Financial Topics Archives | Page 4 of 801

Jan

2025

Financial Consulting Services 101

By Rebecca Lake | Investing | Comments Off

When you need help putting together a solid plan for your money, you might seek out financial consulting services. A financial consultant can offer advice and guidance on things like investing, retirement planning, and building wealth. You may also hear financial consultants referred to as financial advisors, as the terms are often used interchangeably, though there may be some slight differences.

What is financial consulting designed to do? In simple terms, it’s all about helping clients formulate a strategy for managing their money. What working with a personal finance consultant looks like for you can depend on your situation and goals.

Key Points

• Broadly speaking, financial consultants help clients identify strategies to help them reach financial goals.

• Services offered by financial consultants may include investment management, estate planning, tax planning, and retirement planning, among others.

• Financial consultants and financial advisors may hold certificates or designations that reflect advanced training, such as Certified Financial Planner (CFP) or Accredited Financial Planner (AFP).

• Choosing the right consultant requires evaluating the scope of services they offer, their professional certifications and designations, their fee structure, and more.

What Is a Financial Consultant?

Broadly speaking, a financial consultant is someone who offers advice about money – be it retirement planning or buying stocks or other securities – in a professional capacity. A financial consultant may work independently or be employed by a financial consulting firm, and they may offer services online or in-person.

Examples of Financial Consulting Services

Financial consultants can offer a variety of services to their clients. Again, those clients may be individual investors, business owners, or even a non-profit organization. The types of services a financial consultant may offer can include:

• Basic financial planning, such as creating a household budget

• Estate planning

• Tax planning and legacy planning

• Retirement planning

• College planning

• Succession planning for clients who own a business

A financial consultant’s overall goal is to help clients create a comprehensive plan for managing their money. Financial consultants may work with a diverse mix of clients, or niche down to offer their services to a specific demographic or client base, such as dual income couples, with no kids or members of the LGBTQ community.

Financial Consultants vs. Financial Advisors

The terms “financial consultant” and “financial advisor” are often used interchangeably, as their meaning is roughly, but not quite, the same. There are some important differences, including the licensure that each is required to hold in order to practice, and the regulators each operates under. Generally, they both offer financial advice and guidance in a professional capacity, though.

Other Names for Financial Professionals

Financial consultants and financial advisors can go by more specific names, depending on which professional certifications they hold. Certifications and designations signify that a consultant or advisor has completed advanced training and education in a particular area. Here are some of the most common designations for financial professionals:

• Certified Financial Planner (CFP®)

• Chartered Financial Consultant (ChFC)

• Certified Public Accountant (CPA)

• Accredited Financial Planner (AFP)

• Registered Investment Advisor (RIA)

• Certified Annuity Advisor (CAA)

• Certified Financial Consultant (CFC)

• Certified Tax Advisor (CTA)

• Chartered Financial Manager (ChFM)

Navigating the alphabet soup of designations for financial consulting services can be confusing and it helps to understand what type of advice you need.

For instance, if you want to work with an advisor who can help with everything from budgeting to retirement planning, then you might choose a Certified Financial Planner. On the other hand, you might want to work with a registered investment advisor if you’re specifically seeking investment help.

The main thing to know about financial consulting services is that there’s more than one option to choose from. Taking time to research a consultant or advisor’s background and qualifications can make it easier to find the right person to work with when you need consulting services.

When Would You Need Financial Consulting?

Working with a financial consultant is a personal decision. With that in mind, you might start working with a consultant at any time if you feel that you need help managing your finances. If you need more specific examples of when it makes sense to hire a financial consultant, here are a few scenarios to consider:

• Your parents pass away, leaving you $500,000 in assets. You might work with a financial consultant to figure out the best way to maximize your inheritance while minimizing taxes.

• After 15 years of marriage, you and your spouse have decided to divorce. You decide to hire a financial consultant to help you create a plan for managing the assets that you’re leaving the marriage with.

• You’re a parent to a child with special needs who will require long-term care after you’re gone. You reach out to a financial consultant to discuss setting up a trust to pay for their care when the time comes.

Financial consulting services can be an appropriate choice when you have a difficult financial decision to make or you’re trying to navigate a situation that feels overwhelming. Winning the lottery, for instance, could leave you paralyzed with indecision about what to do with the money.

A financial consultant can also help you move through changing life stages. That can include getting married or divorced, having a child, starting or selling a business, or changing careers. Financial consultants can look at the bigger financial picture to help you get through the changes while keeping your long and short-term goals in sight.

Finding the Right Financial Consultant

Finding a financial advisor starts with taking inventory of your needs to determine what kind of advice is appropriate. Once you’ve figured out what kind of help you need, the next step is creating a list of advisors in your area that you might want to work with.

Asking questions can help you get a feel for how an advisor operates. Here are some examples of the types of questions you might want to ask:

• What kind of financial consulting services do you offer?

• Do you hold any professional certifications or designations?

• Do you specialize in working with a particular type of client?

• What is your investment style?

• How are your fees structured and what do you charge for consulting?

• What is your preferred method of communication?

• How often will we meet?

If you’re considering a robo-advisor, then it may be a good idea to look at how the platform manages portfolios, what benefits or features are included, and what you’ll pay for consulting services. Should you choose a robo-advisor vs. financial advisor? There are some pros and cons to consider.

On the pro side, a robo-advisor can be a less expensive way to get financial consulting services. The typical financial advisor cost is around 1% of assets under management per year. Robo-advisors may cost much less, with some offering services charging a fraction of what a human advisor would.

Of course, there’s a trade-off to consider, since you’re not getting financial advice with a human element behind it. For instance, if market volatility sets in and you’re tempted to sell off stocks in a panic, a robo-advisor wouldn’t be able to talk you through it the way a human advisor could. Taking that into consideration can help you decide which one might be right for you.

The Takeaway

A financial consultant’s job is to help you feel more secure and confident when making decisions about your money. Whether you need a consultant’s services or not can depend on where you are financially right now and where you want to go in the future.

If you’re not investing yet, there’s a simple way to get started. With SoFi Invest, you can open an investment account online in minutes and get on the path to building wealth. You can choose from automated investing or DIY investing to build a portfolio that matches your goals and risk tolerance.

Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).

For a limited time, opening and funding an Active Invest account gives you the opportunity to get up to $1,000 in the stock of your choice.

FAQ

Is a financial consultant the same as a financial advisor?

Financial consulting and financial advisory services are typically grouped together, as they generally mean the same thing. A financial consultant or a financial advisor can provide advice about things like investing, retirement planning, and estate planning. The difference is that consultants may offer their services on a one-time basis, while financial advisors may work with clients long-term.

What does a financial consultant cost?

What you’ll pay for financial consulting services can depend largely on the type of professional you’re working with. A typical financial advisor’s fee is around 1% annually, though it’s possible to pay more or less, depending on the kind of services you receive. Robo-advisor financial consulting can cost less, though it does lack the human element.

What does a financial consultant do?

Financial consultants help their clients create a plan for managing money. A financial consultant may work with individual investors, businesses, or organizations to offer financial advice. Financial consulting services may cover a broad scope of topics or concentrate in just one or two areas of financial planning.

Photo credit: iStock/skynesher

SoFi Invest®

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below: Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit SoFi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Claw Promotion: Customer must fund their Active Invest account with at least $25 within 30 days of opening the account. Probability of customer receiving $1,000 is 0.028%. See full terms and conditions.

SOIN0423016

Jan

2025

Understanding the 403(b) Retirement Plan: A Comprehensive Guide

By Pam O’Brien | Investing | Comments Off

If you work for a tax-exempt organization or a public school, you typically have access to a 403(b) plan rather than a 401(k). What is a 403(b)? It’s a workplace retirement plan that can help you start saving for your post-work future.

In this guide, find out how 403(b) plans work, who is eligible for them, and the rules for contributing.

Key Points

• A 403(b) plan serves as a retirement savings option for employees of tax-exempt organizations and public schools, allowing for tax-deductible contributions.

• Two main types of 403(b) plans exist: traditional plans, which use pre-tax contributions, and Roth plans, which utilize after-tax dollars, impacting tax obligations at withdrawal.

• Contribution limits for a 403(b) in 2025 are $23,500 and for 2024 are $23,000, with additional catch-up contributions available for long-term employees and those aged 50 or older.

• Investment options in a 403(b) may be more limited compared to other retirement plans, often focusing on annuities and mutual funds rather than a diverse portfolio.

• Employees can adjust their contributions to a 403(b) and may access funds through loans or hardship distributions, subject to specific plan rules and penalties.

Demystifying the 403(b) Plan

A retirement plan for employees of tax-exempt organizations and public schools, a 403(b) is also known as a tax-sheltered annuity or TSA plan. Employees can contribute to the plan directly from their paycheck, and their employer may contribute as well. A 403(b) can help you save for retirement.

What Exactly is A 403(b) Retirement Plan?

What is a 403(b)? The 403(b) retirement plan is a type of qualified retirement plan designed to help employees save for retirement. Certain schools, religious organizations, hospitals and other organizations often offer this plan to employees. (In layman’s terms, it’s the 401(k) of the nonprofit world.)

Like 401(k)s, 403(b) plans allow for regular contributions toward an employee’s retirement goal. Contributions are tax-deductible in the year they’re made. Also, you won’t pay taxes on any earnings in the account until you make withdrawals.

However, unlike 401(k)s, 403(b)s sometimes invest contributions in an annuity contract provided through an insurance company rather than allocate it into a stocks-and-bonds portfolio.

Distinguishing Between Different 403(b) Options

There are two main types of 403(b) plans: traditional and Roth. With a traditional 403(b), employees contribute pre-tax money to their 403(b) account. This reduces their taxable income, giving them an immediate tax advantage. They will pay taxes on the money when they withdraw it.

With a Roth 403(b), employees contribute after-tax dollars to the plan. They will not owe taxes on the money when they withdraw it.

Not every 403(b) plan offers a Roth version.

💡 Quick Tip: Did you know that opening a brokerage account typically doesn’t come with any setup costs? Often, the only requirement to open a brokerage account — aside from providing personal details — is making an initial deposit.

¹Terms and conditions apply. Roll over a minimum of $20K to receive the 1% match offer. Matches on contributions are made up to the annual limits.

The 403(b) Plan in Action: Participation and Contributions

The IRS states that a 403(b) plan “must be maintained under a written program which contains all the terms and conditions…” In other words, for the plan to be legitimate, paperwork is required.

An employee may get a whole packet of information about the 403(b) plan as part of the onboarding process. This package can include salary reduction agreement terms (this refers to employee contributions from the plan that come from the employee’s paychecks), eligibility rules, explanations of benefits, and more.

In certain limited cases, an employer may not be subject to this requirement. For example, church plans that don’t contain retirement income aren’t required to have a written 403(b) plan.

Who Gets to Participate?

Only employees of specific public and nonprofit employers are eligible to participate in 403(b)s, as are some ministers. You may have access to a 403(b) plan if you’re any of the following:

• An employee of a tax-exempt 501(c)(3) nonprofit organization

• An employee of the public school system, including state colleges and universities, who is involved in the day-to-day operations of the school

• An employee of a public school system organized by Indian tribal governments

• An employee of a cooperative hospital service organization

• A minister who works for a 501(c)(3) nonprofit organization and is self-employed, or who works for a non-501(c)(3) organization but still functions as a minister in their day-to-day professional life

Employers may automatically enroll employees in a 403(b), though employees can opt out if they so choose. Of course, participating in an employer-sponsored retirement plan is one good way to start saving for retirement.

Universal Availability Rule: Who Doesn’t Qualify for 403(b) Participation?

Employers must offer 403(b) coverage to all qualifying employees if they offer it to one — this rule is known as “universal availability.” However, plans may exclude certain employees, including those under the following circumstances:

• Employees working fewer than 20 hours per week

• Employees who contribute $200 or less to their 403(b) each year

• Employees who participate in a retirement plan, like a 401(k) or 457(b), of the employer

• Employees who are non-resident aliens

• Employees who are students performing certain types of services

The same laws that allow these coverage limits also require employers to give employees notice of specific significant plan changes, like whether or not they have the right to make elective deferrals.

Types of Contributions: Understanding Your Options

You can contribute to your 403(b) through automatic paycheck deductions. This process is similar to that of a 401(k) — the employee agrees to have a certain amount of their salary redirected to the retirement plan during each pay period.

However, other types of 403(b)contributions are also eligible, including:

• Nonelective contributions from your employer, such as matching or discretionary contributions

• After-tax contributions can be made by an employee and reported as income in the year the funds are earned for tax purposes. These funds may or may not be designated Roth contributions. In this case, the employer needs to keep separate accounting records for Roth contributions, gains, and losses.

The Cap on Contributions: Limits and Regulations

In 2025, workers can put up to $23,500 into a 403(b) plan. In 2024, workers can put up to $23,500 into a 403(b) plan. Workers who’ve been with their employer for 15 years may be able to contribute an additional $3,000 if they meet certain requirements. Those age 50 or older can contribute an additional $7,500 to a 403(b).

Combined contributions from the employee and the employer may not exceed the lesser of 100% of the employee’s most recent yearly compensation or $69,000 in 2024 and $66,000 in 2023.

Investing Within Your 403(b) Plan

A 403(b) may offer an employee a more limited number of investment options compared to other retirement savings plans.

Exploring Investment Choices for Your 403(b)

One way 403(b) plans diverge from other retirement plans, like 401(k)s and even IRAs, is how the organization invests funds. Whereas other retirement plans allow account holders to invest in stocks, bonds, and exchange-traded funds (ETFs), 403(b)s commonly invest in annuity contracts sold by insurance companies.

Part of the reason these plans are known as “tax-sheltered annuities” is that they were once restricted to annuity investments alone — a limit removed in 1974. While many 403(b) plans still offer annuities, they have also largely embraced the portfolio model that 401(k) plans typically offer. 403(b) plans now typically also offer custodial accounts invested in mutual funds.

Comparing 403(b) with Other Retirement Plans

How does a 403(b) stack up against other retirement plans, such as 401(k)s, IRAs, and pension plans? Here’s how they compare.

403(b) vs. 401(k): Similarities and Differences

These two plans share many similarities. However, one notable difference between 403(b) plans and 401(k) plans is there is no profit sharing in 403(b)s — workplaces that are 403(b)-eligible aren’t working toward a profit.

Another way 403(b) plans diverge from 401(k)s is how the organization invests funds. Whereas other retirement plans allow account holders to invest in stocks, bonds, and exchange-traded funds, 403(b)s commonly invest in annuity contracts sold by insurance companies or in custodial accounts invested in mutual funds.

403(b) vs. IRA vs. Pension Plans: What’s Right for You?

An IRA offers more investment choices than a 403(b). With a 403(b), your investment options are narrower.

403(b) plans may also have higher fees than other retirement plans. In addition, certain 403(b) plans aren’t required to adhere to standards set by the Employee Retirement Income Security Act (ERISA), which protects employees who contribute to a retirement account.

However, 403(b)s have much higher contribution limits than IRAs. IRA contributions are $7,000 for 2024 for individuals under age 50, compared to $23,000 in contributions for a 403(b). IRA contributions are $6,500 for 2023 for individuals under age 50, compared to $22,500 in contributions for a 403(b).

As for pension plans, public school teachers are typically eligible for defined benefit pension plans that their employer contributes to that gives them a lump sum or a set monthly payment at retirement. These teachers should also be able to contribute to a 403(b), if it’s offered, to help them save even more for retirement.

Advantages and Challenges of a 403(b) Plan

There are both pros and cons to participating in a 403(b) plan. Here are some potential benefits and disadvantages to consider.

Tax Benefits and Employer Matching: The Upsides

As mentioned, a 403(b) offers tax advantages, whether you have a traditional or Roth 403(b) plan. Contribution limits are also higher than they are for an IRA.

Employers may match employees’ contributions to a 403(b). Check with your HR department to find out if your employer matches, and if so, how much.

Potential Drawbacks: Fees and Investment Choices

Some 403(b)s charge higher fees than other types of plans. They also have a narrower range of investment options, as mentioned earlier.

Making Changes to Your 403(b) Plan

If a situation arises that requires you to make changes to your 403(b), such as contributing less from your paychecks to the plan, it is possible to do so.

When Life Changes: Adjusting Your 403(b) Contributions

You can adjust your contributions to a 403(b). Check with your employer to find out if they have any rules or guidelines for when and how often you can make changes to your contributions, and then get the paperwork you’ll need to fill out to do so.

Plan Termination: Understanding the Process and Implications

An employer has the right to terminate a 403(b), but they’re required to distribute all accumulated benefits to employees and beneficiaries “as soon as administratively feasible.”

Employees may be eligible to roll their 403(b) funds over into a new retirement fund upon termination.

Loans, Distributions, and Withdrawals from 403(b) Plans

Here’s information about taking money out of your 403(b), whether it’s a loan or a withdrawal.

Borrowing from Your 403(b): What You Need to Know

There are rules that limit how and when an account holder can access funds in a 403(b) account. Generally, employees can’t take distributions, without penalties, from their 403(b) plan until they reach age 59 ½.

However, some 403(b) plans do allow loans and hardship distributions. Loan rules vary by the plan. Hardship distributions require the employee to demonstrate immediate and heavy financial need to avoid the typical early withdrawal penalty. Check with your employer to find out the particulars of your plan.

Taking Distributions: The When and How

Like other retirement plans, 403(b)s have limits on how and when participants can take distributions. Generally, account holders cannot touch the funds until they reach age 59 1/2 without paying taxes and a penalty of 10%. Furthermore, required minimum distributions, or RMDs, apply to 403(b) plans and kick in at age 73.

If you leave your job, you can keep your 403(b) where it is, or roll it over to another retirement account, such as an IRA or a retirement plan with your new employer.

Maximizing Your 403(b) Plan

If you have a 403(b), the amount you contribute to the plan could potentially help you grow your savings. Here’s how.

Strategic Contribution Planning: How to Maximize Growth

If your employer offers a match on contributions to your 403(b), you should aim to contribute at least enough to get the full match. Not doing so is like leaving free money on the table.

Beyond that, many financial advisors suggest aiming to contribute at least 10% of your income for retirement. You may be able to save less if you have access to guaranteed retirement income such as a pension, as many teachers do, but consider all your options carefully before deciding.

If 10% seems like an unreachable goal, contribute what you can, and then consider increasing the amount that you save each time you get a raise. That way, the higher contribution will not put as much of a dent in your take-home pay.

Doing some calculations to figure out how much you need to save and when you can retire can help you determine the best amount of save.

The Takeaway

If you work for a nonprofit employer, contributing to a 403(b) is a tax-efficient way to start saving for retirement. The earlier you can start saving for retirement, the more time your money can have to grow.

If your employer does not offer a 403(b), or if you’re interested in additional ways to save or invest for retirement, you may want to consider opening another tax-advantaged retirement savings account such as an IRA to help you reach your financial goals.

Ready to invest for your retirement? It’s easy to get started when you open a traditional or Roth IRA with SoFi. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).

Easily manage your retirement savings with a SoFi IRA.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SoFi Invest®

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

SOIN1023151

Jan

2025

How Much Does a Financial Advisor Cost?

By Michael Flannelly | Investing | Comments Off

Investing can be complicated and intimidating, so people often look to hire a financial advisor to help figure out the best solutions to meet long-term financial goals. But before they hire such a professional, investors need to know the cost of a financial advisor.

The average fee for a professional advisor varies, often because of their degree of professional experience and the amount of assets they’re managing for each client. Investors should do their homework to understand financial advisor fees before hiring a professional. Read on to learn more about the cost of a financial advisor and ways to help minimize the fees.

Key Points

• The average cost of a financial advisor can vary based on different fee structures, such as a percentage of assets under management (AUM), hourly fees, flat fees per AUM, and annual retainer fees.

• Percentage-based fees typically range from 0.59% to 1.18% of AUM, while hourly fees can range from $130 to $300.

• Flat fees per AUM can vary from $7,500 to $55,000, and annual retainer fees can range from $6,000 to $11,000.

• Fee-only advisors earn money through fees paid by clients, while commission-based advisors earn money from commissions on investments bought and sold on behalf of clients.

• Robo advisors and online financial advisors generally have lower fees compared to traditional advisors, with robo advisors typically charging around 0.25% of AUM.

Average Cost of a Financial Advisor

The average cost of a financial advisor can vary, depending on the services offered and the client’s needs.

Traditionally, financial advisors charge a certain percentage – usually about 1% – of a client’s portfolio value, known as assets under management (AUM). For example, a financial advisor would charge $100 to a client with a $10,000 portfolio, while a client with a $100,000 portfolio may be charged $1,000.

However, this fee is often charged on a sliding scale, meaning the more valuable a portfolio is, the lower the fee percentage the financial advisor would charge. An advisor may charge a client with a $10 million portfolio a lower fee than a client with a $1 million portfolio.

This fee, the percentage of assets under management charged by an advisor, is generally lower for robo and online advisors than traditional financial advisors, which can average about 0.25% to 0.50% of AUM.

Instead of or in addition to an asset under management fee, some financial advisors may have other costs that investors should know. These can be for hourly charges, typically reserved for special planning and consulting, ranging from $130 to $300 per hour, depending on the advisor and the client’s needs.

Moreover, an advisor may charge a flat rate based on AUM rather than a percentage of AUM. Depending on a client’s portfolio size, these fees can range from $7,500 to $55,000. And some advisors charge an annual retainer fee, ranging from $6,000 to $11,000 a year.

Recommended: How to Find a Financial Advisor

Average Financial Advisor Fees
Fee Type	Average Cost
Percentage of Assets Under Management (AUM)	0.59% to 1.18%
Hourly Fees	$130 to $300
Flat Fees per AUM	$7,500 to $55,000
Annual Retainer Fee	$6,000 to $11,000

Source: AdvisoryHQ

Fee-Only Advisors vs Commission-Based Advisors

There are several things an investor should be aware of when it comes to financial advisors’ fee structures, including knowing the difference between fee-only advisors, fee-based advisors, and commission-based advisors.

Fee-only advisors earn money through the fees paid to them by clients, whether that’s a percentage of AUM or an hourly fee. Specialists generally recommend fee-only advisors because investors don’t have to worry that the advisor is focused on selling them a product because it’ll give the advisor a nice commission. Many fee-only advisors are known as fiduciary financial advisors, meaning they are legally required to provide advice with their client’s best interests in mind.

In contrast, commission-based advisors earn money from commission on the investments bought and sold on a client’s behalf. For example, a financial advisor may earn commissions when a client invests in a particular financial product, like a mutual fund or annuity. Because the advisor is incentivized to get their clients to put money into these products, it may be in the advisor’s best interest and not the client’s.

A fee-based advisor combines the fee structures of fee-only and commission-based advisors. Fee-based advisors generally charge an AUM fee, a flat fee, or an hourly fee, but may also charge commissions.

Financial Advisor Fees Based on Account Type

Robo Advisor Fees

According to a 2023 Morningstar report, the median advisory fee for robo advisors is 0.25%, which is less than traditional financial advisors. Moreover, some robo advisors charge no management fees.

Robo advisors use computer algorithms to provide financial guidance and portfolio management for investors rather than management by humans. Robo advising may be a good option for investors looking for low financial advisor fees.

Additionally, robo advisors may benefit investors because they require a smaller minimum account size than most traditional financial advisors. A smaller minimum account size can be a good option for investors who are just beginning to invest and want to build up their portfolios.

Though the fees are lower than traditional firms, robo advisors generally don’t provide services that some investors may be looking for, like creating financial plans or personalized investment advice.

Online Financial Advisor Fees

Online financial advisors can cost more than robo advisors but less than traditional advisors. The fees for online financial advisors can vary depending on the firm.

Online financial advisors operate like a combination of robo advisors and traditional, in-person advisors. Depending on the firm, these advisors may offer financial planning services and asset management conducted by humans rather than algorithms. These services are conducted virtually through phone and video meetings. Account minimums for online financial advisors can range from zero to a few hundred thousand dollars.

Traditional Advisor Fees

As mentioned above, the fee structures for traditional financial advisors can vary, depending on the firm and the client’s needs. It may include fees that range from 0.59% to 1.18% of AUM, according to a 2023 report by Advisory HQ, as well as hourly rates, annual retainer costs, and commission fees.

When most people think of a financial advisor, they think of a traditional advisor where the client gets in-person services and specialized planning. These advisors can be for everyone, though their higher costs may make them more suitable for investors with more money and more complex financial goals.

💡 Quick Tip: One advantage of using a robo investing advisor is that these services are intended to be cost effective. Still, it’s wise to learn what the underlying costs are for the investment choices these services provide, as fees offset returns over time.

Tips On Minimizing Financial Advisor Fees

If you’re interested in working with a financial advisor, these are a few potential strategies that may help you get a lower fee.

1. Look to online and robo advisors

As noted previously, online and robo advisors can be an option that costs less than a full-service investment firm. These online options generally use a more self-directed or algorithmic approach, offering investment choices that can include individual stocks, bonds, mutual funds, exchange-traded funds (ETFs), and other options. Because there is less human involvement, the fees are lower.

2. Negotiate with your advisor

Investors can talk to their financial advisor and ask if there are ways to lower their fees. Depending upon the advisor, they might charge less if the investor is willing to use fewer available services. Or, if the client has more assets than the advisor usually manages, the advisor might be willing to negotiate the fees.

3. Consider a newer advisor

Sometimes a newer advisor will charge lower fees as they are building up a client list. This person won’t have as much experience but may be willing to negotiate fees and dedicate a reasonable amount of time to a client’s portfolio.

The Takeaway

There is no one cost that an investor can look to pay when using a financial advisor. It all depends on the type of services that a client requires and the fee structures a firm may offer. Because of this variability, you need to ask a potential financial advisor about fees to know exactly what you’re paying.

You might also want to consider using a robo or online advisor, which typically costs less than an traditional advisor. Explore the different advisor options to see what makes the most sense for you and your investment goals.

Invest with as little as $5 with a SoFi Active Investing account.

FAQ

What is a typical fee for a financial advisor?

Typically, traditional advisors charge about 1% of a client’s portfolio value, known as assets under management (AUM), though advisor fees can range from 0.59% to 1.18%. However, some financial advisors may also charge other fees, including hourly rates, annual retainer costs, and commission fees.

Is 2% fee high for a financial advisor?

In general, 2% is on the higher end for a financial advisor fee. Typically, traditional financial advisors charge about 1% of a client’s portfolio value. However, you may want to find out what that 2% fee covers to determine whether it’s worth it for you. Another option is to negotiate with the advisor to see if they will lower their fees. A financial advisor might be willing to charge you less if you use fewer services, for example.

Are advisor fees tax deductible?

No, financial advisor fees are currently not tax deductible. The Tax Cuts and Jobs Act (TCJA) of 2017 eliminated financial advisor fees as a tax deduction. However, it’s possible that this may change at the end of 2025, when some provisions of TCJA are due to expire.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SoFi Invest®

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below: Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit SoFi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.

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 .

Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.

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.

SOIN0124112

Jan

2025

Guide to Calculating EPS and Why It Matters

By Brian Nibley | Investing | Comments Off

Earnings per share (EPS) tells investors a company’s ability to produce income for shareholders, and relates to its profitability. To calculate EPS, investors can use a ratio that takes a company’s quarterly or annual net income and divide it by the number of outstanding shares of stock on the market.

Knowing a stock’s earnings per share can be a valuable portfolio benchmarking tool. Think of EPS as GPS for where a public company is on the value map, based on how profitable it has been. Further, knowing an investment’s EPS gives investors — and portfolio managers — a good indicator of a stock’s performance over a specific period of time and its potential share price performance in the near future.

Key Points

• Earnings per share (EPS) is a ratio that measures a company’s ability to generate income for shareholders.

• EPS is calculated by dividing a company’s net income by the number of outstanding shares of stock.

• EPS is a valuable tool for benchmarking a company’s profitability and assessing its potential share price performance.

• Basic EPS includes all outstanding stock shares, while diluted EPS considers additional assets like convertible securities.

• EPS may help investors evaluate a company’s financial health, make investment decisions, and assess risk.

What Is Earnings Per Share (EPS)?

The starting point for any conversation about the EPS ratio is the earnings report companies issue to regulators, shareholders, and potential investors. Earnings reports play a major role, if not the starring role, during earnings season.

Publicly traded companies must, by law, report their earnings quarterly and annually. Earnings represent the net income a company generates (after taxes and after expenses are deducted), along with an estimate of what profits or losses can be expected going forward.

Typically, investment analysts, money managers and investors look at earnings as a major component of a company’s profit potential, with earnings per share a particularly useful measurement tool when gauging a company’s financial prospects.

While a company’s earnings call represents a publicly traded company’s revenues, minus operating expenses, earnings per share is different.

EPS indicates a firm’s earnings for investors, divided by the company’s number of remaining shares. Earnings per share is perhaps most optimal when comparing EPS rates of publicly traded firms operating in the same industry.

It is likely not, however, the only investment measurement tool when researching stocks and funds. Other key indicators, like share price, market share, market capitalization, dividend growth, and historical performance may also be added to the investment assessment mix. In all, though, it’s an important tool that can help determine the investing risk at play when making investing decisions.

If you’re wondering how to find earnings per share, investors can find a company’s quarterly and yearly EPS by visiting the firm’s investor relations page on its website or by plugging in the stock’s ticker symbol on major business and finance media platforms.

💡 Quick Tip: Before opening an investment account, know your investment objectives, time horizon, and risk tolerance. These fundamentals will help keep your strategy on track and with the aim of meeting your goals.

Basic and Diluted EPS

When companies report earnings per share, they may do so in two forms: basic EPS or diluted EPS. Each has key distinctions that investors should know about. Basic EPS is a good barometer of a firm’s financial health, while diluted EPS represents a deeper dive into a company’s financial metrics and its use of alternative assets like convertible securities.

Basic

Basic earnings per share, or basic EPS, includes all of a publicly traded company’s outstanding stock shares.

Diluted

Diluted earnings per share, or diluted eps, includes all of a company’s outstanding stock shares, plus its investable assets, like stock options, stock warrants, and other forms of convertible investments tied to a company’s financial performance that could become common stocks one day.

One big takeaway for both EPS models is that any major deviation between basic and diluted EPS calculations should be considered a warning sign to investors, as it indicates that a company’s use of convertible securities is complicated and still in flux.

That scenario may indicate that the company isn’t in an ideal position to provide accurate share value to the investing public at a given time.

Why Is EPS Important to Investors

EPS calculations are not only a snapshot of a company’s profit performance, but they can also be used to evaluate a company’s stock price going forward. Even a moderate increase in EPS may indicate that a company’s profit potential is on the upside, and investors may take that as a sign to buy the company’s stock.

Conversely, a small decrease in a company’s EPS from quarter to quarter may trigger a red flag among investors, who could view a downward EPS trend as a larger profit issue and shy away from buying the company’s stock.

In short, the higher the EPS, the more attractive that company’s stock generally is to investors. But the higher a stock’s EPS, the more expensive its shares are likely to be.

Once investors have an accurate EPS figure, they can decide if a stock is priced fairly and make an appropriate investment decision.

What Is Considered a Good EPS Ratio?

There’s no hard and fast figure to point to when trying to determine a good EPS ratio. It’s perhaps better practice to look, in general, for a higher number. Context is important, too, because whether an EPS is good may depend on the expectations surrounding it.

Companies grow at different rates, and some are in different stages of growth than others. With that in mind, you might expect a different EPS for, say, a tech startup than you would for a decades-old auto manufacturer. So, there are differences and contexts to take into consideration.

But again, it may be best to look for a high number — or, to do some research to figure out what analysts and experts are looking for in terms of a specific company’s EPS. Again, this can all help you determine whether a stock is right for your portfolio and strategy in accordance with your tolerance for risk.

💡 Quick Tip: How to manage potential risk factors in a self directed investment account? Doing your research and employing strategies like dollar-cost averaging and diversification may help mitigate financial risk when trading stocks.

Earnings Per Share Ratio Considerations

Investors should prepare to dig deeper and examine what factors influence EPS figures. These factors are at the top of that list:

• EPS numbers can rise or fall significantly based on earnings’ rise or fall, or as the number of company shares rises or falls.

• A company’s earnings may rise because sales are surging faster than expenses, or if company managers succeed in curbing operations costs. Additionally, investors may get a “false read” on EPS if too many company expenses are shed from the EPS calculation.

• A company’s number of outstanding shares may fall if a company engages in significant stock share buybacks. Correspondingly, shares outstanding may jump when a firm issues new stock shares.

• A company’s profit margins are also a big influencer on EPS. A company that is losing money usually has a negative EPS number. (Then again, that may send a wrong signal to investors. The company could be on the path to profits, and that trend may not show up in an EPS calculation.)

• A price to earnings ratio is another highly useful metric to evaluate a stock’s share growth potential. Investors can find a P/E ratio through a proper calculation of EPS (“P” is the price per share; “E” refers to EPS), though it’s easy to look up a P/E ratio on any site that aggregates stock information.

EPS can be reported for each quarter or fiscal year, or it can be projected into the future with a forward EPS.

How to Calculate EPS

The EPS formula is fairly simple, and it can be used in a couple of different methods, too. The most common way to accurately gauge an EPS figure is through an end-of-period calculation.

EPS Formula

The EPS formula is a company’s net income, minus its preferred dividends, divided by the number of shares outstanding. It looks like this:

EPS = (net income – preferred dividends) / outstanding shares

EPS is perhaps usually calculated using preferred dividends, but it can be calculated without them, too. Here are a couple of examples:

Example With Preferred Dividends

Investors can calculate EPS by subtracting a stock’s total preferred dividends from the company’s net income. Then divide that number by the end-of-period stock shares that are outstanding.

Basic EPS = (net income – preferred dividends) / weighted average number of common shares outstanding

For example, ABC Co. generates a net income of $2 million in a quarter. Simultaneously, the company rolls out $275,000 in preferred dividends and has 12 million outstanding shares of stock. In that calculation, knowing that shares of common stock are equal in value, the company’s earnings per share is $0.14.

(2,000,000 – 275,000) ÷ 12,000,000＝ 0.14

Example Without Preferred Dividends

For smaller publicly traded companies with no preferred dividends, the EPS calculation is more straightforward.

Basic EPS = net income / weighted average number of common shares outstanding

Let’s say DEF Corp. has generated a net income of $50,000 for the year. As the company has no preferred shares outstanding and has 5,000 weighted average shares on an annual basis, its earnings per share is $10.

50,000 ÷ 5,000＝ 10

In any EPS calculation, preferred dividends must be severed from net income. That’s because earnings per share is primarily designed to calculate the net income for holders of common stock.

Additionally, in most EPS end-of-period calculations, a company is mostly likely to calculate EPS for end-of-year financial statements. That’s because companies may issue new stock or buy back existing shares of company stock.

In those instances, a weighted average of common stock shares is required for an accurate EPS assessment. (A weighted average of a company’s outstanding shares can provide more clarity because a fixed number at any given time may provide a false EPS outcome, as share prices can be volatile and change quickly on a day-to-day basis.)

The most commonly used EPS share model calculation is the “trailing 12 months” formula, which tracks a company’s earnings per share by totaling its EPS for the previous four quarters.

The Takeaway

Earnings per share (EPS) can be calculated by investors to get a better sense of a company’s ability to produce income for shareholders. To calculate EPS, investors can use a ratio that takes a company’s quarterly or annual net income and divide it by the number of outstanding shares of stock on the market. There are different variations of the calculation, too.

Earnings trends, up or down, make earnings per share one of the most valuable metrics for assessing investments. Four or five years of positive EPS activity is considered an indicator that a company’s long-term financial prospects are robust and that its share growth should continue to rise.

For a limited time, opening and funding an Active Invest account gives you the opportunity to get up to $1,000 in the stock of your choice.

FAQ

How do you calculate EPS by year?

To calculate EPS by year, investors can use the formula that subtracts preferred dividends from net income, and then divide that number by the weighted average of common shares outstanding for the given year.

What is a good EPS ratio?

Each company is different, as is the context surrounding it, so there is no general rule about what makes a “good” EPS ratio for any given stock. Instead, investors should gauge analyst expectations, and consider a company’s age, among other things, to determine if its EPS is good or bad.

What are the two ways to calculate EPS?

Earnings per share (EPS) can be calculated with preferred dividends, or without preferred dividends, depending on the specific company.

SoFi Invest®

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

Jan

2025

Guide to Estimated Tax Payments

By Rebecca Lake | Family Finances, money, Terminology | Comments Off

If you are self-employed or receive income other than a salary or employment wages, you could be responsible for making estimated tax payments.

You might think of these estimated taxes as an advance payment against your expected tax liability for a given year. The IRS requires certain people and businesses to make quarterly estimated tax payments (that is, four times each year).

Not sure if you are required to make estimated tax payments or how much you should pay? Here’s a closer look at this topic, which will cover:

• What are estimated tax payments?

• Who needs to make estimated tax payments?

• What are the pros and cons of estimated tax payments?

• How do you know how much you owe in estimated taxes?

What Are Estimated Tax Payments?

Estimated tax payments are payments you make to the IRS on income that is not subject to federal withholding. Ordinarily, your employer withholds taxes from your paychecks. Under this system, you pay taxes as you go, and you might get money back (or owe) when you file your tax return, based on how much you paid throughout the year.

So what is an estimated tax payment designed to do? Estimated tax payments are meant to help you keep pace with what you owe so that you don’t end up with a huge tax bill when you file your return. They’re essentially an estimate of how much you might pay in taxes if you were subject to regular withholding, say, by an employer.

Estimated tax payments can apply to different types of income, including:

• Self-employment income

• Income from freelancing or gig work (aka a side hustle)

• Interest and dividends

• Rental income

• Unemployment compensation

• Alimony

• Capital gains

• Prizes and awards

If you receive any of those types of income during the year, it’s important to know when you might be on the hook for estimated taxes. That way, you can avoid being caught off-guard during tax season.

💡 Quick Tip: Tired of paying pointless bank fees? When you open a bank account online you often avoid excess charges.

How Do Estimated Tax Payments Work?

Estimated tax payments allow the IRS to collect income tax, as well as self-employment taxes from individuals who are required to make these payments. When you pay estimated taxes, you’re making an educated guess about how much money you’ll owe in taxes for the year.

The IRS keeps track of estimated tax payments as you make them. You’ll also report those payments on your income tax return when you file. The amount you paid in is then used to determine whether you need to pay any additional tax owed, based on your filing status and income, and the deductions or credits you might be eligible for.

Failing to pay estimated taxes on time can trigger tax penalties. You might also pay a penalty for underpaying if the IRS determines that you should have paid a different amount.

Who Needs to Pay Estimated Tax Payments?

Now that you know what an estimated tax payment is, take a closer look at who needs to make them. The IRS establishes some rules about who is liable for estimated tax payments. Generally, you’ll need to pay estimated taxes if:

• You expect to owe $1,000 or more in taxes when you file your income tax return, after subtracting any withholding you’ve already paid and any refundable credits you’re eligible for.

• You expect your withholding and refundable credits to be less than the smaller of either 90% of the tax to be shown on your current year tax return or 100% of the tax shown on your prior year return.

• The tax threshold drops to $500 for corporations.

Examples of individuals and business entities that may be subject to estimated tax payments include:

• Freelancers

• Sole proprietors

• Business partners

• S-corporations

• Investors

• Property owners who collect rental income

• Ex-spouses who receive alimony payments

• Contest or sweepstakes winners

Now, who doesn’t have to make estimated tax payments? You may be able to avoid estimated tax payments if your employer is withholding taxes from your pay regularly and you don’t have significant other forms of income (such as a side hustle). The amount the employer withholds is determined by the elections you make on your Form W-4, which you should have filled out when you were hired.

You can also avoid estimated taxes for the current tax year if all three are true:

• You had no tax liability for the previous tax year

• You were a U.S. citizen or resident alien for the entire year

• Your prior tax year spanned a 12-month period

Pros and Cons of Estimated Taxes

Paying taxes can be challenging, and some people may dread preparing for tax season each year. Like anything else, there are some advantages and disadvantages associated with estimated tax payments.

Here are the pros:

• Making estimated tax payments allows you to spread your tax liability out over the year, versus trying to pay it all at once when you file.

• Overpaying estimated taxes could result in a larger refund when you file your return, which could be put to good use (such as paying down debt).

• Estimated tax payments can help you create a realistic budget if you’re setting aside money for taxes on a regular basis.

And now, the cons:

• Underpaying estimated taxes could result in penalties when you file.

• Calculating estimated tax payments and scheduling those payments can be time-consuming.

• Miscalculating estimated tax payments could result in owing more money to the IRS.

Figuring Out How Much Estimated Taxes You Owe

There are a few things you’ll need to know to calculate how much to pay for estimated taxes. Specifically, you’ll need to know your:

• Expected adjusted gross income (AGI)

• Taxable income

• Taxes

• Deductions

• Credits

You can use IRS Form 1040 ES to figure your estimated tax. There are also online tax calculators that can do the math for you.

• If you’re calculating estimated tax payments for the first time, it may be helpful to use your prior year’s tax return as a guide. That can give you an idea of what you typically pay in taxes, based on your income, assuming it’s the same year to year.

• When calculating estimated tax payments, it’s always better to pay more than less. If you overpay, the IRS can give the difference back to you as a tax refund when you file your return.

• If you underpay, on the other hand, you might end up having to fork over more money in taxes and penalties.

Paying Your Estimated Taxes

As mentioned, you’ll need to make estimated tax payments four times each year. The due dates are quarterly but they’re not spaced apart in equal increments.

Here’s how the estimated tax payment calendar works for 2025:

Payment	Due Date
First Payment	April 15, 2025
Second Payment	June 15, 2025
Third Payment	September 15, 2025
Fourth Payment	January 15, 2026

Here’s how to pay:

• You’ll make estimated tax payments directly to the IRS. You can do that online through your IRS account, through the IRS2Go app, or using IRS Direct Pay.

• You can use a credit card, debit card, or bank account to pay. Note that you might be charged a processing fee to make payments with a credit or debit card.

• Certain IRS retail locations can also accept cash payments in person.

Keep in mind that if you live in a state that collects income tax, you’ll also need to make estimated tax payments to your state tax agency. State (and any local) quarterly estimated taxes follow the same calendar as federal tax payments. You can check with your state tax agency to determine if estimated tax is required and how to make those payments.

The Takeaway

If you freelance, run a business, or earn interest, dividends, or rental income from investments, you might have to make estimated tax payments. Doing so will help you avoid owing a large payment on Tax Day and possibly incurring penalties. The good news is that once you get into the habit of calculating those payments, tax planning becomes less stressful.

Another way to make your financial life less stressful: Find the right banking partner.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.00% APY on SoFi Checking and Savings.

FAQ

What happens if I don’t pay estimated taxes?

Failing to pay estimated taxes when you owe them can result in tax penalties. Interest can also accrue on the amount that was due. You can’t eliminate those penalties or interest by overpaying at the next quarterly due date or making one large payment to the IRS at the end of the year. You can appeal the penalty, but you’ll still be responsible for paying any estimated tax due.

What if you haven’t paid enough in estimated tax payments?

Underpaying estimated taxes can result in a tax penalty. The IRS calculates the penalty based on the amount of the underpayment, the period when the underpayment was due and not paid, and the applicable interest rate. You’d have to pay the penalty, along with any additional tax owed, when you file your annual income tax return.

How often do you pay estimated taxes?

The IRS collects estimated taxes quarterly, with the first payment for the current tax year due in April. The remaining payments are due in June, September, and the following January. You could, however, choose to make payments in smaller increments throughout the year as long as you do so by the quarterly deadline.

Photo credit: iStock/pixdeluxe

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2024 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

SoFi members with direct deposit activity can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.00% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 12/3/24. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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.

SOBK0224006

Financial Consulting Services 101

What Is a Financial Consultant?

Examples of Financial Consulting Services

Get up to $1,000 in stock when you fund a new Active Invest account.*

Access stock trading, options, alternative investments, IRAs, and more. Get started in just a few minutes.

Financial Consultants vs. Financial Advisors

Other Names for Financial Professionals

When Would You Need Financial Consulting?

Finding the Right Financial Consultant

The Takeaway

FAQ

Is a financial consultant the same as a financial advisor?

What does a financial consultant cost?

What does a financial consultant do?

Understanding the 403(b) Retirement Plan: A Comprehensive Guide

Demystifying the 403(b) Plan

What Exactly is A 403(b) Retirement Plan?

Distinguishing Between Different 403(b) Options

Get a 1% IRA match on rollovers and contributions.

Double down on your retirement goals with a 1% match on every dollar you roll over and contribute to a SoFi IRA.1

The 403(b) Plan in Action: Participation and Contributions

Who Gets to Participate?

Universal Availability Rule: Who Doesn’t Qualify for 403(b) Participation?

Types of Contributions: Understanding Your Options

The Cap on Contributions: Limits and Regulations

Investing Within Your 403(b) Plan

Exploring Investment Choices for Your 403(b)

Comparing 403(b) with Other Retirement Plans

403(b) vs. 401(k): Similarities and Differences

403(b) vs. IRA vs. Pension Plans: What’s Right for You?

Advantages and Challenges of a 403(b) Plan

Tax Benefits and Employer Matching: The Upsides

Potential Drawbacks: Fees and Investment Choices

Making Changes to Your 403(b) Plan

When Life Changes: Adjusting Your 403(b) Contributions

Plan Termination: Understanding the Process and Implications

Loans, Distributions, and Withdrawals from 403(b) Plans

Borrowing from Your 403(b): What You Need to Know

Taking Distributions: The When and How

Maximizing Your 403(b) Plan

Strategic Contribution Planning: How to Maximize Growth

The Takeaway

How Much Does a Financial Advisor Cost?

Average Cost of a Financial Advisor

Get up to $1,000 in stock when you fund a new Active Invest account.*

Access stock trading, options, alternative investments, IRAs, and more. Get started in just a few minutes.

Fee-Only Advisors vs Commission-Based Advisors

Financial Advisor Fees Based on Account Type

Robo Advisor Fees

Online Financial Advisor Fees

Traditional Advisor Fees

Tips On Minimizing Financial Advisor Fees

1. Look to online and robo advisors

2. Negotiate with your advisor

3. Consider a newer advisor

The Takeaway

FAQ

What is a typical fee for a financial advisor?

Is 2% fee high for a financial advisor?

Are advisor fees tax deductible?

Guide to Calculating EPS and Why It Matters

What Is Earnings Per Share (EPS)?

Basic and Diluted EPS

Basic

Diluted

Why Is EPS Important to Investors

What Is Considered a Good EPS Ratio?

Earnings Per Share Ratio Considerations

How to Calculate EPS

EPS Formula

Example With Preferred Dividends

Example Without Preferred Dividends

The Takeaway

FAQ

How do you calculate EPS by year?

What is a good EPS ratio?

What are the two ways to calculate EPS?

Guide to Estimated Tax Payments

What Are Estimated Tax Payments?

Get up to $300 when you bank with SoFi.

Double down on your retirement goals with a 1% match on every dollar you roll over and contribute to a SoFi IRA.¹

Student Loan
Refinancing

Personal
Loans

Online
Investments