), a service that makes it possible for accounts to be transferred in a standard way from one brokerage firm to another. ACATS should work for the most transfers, including cash, stocks, and bonds.

When an investor contacts the receiving firm, they’ll receive a set of instructions, and oftentimes a physical or digital copy of the Transfer Initiation Form. At this stage, it’s not necessary for an investor to reach out to their old brokerage firm.

During initial contact is also a good time for investors to ask any questions specific to the receiving firm’s transfer process. Some good questions to ask include:

•   How long does the average account transfer take?
•   What are some common issues that could delay a transfer?
•   How does the brokerage firm stay in contact with an investor during the transfer? Will they reach out via phone or email?
•   What documents does an investor need to start a transfer?
•   What fees (if any) might an investor have to pay to complete an account transfer?
•   How does the brokerage firm let investors know the process is complete?

In addition to these basic questions, the investor might also want to ask about the specific assets they’re transferring. In some cases, a brokerage firm might not be able to accept securities or assets because:

•   The stocks or bonds are proprietary to a specific brokerage firm
•   The firm doesn’t have an existing relationship with the mutual fund or money market that holds the investor’s funds
•   Securities are bankrupt
•   Shares are fractional
•   The asset is a private stock holding

If the receiving firm deems any of the investor’s assets to be untransferable, there are a few options as to how they could proceed:

Sell the asset and transfer the cash. Investors should be aware that selling the asset may affect their taxes. They should consult with a financial advisor before proceeding.

Leave the asset in the account after the transfer. If the account will go inactive after the transfer, the investor could ask if keeping the asset there would incur a fee.

The investor can physically deliver the assets. This is a complicated and sometimes risky process that should only be done with the assistance of an advisor.

Connecting with a new broker can help clear up any potential issues that might come up during the actual transfer. Getting common issues out of the way before kicking things off could lead to fewer delays in the process down the road.

Step Three: Completing a Transfer Initiation Form (TIF)

Completing the standard TIF officially kicks off the process. Once the receiving firm has an investor’s TIF, they’ll start making arrangements with the person’s old brokerage firm, or “delivering firm,” to send the assets over.

Investors should take care to complete the TIF thoroughly and correctly. If information (such as Social Security number, name, or address) is not the same with both the delivering and receiving firms, the request could be flagged as fraud and rejected.

That means confirming an investor’s receiving and delivering firms have the correct personal information on file as well.

The most common hold-up in the transfer process is an investor error in the TIF.

TIFs typically include the following information:

•   Numbers for both brokerage accounts
•   The brokerage account type, such as joint, individual, Roth IRA, trust, estate, limited liability, 401(k), etc.
•   Social Security number
•   A co-owner’s SSN (if applicable)
•   Investor phone number
•   Investor email
•   Delivering firm’s contact information (address, phone number)
•   Specific assets to transfer, in the event of a partial transfer

Depending on the receiving firm, the investor might be able to complete the TIF online in a few minutes, or they might have to submit via mail, fax, or scan. In some instances, a brokerage firm might ask an investor to come into the office to complete a TIF.

Using the TIF is the most common way to transfer funds, but there are some brokerage firms s that choose not to use ACATS, and therefore don’t accept TIFs.

If this is the case for either the receiving or delivering firm, then the brokerage firm will exchange custom forms between themselves and the investor. This is an acceptable way to perform a transfer, but investors should be warned—a transfer outside of ACATS will take longer, up to 30 days in some cases .

Step Four: Submitting the TIF, and Sitting Tight

When everything looks complete, the investor will submit the TIF to their receiving firm. Then comes waiting.

While the investor can’t do much more than sit on their hands and wait, the receiving firm is entering the TIF into ACATS. This information becomes a digital request submitted to the delivering firm, requesting a transfer of assets from one brokerage to another.

The delivering firm has one day to review the form and accept it, or reject it if the TIF is incomplete or incorrect.

When the TIF is being reviewed, investors might want to pay close attention to their email and phone. If there’s any mismatched information on the TIF or between the two firms, the receiving firm will likely reach out to the investor to amend the issue.

Missing outreach could mean an even longer transfer period. That’s why investors might want to double (or even triple) check that all the information on the TIF and between the two brokerages, is consistent.

Even a single-digit mistake in an address or phone number could spell a multi-day delay in the process. Depending on the process, the receiving firm might try to correct a perceived error or might reach out to the investor directly to have them provide the correct information.

If a problem is not resolved within two business days , the transfer request is deleted from ACATS. If the form is correct and approved by the delivering firm within the appropriate window, then they will send a list of assets to the receiving firm. Now, it’s the receiving firm’s time to accept or reject.

The receiving firm gets to decide if they want to accept or reject those assets. While uncommon, it is possible for a brokerage to reject the assets. This is why it helps that investors speak to the receiving firm before the transfer, to confirm their assets will be accepted.

In the event that the assets are accepted, the delivering firm will digitally move the holdings over to the receiving firm.

Step Five: Contacting Your Old Broker (Optional)

In the world of texting, a phone call might be the last thing a person wants to do. But, a simple call could save a few bucks in the transfer process. One hiccup that can come from the process is the account transfer fee. In some instances, the delivering firm will charge an “exit fee” when an investor makes a full transfer, partial transfer, or decides to close an account entirely.

If the delivering firm charges a fee at all, it’s typically $75 or less . To avoid the surprise of a fee, an investor might choose to reach out to their old brokerage firm and ask if they’ll be charged a fee for leaving or transferring funds.

If the delivering firm charges a fee, investors could reach out to the receiving firm to ask if they have any promotion for new clients that would cover the cost of transfer fees.

Step Six: Watching the New Account, and Waiting

After the delivering and receiving firms approve the transfer request, it will still take a few days for the investments to move accounts.

Investors shouldn’t be alarmed when assets disappear from both accounts for a day or two—but the whole process typically takes no more than six business days.

The process may take longer if the delivering firm is not a broker-dealer. If the delivering firm is a bank, mutual fund, or credit union, the transfer often takes longer than six business days.

Investors can also expect the transfer to take longer if it requires a custodian. Telling the receiving firm of this upfront could give investors a better idea of the time table for these circumstances.

No matter the length of the transfer, it’s common for one or both of the brokerage accounts involved to be frozen. That means no trades are allowed until the process is complete.

Investors might choose to plan ahead and avoid trading during this period. So, if there are a stock or fund investors are looking to sell in the near future, they might want to sell it before starting a transfer.

This process might look long and complicated, but oftentimes, steps will happen at the same time. However, communication between the two brokerages will still take time, no matter how efficient the two are.

Switching to SoFi Invest®️

People might put off transferring their brokerage account because they believe it’s involved and complicated. While it’s not instant, the process typically takes just six business days from start to finish.

That means investors are only a few days and a simple form away from a new brokerage service.

As long as an investor is careful and asks their receiving firm the right questions before getting started, they shouldn’t run into any major roadblocks during the transfer.

When it comes to fast, simple transactions, SoFi Invest® makes it easy to trade stocks, buy cryptocurrencies, and invest in ETFs with a few simple taps.

SoFi active investing makes it easy for the investor to take control of their portfolio with a DIY approach.

But, if DIY sounds intimidating, investors can build a portfolio using automated investing instead, while still avoiding high costs by trading stocks and ETFs for free.

An account transfer might be tricky, but it doesn’t have to be with SoFi Invest. Switch your account to SoFi today.


Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
SoFi Invest®
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . The umbrella term “SoFi Invest” refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.

Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.
Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC Registered Investment Advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“SoFi Securities”).
Crypto: Bitcoin and other cryptocurrencies aren’t endorsed or guaranteed by any government, are volatile, and involve a high degree of risk. Consumer protection and securities laws don’t regulate cryptocurrencies to the same degree as traditional brokerage and investment products. Research and knowledge are essential prerequisites before engaging with any cryptocurrency. US regulators, including FINRA , the SEC , and the CFPB , have issued public advisories concerning digital asset risk. Cryptocurrency purchases should not be made with funds drawn from financial products including student loans, personal loans, mortgage refinancing, savings, retirement funds or traditional investments. Limitations apply to trading certain crypto assets and may not be available to residents of all states.

SOIN20062

Read more

6 Real Questions About Investing—Answered

If you’re curious about investing but have yet to dip your toes in the water, you’re not alone. Taking the plunge may be the hardest part.

The world of investing is broad and, at times, can feel complicated. As much as you may read and research, it’s natural to end up with unanswered questions.

Here are a few common ones by new investors: “When should I start investing? How much do I need to start? And what type of investments are right for me?”

For answers, you can scour the internet for articles, but it can be hard to know where to go and whom to trust. That’s where a trusted financial advisor comes in.

When, how, and how much do you need to start investing?

Great news: Investing in your future is no longer an activity reserved for the wealthy. You can get started easily, even without much in your pocket.

When you’re an investor starting with a small amount, say $10 or $100, it may be a good idea to look for banks or online stock trading platforms that offer free accounts, no account and investment minimums, and no trading costs. SoFi Invest® is one such option.

SoFi Invest has no minimum for investing, so you can get started as soon as you’d like. And, with investing, sometimes earlier is better.

By starting early, you may be able to take advantage of the power of compounding. Compounding interest is the phenomenon of earning a rate of return on both the money you’ve invested and all of the profits you’ve already earned on that investment. So, you’re earning a profit on top of your profits—causing your rate of growth to increase at an increasing rate.

That said, it may be worth setting up a secure emergency fund before you start investing. An emergency fund is often held in cash separate from your checking account, preferably in an accessible, FDIC-insured savings account.

It’s recommended to save between three to six month’s worth of expenses before investing. (One exception? Take advantage of your company’s 401(k) match, if you have one. And that’s investing!)

I am going to have $30 left in my bank account before my monthly salary hits. What is the lowest possible entry threshold that isn’t a waste of resources?

First, do you have an emergency fund?

Falling within $30 of a zero-dollar bank account at the end of the month may mean there’s not enough extra for unexpected emergencies and incidentals.

What happens if you get hit with an unforeseen medical bill? Or your car breaks down? It’s helpful to have a cash cushion to weather any storms–and avoid going into credit card debt to cover unexpected costs.

You might consider spending some time building up your cash reserves. As mentioned in the previous question, three months of expenses is a good start. But you may want to increase this amount to six months or more.

And once you’ve secured a minimum of three months’ expenses in an emergency fund, it may be time to consider your next money moves.

A great next step is to determine if your employer offers a 401(k) match. Even if you’re only able to invest 1% of your salary, your employer may match with an additional 1%—an immediate 100% return on your investment.

Don’t have a 401(k)? Then the previous answer applies. It may be wise to avoid wasting precious resources on the fees and costs of investing when you’re starting with small amounts, like $30.

I have $10,000 burning a hole in my pocket. Should I buy stock?

You’ve got $10,000 to invest—how exciting.

SoFi’s financial advisors are realistic about how difficult it is to pick the next hottest stock—try as we might, we can’t predict the future. And anyway, we typically prefer a diversified investment strategy.

Diversification is the practice of allocating money to many different investment types. Big picture, this means investing in multiple different asset classes like stocks, bonds, cash, and real estate. Next, someone might consider diversifying within each category. With stocks, investors might consider companies within different industries and countries of origin.

One way to diversify is with a portfolio of low-cost index funds, whether index mutual funds or exchange-traded funds (ETFs). For example, you could buy an S&P 500 index fund that invests in 500 leading companies in the United States across many industries. This way, you may eliminate the risk of investing in only one company or in one industry.

Once you’ve established a diversified strategy with the majority of your funds, you might consider buying a few individual stocks. Bear in mind that stock-picking is hard work and requires hours of research—and a ton of luck. Therefore, you may not want to use more than $500 (5% of your $10,000) on individual stocks.

For the newbie investor, do you recommend ETFs or mutual funds?

Mutual funds and ETFs are similar in that they each bundle together some other type of investment, such as stocks are bonds.

They also have some important differences. ETFs trade throughout the day, like a stock. Mutual funds trade once per day.

Here’s an important question: What is the strategy being used to invest within the fund? Funds, both mutual funds and ETFs, come in two varieties: actively managed and index. (Currently, many ETFs are index, though there are actively-managed ETFs.)

An actively-managed fund typically has higher costs, while an index fund aims to invest in the market using a passive strategy, usually at a low cost. (Not sure of the cost? Look for a fund’s annual fee, called an expense ratio.)

They’re called “index funds” because they track an index that aims to measure market performance. For example, the S&P 500 is an index designed for the sole purpose of tracking U.S. stock market performance.

But, it is possible to buy an index fund that mimics the S&P 500—and this can be done via either an ETF or an index mutual fund.

Considering that it’s possible to buy ETFs and index mutual funds that accomplish the same exact thing, you may want to consider the following: 1) Which do you have access to and 2) Which option is lower-cost?

For example, if you only have access to index mutual funds in your 401(k), that may be the direction to go in. If you were to open an investment account with SoFi Invest, you can buy ETFs with no transaction costs.

Invest in the future–not fees.




Distributor, Foreside Fund Services, LLC

Would you recommend me opening a traditional IRA or stick with a 401(k)?

Here’s the scenario: I have already maxed out my employer match. Right now I’m investing about $10,000 into my 401K after my employer’s match. I want to put more into my 401(k) but I don’t like target retirement funds.

The company that does low-cost index funds in my 401(k) is a small company that I don’t trust to optimize returns. It sounds like you have two separate concerns: First, you don’t like target-date funds. Second, you do like low-cost index funds, but not the ones offered in your 401(k).

Let’s address each.

For a target date fund, you pick a “target” retirement date so that you’re matched with a target-date fund with an appropriate investment mix for your age.

I’d be interested to know more about yours. If you do indeed have a preference for low-cost index funds, see what is held inside of your target-date fund: Some target-date funds do indeed hold index funds. Others hold more expensive, managed options.

To investigate further, you can look into what is called a fund’s “tracking error,” which measures its success at mimicking the index for which it is designed to track.

If you’re still not pleased with your 401(k) options, you can absolutely consider opening an investment account outside of your 401(k).

However, as an active participant in your 401(k), your ability to contribute to a traditional, tax-deductible IRA depends on your income level. If you are already covered by a workplace retirement plan, the IRS allows you to deduct the full amount ($6,000) only if you earn less than $64,000 as a single person and $103,000 if you file taxes jointly.

You might have better luck with a Roth IRA, which has different taxation and rules for use than a Traditional IRA. Unlike a 401(k) and Traditional IRA, Roth IRA contributions are not tax-deductible.

Although you don’t get a tax break now, you won’t pay taxes on it when you pull the money out in retirement. You can contribute the full amount to a Roth IRA if you earn less than $122,000 as a single filer or $193,000 for joint filers.

If neither of these options work, you can always open up a brokerage account with an online trading platform. Just because these accounts do not have “special” tax treatment like retirement-specific accounts does not mean that they cannot be used to save and invest for the long term. You’ve got lots of options!

Do you offer financial planning to individuals who have Sofi Invest® accounts?

Yes, we do! Sign up online to schedule an appointment with one of our financial planners.

Ready to get personalized advice on how to start investing? Sign up for SoFi Invest today!


External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
Third Party Trademarks: Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.
SoFi Invest®
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . The umbrella term “SoFi Invest” refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.

WM17138

Read more

How to Save & Invest When You Have Student Loans

Are you one of the many people who make financial resolutions every New Year? If so, congratulations! Whether your goal is to pay off debt, increase your savings or start investing for the future, there’s no time like the present to get started.

But if you’re one of the millions of Americans with student debt , it’s hard to know where to begin. How do you find extra money after making your student loan payment each month? Should you wait until your loans are paid off to start a savings account or begin investing ASAP for retirement? How much money should you allocate to each goal?

6 Tips to Build Your Savings—Even with Student Loans

While everyone’s situation is different, there are a few rules of thumb that can be useful when you’re trying to build a solid financial foundation, no matter how much student loan debt you have. Here are six steps that could help you get started.

1. Starting Small

If you’re like many people with student loans, you might not have a lot of extra money to invest or save at the end of each month. But that doesn’t have to stop you from trying. Putting away a small but consistent amount every paycheck, or once a month, can make a big difference over time. (Even a little something is better than nothing at all).

If you feel overwhelmed, perhaps focus on one or two goals at a time and just do what you can when you can. Maybe you want to save for a car or to put a down payment on a house. Or perhaps you don’t yet have an emergency fund (see #3).

You can start out by putting whatever you can afford into a high-yield savings account each month. Online-only financial institutions, like SoFi, are often able to offer more competitive interest rates than their brick and mortar counterparts.

So, if your money is sitting in a basic checking account, you could be missing out on the extra growth an online account can offer.

If you don’t want to think about setting that money aside every month—or worry that you won’t have the discipline to stick to your plan—you can arrange automatic transfers with your financial institution.

Some financial institutions also offer programs that can take a bit of the sting out of saving by rounding up expenditures to the nearest dollar and depositing the difference into your account.

And should you get an unexpected financial windfall—a tax refund, some birthday money, or a bonus at work—putting all, or a portion of it into that savings account can give it a nice boost here and there.

2. Reducing High Interest Rate Debt

If you have multiple sources of debt, it may make sense to focus your efforts on those with the highest interest rates first.

Of course, you should always pay at least the minimum on every debt you have each month. But if you have credit card debt as well as student loan debt, you might benefit from using a debt reduction strategy to pay off your bills.

Everyone’s financial situation is different, and there’s no “right way” to tackle debt, but we think SoFi’s “Fireball” method offers a balanced approach, because it targets high-interest debt and helps keep you motivated as you knock down each bill. Here’s how it works:

1. First, you’d separate your bills into “good” and “bad” debt. “Good” debts are those that can help you build your net worth—like a mortgage, business loan, or student loans. Good debt usually comes with a lower interest rate—typically 7% or less. “Bad” debt is different, because it can inhibit your ability to save money, and with higher interest rates, it’s usually more expensive in the long run.

2. Next, you’d take those bad-debt bills and list them in order from the smallest balance to the highest. Take the No. 1 bill on that list (the one with the smallest balance), and once you’ve paid the minimum on all your other bills—you could make it your mission to funnel any extra cash toward knocking down that balance.

3. Work your way down the list until all the bad debts are paid off. Once you blaze through the list, you should have more money to put toward the next bill and the next, until you get to and through the highest balances.

4. Carrying a balance on a high-interest credit card is kind of like swimming with weights tied to your ankles—it can make your financial strategy more difficult than it needs to be. So the last step of the Fireball method is to keep those balances paid off.

If you only have student loans, you can still use the Fireball method to pay them off. For example, you might pay the minimum on your lowest-interest subsidized loans while paying down your high-interest, unsubsidized PLUS or private loans more aggressively.

It also may be worth looking into consolidating your non-educational debt with a personal loan or, if you qualify, refinancing your student loans at a lower interest rate. A lower interest rate can reduce the amount of money you spend on any debt over the life of the debt.

And if the debt seems overwhelming—if, for example, you have multiple student loans—combining them into one payment could make things more manageable. (It’s important to note, though, that if you refinance your federal loans with a private student loan, you will lose access to borrower protections, such as Public Service Loan Forgiveness and income-driven repayment plans.)

3. Giving Yourself a Cushion

A general rule of thumb is to have three to six months’ worth of living expenses saved in an emergency fund in case you’re faced with an unexpected expense or if your source of income should suddenly disappear.

This is especially crucial for student loan borrowers, since, in some cases, even one late or missed payment can have an impact on your credit score. The ultimate purpose of an emergency fund is to create a financial cushion that allow you to pay all of your bills, including payments on your student loans, for at least a few months until you’re back on your feet.

4. Considering Investing as Soon as Possible

When it comes to retirement investing, waiting can cost you money. The sooner you start investing, the more time your portfolio has the potential to grow through compound interest.

Delaying your savings means you may need to save more on a monthly basis down the line. If you wait to get started until your student loans are totally paid off, you could be missing out on a lot of precious time.

That said, you don’t want retirement investing to come at the expense of your overall financial health. For example, you may want to delay or minimize investment contributions until you’ve paid down your high-interest debt and established an emergency fund (see #2 and #3). Instead, you could plan to increase contributions when you have only low interest rate student loans left on your plate.

5. Take the (Free) Money and Run

If you’re ready to start investing even though you still have student loans, there are a lot of account options out there. You could start by checking with your employer to see if the company offers a defined contribution plan, such as a 401(k), and if there is some type of matching contribution.

Many employers will match an employee’s elective deferral contribution up to a certain dollar amount or percentage of compensation. If that’s a perk at your place of business, why not aim to make the most of that match?

If you can do more, a frequently cited target is to save 15% of your income annually. But remember, if you start saving for retirement early, even small contributions can have an impact.

If your employer doesn’t offer a defined contribution plan or you’re self-employed, there are a number of other tax-advantaged retirement accounts that can help you grow your nest egg.

If you’re opening your own retirement savings account, such as a traditional or Roth IRA, you can do so at a brokerage firm, a bank, or an online financial services company, including SoFi Invest®. To find the right account for you, do your research and talk to a financial professional if needed. (As a SoFi member, you can get one-on-one access to financial advisors on the house.)

6. Adjusting as Needed

Your financial situation may look different each year, so you may want to occasionally revisit your strategy. (Quarterly might be a solid goal for you, but if that seems like a lot, an annual review could still be helpful.) In between reviews, you may find that using a tracking app can help you stick to your plan.

With an app like SoFi Relay, you can set goals, track your spending, and monitor your savings. As part of that review, you also may want to see if your investment account still matches the asset allocation you’re comfortable with, or if it needs rebalancing.

Staying on top of the day-to-day movements in your financial life can help you make better decisions for now and the future.

The next time you think about making an impulse purchase, you might decide to apply that money to your financial strategy instead. And if, down the road, you get a new job, get married, or get pregnant, you’ll have a head start on planning for what’s next.

Check out SoFi to see how refinancing your student loans may help you save money.


External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
SoFi Money®
SoFi Money is a cash management account, which is a brokerage product, offered by SoFi Securities LLC, member FINRA / SIPC .
Neither SoFi nor its affiliates is a bank. SoFi Money Debit Card issued by The Bancorp Bank. SoFi has partnered with Allpoint to provide consumers with ATM access at any of the 55,000+ ATMs within the Allpoint network. Consumers will not be charged a fee when using an in-network ATM, however, third party fees incurred when using out-of-network ATMs are not subject to reimbursement. SoFi’s ATM policies are subject to change at our discretion at any time.
SoFi Invest®
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . The umbrella term “SoFi Invest” refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.

SoFi Student Loan Refinance
IF YOU ARE LOOKING TO REFINANCE FEDERAL STUDENT LOANS PLEASE BE AWARE OF RECENT LEGISLATIVE CHANGES THAT HAVE SUSPENDED ALL FEDERAL STUDENT LOAN PAYMENTS AND WAIVED INTEREST CHARGES ON FEDERALLY HELD LOANS UNTIL THE END OF JANUARY 2022 DUE TO COVID-19. PLEASE CAREFULLY CONSIDER THESE CHANGES BEFORE REFINANCING FEDERALLY HELD LOANS WITH SOFI, SINCE IN DOING SO YOU WILL NO LONGER QUALIFY FOR THE FEDERAL LOAN PAYMENT SUSPENSION, INTEREST WAIVER, OR ANY OTHER CURRENT OR FUTURE BENEFITS APPLICABLE TO FEDERAL LOANS. CLICK HERE FOR MORE INFORMATION.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.

SLR14102

Read more
hand paper house mobile

4 Tips for When You Are Expecting an Inheritance

Receiving an inheritance can be bittersweet. Of course, coming into a valuable asset can have a positive impact on your financial life. But this type of gift often comes as a consequence of a loved one passing away.

The circumstances around getting an inheritance can mean that you already have a lot on your mind. You might be in shock, grieving, or figuring out the logistics of arranging a funeral or dealing with an estate.

It may not be easy, but it’s important to plan ahead for the windfall and think about your next steps carefully. In some circumstances, you may even find out in advance what types of assets you stand to receive and their value. Here are some tips for those expecting an inheritance:

1. Tempering Your Expectations

According to a recent survey, one in three Americans are counting on an inheritance in order to achieve financial stability. Among young people, relying on a future windfall is even more common, with nearly 70% of millennials anticipating inheriting money from grandparents or parents.

However, only 40% of millennials’ parents report planning to leave assets to their children, meaning there is a huge gap between expectations and reality. Even if you do end up getting something, the lack of certainty about what the assets will be worth and when you’ll get them means it’s not a replacement for saving and investing.

In many cases, it’s a good idea to consider an inheritance a nice-to-have-bonus, not a foundation for financial well-being.

2. Preparing Emotionally

Getting an inheritance isn’t always a smooth process. A recent poll by one wealth management firm revealed that 44% of estate planning professionals reported that family squabbles were the biggest threat they dealt with.

Hopefully, you won’t encounter drama, but it may be worthwhile to prepare yourself emotionally for this possibility.

One way to prevent issues from emerging is by checking in with older relatives to make sure they have a clear estate plan and keeping the lines of communication open with other family members.

3. Learning How Inheritance Works

Closing someone’s estate can be a long process. The first step is locating the deceased person’s estate planning documents, such as their will and any revocable living trusts, as well as other important records, such as bank statements and life insurance policies.

Then, the estate may need to go to probate, which is the process, overseen by a court, of authenticating the will, figuring out the value of the deceased person’s assets, paying any debts or taxes, and then distributing the remainder to beneficiaries.

In a simple situation, this process can take just a few months. But if things get complicated, you could be waiting a year or more to get your inheritance.

4. Not Making Rash Decisions

When a valuable asset falls into your lap, you may feel pressure to decide what to do with it right away.

But taking it slow may be a better path. Emotions are likely to be running high, so it can be a good idea to wait until you can think clearly.

It can also make sense to review your current financial plan before figuring out what to do with the inheritance.

That way, you can see where you stand on the path to your goals and how the new addition fits in.

Ideas for What You Can Do with Inherited Money

When you’ve finally gotten your inheritance and are emotionally ready, it’s time to figure out what to do with it.

You may be tempted to blow it all on clothing, a nice car, or a dream vacation. Before you do, consider these options for where to put money after receiving an inheritance:

Building an Emergency Fund

According to a recent study, 40% of Americans can’t afford to cover an unexpected expense of just $400. And emergencies do happen, from car trouble to unforeseen medical bills.

If you don’t already have one, an inheritance can help you build or beef up an emergency fund. Ideally, your emergency fund will have three to six months of living expenses.

Paying Off “Bad” Debt

If you have outstanding debt, such as credit card balances or personal loans, you may consider using your inheritance to pay it off. Debt with an interest rate greater than 7% is considered bad debt, and the interest you pay over time will really add up.

Targeting bad debt with an inheritance is a great way to improve your financial picture. It may be tempting to pay off all of your debt with an inheritance, but you should consider investing the money before paying off good debt such as mortgages or student loans.

These types of debt typically come with low interest rates, that over the long run has been less than the return of investing in the stock market.

Having Fun—Responsibly

If you’re in good shape financially, you may be toying with the idea of spending some of your inheritance money. Your loved one left the money to you, probably in hopes that it would make your life better. Financial security is important, but that doesn’t mean you can’t use some of the money to enjoy yourself or invest in your dreams.

That might mean taking a trip around the world or turning a life-long side hustle into a small business. If you’re planning to spend your inheritance, the key is to do so in moderation, and only once you are financially secure.

Investing It

Investing allows you to take advantage of the power of compound interest to grow your wealth. The longer your money is in the market, generally speaking, the more of an impact compounding interest may have on your financial life.

If you’re focused on retirement investing, you can do this through an employer-sponsored 401(k), if one is available to you.

Otherwise, you can invest through an IRA, Roth IRA, or if you’re self-employed, a SEP IRA. All of these funds allow you to invest in a mix of assets, including stocks and bonds, based on your tolerance for risk and your target retirement age.

An online retirement calculator can help you figure out whether you’re on track. If you have other goals, you can consider investing through a 529 college savings plan for your children or opening a brokerage account.

Confused about your inheritance? Consider SoFi Invest®, which provides you complimentary access to our licensed financial advisors.


External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
SoFi Invest®
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . The umbrella term “SoFi Invest” refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.

Advisory services are offered through SoFi Wealth, LLC an SEC-registered Investment adviser. Information about SoFi Wealth’s advisory operations, services, and fees is set forth in SoFi Wealth’s current Form ADV Part 2 (Brochure), a copy of which is available upon request and at adviserinfo.sec.gov .

SOIN19202

Read more
TLS 1.2 Encrypted
Equal Housing Lender