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SigFig is a leader in the automated investing (robo-advisor) market. Wealthfront and Betterment are other top options in this space.
Interested in a financial planner? Take a look at SmartAsset, which is free to use.
SigFig is brought to you by the same people who founded Wikinvest more than a decade ago in 2006. Operational in its own right since 2011, they have around 300,000 clients and manage over $70 million in assets. SigFig’s focus is on easy accessibility and being transparent with their customers, providing clear information to them specifically relating to fees. SigFig will assess your overall holdings based on their cost, performance, and diversification. Using unique algorithms, it will then ascertain any potential gains you might have.
This robo-advisor service makes it easy to add and link up your existing accounts without needing to hand over the reigns entirely or transfer cash into their service.
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They offer three types of services to clients which are:
- Asset Management
- Portfolio Tracking
- Diversified Income
Asset Management costs 0.25% once you reach a balance of $10,000. Anything between $2,000-$9,999 is free from annual management fees. It is great for retaining a balanced portfolio that is equally diverse and allows you to optimize your investment earnings. The minimum amount you need to invest in this service is $2,000.
The portfolio tracking service provided by SigFig is free of charge. It will aggregate your investment portfolio and deliver an easy to view snapshot via their dashboard. There is no minimum investment required for this service.
A diversified income account costs 0.50% in management fees. This allows you to maximize your bonds, CDs, US treasuries, and bank interest rates in a low-rate environment. The minimum investment required for this service is $100,000.
Who Is SigFig Suitable For?
- SigFig supports a range of account types such as 401(k) plans, IRA Accounts, Roth IRA Accounts, Taxable Accounts, and SEP IRA Accounts.
- With a low account minimum of $2,000, they are able to attract those who are new to investing, or who have only a small amount of capital to invest.
- Those who are looking to learn about investment decisions and understand the ‘why’ behind what they do
- If you do not require human support from a Financial Advisor
How Does SigFig Work?
Unlike others in this space, SigFig is not concerned with taking a portion of your managed assets as commission. Some of the revenue they earn comes from the referrals they make to brokers and advisors. However, the recommendations they make are not based on these commissions; they are driven with SigFig’s unique algorithms.
If you do not have a managed account, you are still able to get a lot of useful information from your personalized dashboard. You are able to tailor the recommendations based on your preferences which relate precisely to your tolerance for risk and your own portfolio. Once you have updated your information, the algorithms then work out the optimal allocation of your holdings in just a few seconds. The data is presented in real-time and gives you an overview of your portfolio which can be actively compared to different indexes such as the S&P 500 or the Dow Jones.
SigFig also allows investors to compare the fees that their chosen advisor is charging, relative to their portfolio performance. This is particularly useful as it will then offer suggestions and will recommend Financial Advisors who are within your locality who can offer a better level of performance and more competitive fees. Anyone who is listed as a recommended Advisor on the site has been fully verified and vetted by SigFig beforehand, and they are required to sustain performance standards in order to retain their place on the SigFig platform.
SigFig Portfolio Manager
In order for SigFig to optimize your portfolio, they will undertake a deep analysis using a system called SigFig Scores. This looks at a number of factors before ascertaining any recommendations. It considers fees, risk, asset class, third-party ratings, the Sharpe Ratio and the trading costs of your funds. It will then perform an analysis on the historical risk-adjusted returns over the past three years for each specific fund, providing you with data that pertains to any predicted fluctuation along with recommendations for higher-yielding funds. It will also deliver you information about any opportunities to lower your fees and any recommendations it gives will match up with your risk tolerance profile.
If you have a managed account, then this will only invest in ETFs that are commission free, such as iShares, Schwab, and Vanguard. This approach also delivers certain tax advantages as well, which is another reason we like the SigFig approach.
Pros And Cons Of SigFig
- Free Portfolio Tracking. We love the fact that SigFig offers this service for free. You get a handy summary sent to you each week that tells you how your investments are performing. It also tells you the top-performing investments and provides you with a snapshot of investment news alongside your own portfolio’s individual performance.
- Low Minimum Investment. With SigFig, you can get access to their managed service with just $2,000 worth of funds. Compared to others, this is a relatively low investment amount. Competitors like Betterment (no minimum) and Wealthfront ($500 minimum) do a bit better if the $2,000 minimum is an issue.
- No Management Fees up to $10,000. You will not start paying any annual fees with SigFig until you reach the $10,000 mark, anything under that is managed for free. This makes the offering quite appealing to those who want to test their services without first needing to pay any fees.
- Tax Loss Harvesting
- Accessibility. Accessible from Apple and Android devices as well as from the desktop
- Fee-Driven Service. The whole service tends to be fee driven. While it is always good to know that your fees are competitive, where investments are concerned, it should not be the driving force behind all of your decisions.
- Recommendations with High Fees. Speaking of fees, we were surprised to see that SigFig suggested some funds with higher fees when there were other options which were available at a lower cost.
SigFig Summary
The features that SigFig provide can be most similarly found in Personal Capital’s offering. The only exception to this is that the Financial Advisors are via third-parties and not in-house such as is the case with Personal Capital. One of the most commonly reported ways to use this site is as an aggregator of services.
The daily updates, along with the clear and transparent breakdown of the fees give you a good overview of your portfolio. However, one of the really confusing aspects of their service that puts a lot of people off using it relates to the recommended funds. Even though the services are unbiased towards specific Financial Advisors, it does have a tendency to recommend funds with higher fees. This is also one of the reasons that SigFig comes up short in a lot of the independent reviews of the service.
We feel the standout feature of the SigFig offering is the free investment portfolio tracker and the aggregation features. As a service, SigFig creates a very transparent way for Investors to manage their portfolio. The patent-pending algorithms provide a suite of useful and up to date information that allows users to easily compare providers and their fees.
Overall, it delivers great value, and with the low management fees and low deposit amount, it is a great tool that will help you learn about investing and understand the rationale behind the decisions that are made. With the increasingly difficult task of understanding exactly who charges what fees, or where the hidden fees might be, SigFig makes it easy to see who is offering the best deal and provides an easy way to save time which might have otherwise been spent sifting through complex pages trying to ascertain this information.
See the list of the current best Robo-Advisors here.
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