Inflation is raging. The cost of funding milestones in life — be it buying a new home, replacing that old clunker, paying off college bills, hosting a wedding, or funding a comfy nest egg — is not likely to fall much in the near future. But entrepreneurs aim to help consumers reach these big-money goals with savings and investment apps like SoFi and Robinhood.
These business innovators are creating, improving and marketing new smartphone apps and digital platforms to help users invest and save more wisely.
A May IBD/TIPP Poll survey of 1,320 Americans found that a Financial Related Stress index rose 2.1% from April to its highest point since April 2020, early in the Covid-19 pandemic lockdowns. People ages 18-24 and 25-44 were most likely to report feeling more financial stress than in the prior three months.
That's the kind of problem that savings and investment app developers hope to solve.
So which companies are winning the biggest fans in this still-young, dynamic industry?
Best Savings And Investment Apps: The Champions Today
The Best In Fintech trophies in this field go out to a small collection of startups and publicly traded firms. Namely, SoFi, Webull and Plaid are collecting the shiny hardware, according to an inaugural survey by Investor's Business Daily and its longtime polling partner TechnoMetrica Market Intelligence, led by pollster Raghavan Mayur.
These three companies grabbed the top spots overall in a customer satisfaction survey of people across the country.
Certainly, new companies will jump into the ring for years to come. After all, the potential to build a billion-dollar business remains high.
Younger-generation workers are already tech-savvy. But many still need to learn how to build wealth, navigate tricky stock markets and even learn about other financial securities such as options — assuming they desire a comfortable retirement or a life of luxury after finishing their careers.
Explaining The Ratings For Savings & Investment Apps
In late December, TechnoMetrica asked 6,000 consumers about fintech companies in various categories, including savings and investment apps and digital platforms. Survey participants only rated companies they did business with in the prior 12 months. At least 100 of a company's customers had to participate for it to qualify for the survey analysis.
Among savings and investment apps, six met the threshold to be included in the Best In Fintech rankings. They were evaluated across six service categories: ease of use, quality of customer service, fair prices and fees for products and services, rewards such as cash-back offers and promotions, security and privacy features, and speed of transactions.
IBD came up with these categories after doing research on what attributes in financial services were deemed most important to fintech users. Other types of fintech firms covered in this survey were digital wallets and cryptocurrency apps. (See all of IBD's Best In Fintech coverage .)
TechnoMetrica established a Customer Experience Index, or CEI, for each performance category for apps and digital platforms. Users rated these firms based on their experience over the past 12 months.
Specifically, the CEI gauges the difference between the percentage of survey takers who gave ratings of "excellent" and "very good" and the ratio of those who graded the firms as "fair" or "poor."
The overall CEI shows the company's average score of all six categories. Overall CEI among the six savings and investment platforms spanned from as high as 66.5 to as low as 51.8. The top three are designated the Best In Fintech. (See the full list of best savings and investment apps overall and in every category.)
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1. SoFi
The winner's trophy goes to SoFi Technologies. The company secured the top spot with an overall CEI of 66.5.
SoFi also won a No. 1 ranking in the categories of customer service, ease of use of its fintech app, and reward opportunities among the six companies making the survey. Its "ease of use" CEI score of 80.1 topped the next best firm by a whopping 11 points.
SoFi strives to become a "one-stop shop for digital financial services," according to the investor relations section of its website. That is, SoFi seeks to help customers borrow, save, spend, invest and protect money like a savvy veteran.
SoFi can help users choose a student loan or refinance a mortgage. It also offers to help guide parents setting up direct loans to their children to fund college.
Further, the San Francisco-based firm extends personal loans of up to $100,000. This service puts SoFi in competition with a host of banks and new fintech firms such as Upstart.
Features Of Best Savings App SoFi
Go to the SoFi phone or tablet app, and you'll see a remarkably clean interface on a full-white background that starts with a customized homepage. A sample homepage includes outstanding loan balances, total equity in the investments account, and a link to a daily podcast on investing and saving.
From there, swipe to additional pages, such as one that highlights your up-to-date credit score and spending targets. Swipe again? You land on a banking account page. Swipe one more time? SoFi offers choices on how to refinance your current loans.
Still another page offers a profile of specific stock holdings in your account.
SoFi ranked No. 1 in the rewards category. Recently, SoFi offered customers a gift of up to $100 in Bitcoin after they make their first cryptocurrency trade. Those who open an investment account can get up to $1,000. The SoFi credit card offers 2% unlimited cash back on purchases. And direct deposits into a SoFi savings account receive 1.25% in APY (annual percentage yield), what the company touts as 41 times the national average.
SoFi Is A New Nasdaq Stock Among Investment Apps
SoFi went public in December 2020 and finished at 10.41 in its debut week on the Nasdaq. Shares have gone on a severe roller-coaster ride since then. After peaking just two months later at 28.26, SoFi nose-dived. It has been touching all-time lows under 6.
The company owns the naming rights to the home stadium for the National Football League's Los Angeles Rams, the reigning Super Bowl champions, along with fellow NFL club the L.A. Chargers. SoFi has a market value of $5 billion and 828.6 million shares outstanding, according to MarketSmith.
San Francisco-based SoFi has yet to post a net profit, but it achieved adjusted earnings before interest, tax, depreciation and amortization — known as EBITDA — of $4.6 million in the fourth quarter of 2021 and $30.2 million for all of last year.
"Today, SoFi is in its strongest position ever to differentiate our offerings and ensure that we're delivering for our members and enhancing their experience with each new product they adopt," Chief Executive Anthony Noto said in a March 1 news release on quarterly results. The company ended 2021 with 3.5 million total SoFi members, up 87%. That beat its own forecast by 500,000 members.
According to its annual 10-K filing with the U.S. Securities and Exchange Commission, SoFi expanded into Hong Kong by buying 8 Limited. SoFi also has a footprint in Latin America, as its acquisition of Galileo gave it clients in Mexico and Colombia.
"We expect to further expand into Latin America with our anticipated acquisition of Technisys," SoFi wrote in its filing.
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2. Webull
Webull Financial doesn't strive to be the one-stop shop that SoFi aims to become. Yet the New York-based retail brokerage platform finished in second place with an overall CEI of 63.8. And Webull beat SoFi in a couple categories.
Webull enables users to trade in stocks, ETFs, options and major cryptocurrencies, including Bitcoin, Ethereum and Dogecoin. Just like the big online and branch-based brokers to retail investors, Webull charges zero trading commissions. Users can buy or sell cryptocurrencies in increments as small as $1.
Webull garnered a No. 1 CEI of 70.1 in the fair prices and fees category and top honors for security and privacy with an 81.5 CEI rating. That beat out SoFi's 78.8 score in this category. Webull also notched a second-place rating in both customer service and ease of use.
Its worst ranking among the six categories? Fifth place for customer rewards.
Webull's Unique View Into Market Action
The broker's Markets Overview page shows some innovative ways to present a picture of the stock market action.
For instance, Webull reports the breadth of the stock market action not simply in terms of the raw number of advancing stocks vs. declining stocks. The app mines deeper into the data, with visual and numerical presentations on the number of stocks up vs. stocks down in price. It also offers data on the size of their price moves.
As an example, Webull noted on March 7 that 1,197 companies among 7,996 stocks in the database fell 5% to 10%. In contrast, 251 stocks rose 5% to 10% in price that same day. Nearly twice as many stocks fell 10% or more than those that jumped at least 10%.
Bullish Innovation Among Investment Apps
Webull continues to add new products.
On Jan. 25, the company said it would offer global equity index options traded on the Chicago Board Options Exchange, or Cboe, to retail traders.
Webull also started offering Cboe's heavily traded S&P 500 Index options, Cboe Volatility Index options and Mini-S&P 500 index options. Webull plans to add the Nanos S&P 500 Index options to make the investment vehicle even simpler to trade.
"We are excited to collaborate with Cboe to educate our customers on the usability and benefits of index options," Anthony Denier, Webull CEO, said in a Jan. 25 news release.
3. Plaid
Think of Plaid as a digital middleman that connects bank accounts to other fintech services. Plaid reportedly is used by tens of millions of consumers across North America.
Plaid touts itself as the "safer way to connect financial accounts to an app."
Folks who use Google Pay may not know it, but they use Plaid's platform to connect their bank accounts to the search engine giant's payment processing system. Plaid customers also can allow Google to track their spending and account balances.
Plaid also has partnered with financial services firms Betterment, Acorns, Chime, PayPal's Venmo peer-to-peer payments app, Truebill and consumer electronics heavyweight Samsung.
Where Plaid Ratings Excelled
Headquartered in San Francisco, Plaid earned top honors in the category of transaction speed with a CEI of 73.2. Plaid also scored second place in the fields of customer rewards and fair pricing, and it posted a third-best CEI for customer service.
The company ranked last in ease of use.
Digital news sites in January reported that Plaid must pay $58 million to users of PayPal-owned Venmo, Robinhood, Coinbase and other retail finance and payments apps.
In a class action suit, plaintiffs accused the firm of collecting excessive data from users of these apps. They also argued that Plaid set up login webpages that "deceptively mimicked those of the user's own bank account, but fed the credentials directly to itself," Fast Company reported Jan. 21.
Plaid denied any wrongdoing in agreeing to a settlement in August. The deal required the San Francisco-based startup to change some business practices.
The Rest Of The Pack In Investment Apps
Rounding out the remaining platforms that garnered a statistically meaningful response but didn't earn top overall customer ratings are Acorns, Stash and Robinhood.
Acorns was fourth in overall CEI, behind the three Best In Fintech winners. It didn't achieve either a first- or second-place ranking in any of the six categories among savings apps and investment apps. The Irvine, Calif.-based company ranked third in both rewards and transaction speed and was in fourth place in ease of use and security/privacy.
Acorns says its goal is to motivate consumers to become investors in a diversified portfolio designed by seasoned investment professionals.
Investments span across exchange traded funds, stocks, bonds and real estate. Acorns emphasizes zero hidden fees, no minimum balance fees, no overdraft fees and access to 55,000 free automated tellers.
One review on Bing.com, however, noted that it has "extremely high fees for simply using the app for round-up micro-investing when account balances are under $5,000."
A Play For Beginning Investors
Coming in fifth place among the investment apps in terms of overall CEI was Stash, which says it aims to make all of its customers equity investors.
The service features several plans, including Stash Beginner for just $1 per month. Stash Beginner offers advice for investing newbies as well as access to a "personal portfolio." Banking access includes a two-day advance on paychecks.
The Stock-Back Card is no doubt a unique offering. Spending at certain businesses can lead to rebates in the form of actual shares in the business's stock, such as pharmacy chain CVS, pizza giant Domino's and Starbucks. Stash Beginner also offers access to $1,000 insurance offered by a third-party provider.
The Stash+ plan, for $9 per month, includes all the services from Beginner and the $3-per-month Growth, plus advice for managing family finances, two custodial accounts for children under 18, and enhanced banking and insurance services.
Weekly Stock Party events give members a chance to own shares in blue-chip stocks. It helps explain why Stash ranked third for rewards, its best showing among the six categories.
Riding The Meme-Stock Boom Of 2021
Finally, Robinhood finished at No. 6 overall to round out the six investment apps that met IBD's minimum of 100 responses among the 6,000 people surveyed.
The trading app boomed in popularity in 2020 as the coronavirus pandemic spawned a new generation of individuals trading stocks. It also joined the WallStreetBets crowd of individual traders who targeted stocks that were heavily sold short. Such stocks include AMC Entertainment, GameStop, Bed Bath & Beyond, BlackBerry and others.
Despite its many users, Robinhood earned low ratings from customers. It finished third in ease of use and fourth in pricing. It was dead last in every other category. Robinhood also has earned low customer ratings in Investor's Business Daily's annual Best Online Brokers survey of investors.
In 2021, feverish options activity forced Robinhood to raise the capital needed to cover the capital requirements generated by an enormous number of call options bought by its customers. At the end of last year, Robinhood expanded its cash and cash equivalents by 350% to $6.3 billion.
Monthly active users jumped 48% to 17.3 million in the month of December 2021 vs. a year earlier.
Please follow Chung on Twitter: @saitochung and @IBD_DChung
