Who's it for?
If you’re a do-it-yourself investor (can’t stand to watch fees hijack your money?) then SigFig might be a perfect option for you.
What SigFig offers
SigFig, like many robo advisors, offers low fees through exchange traded funds (ETFs). What SigFig does is act as the conduit between you and your broker. This is different compared to traditional robo advisors, which allow you to invest directly with them.
SigFig offers joint and individual accounts, as well as IRAs (Roth, Traditional, Rollover, SEP, and SIMPLE IRAs are included in that mix).
As far as asset allocation goes, SigFig offers the following combinations:
- U.S. stocks
- Developed markets
- Emerging markets stocks
- Real estate
- U.S. bonds
- Treasury inflation-protected securities
- Municipal bonds
- Emerging market sovereign debt
- U.S. Treasuries
Free portfolio analysis
SigFig offers a free portfolio analysis for anyone who’d like to analyze his or her current investments. You don’t have to invest with SigFig to do the portfolio analysis, but you do have to create a login and password and sync your current accounts. You’ll also take a risk tolerance quiz (it’s quick) and based on your answers to that and what you have in your accounts, you’ll be able to quickly deduce whether you’re on the right path with your current investments. It’ll cover:
- Your asset allocation
- Stock-bond split
- Expense ratio
- Geographic diversification
- Cash drag
- Single stock exposure
As you can see in the example below, the overview clearly outlines the type of portfolio in which you should invest, then goes on to recommend how SigFig can help you. The free analysis offers a simple layout, and its great advice makes it well worth your time. However, you can’t find every broker under the sun; the analysis only works for a set group, including big-name brokerages such as Vanguard, E-Trade, Merrill Lynch, Edward Jones and more, though it’s not an exhaustive list.
Sigfig's free portfolio analysis
To set up a managed account through SigFig, you’ll be asked about your investment goals, review a recommended SigFig portfolio, fund your portfolio, and then will offer summary reports and regular updates on your funds.
A benefit that comes along with your managed account, you’ll be able to be connected with an advisor who can work with you on your individual investment goals. SigFig makes its advisors accessible for free, which is slightly unusual among robo-advisors. With other robo-advisors, you’ll typically have to invest a lot of money or pay a management fee in order to have access to investment advisors.
Commissions and fees
If you choose to go with a managed account with SigFig, your first $10,000 will be managed for free (the minimum balance is $2,000). For amounts in a managed account over $10,000, the fee is 0.25% annually.
SigFig offers a sliding scale on its website, which explains the fees involved, depending on the amount you’ve invested. For example, a $20,000 investment would cost $21.67 a month in fees with a traditional advisor, whereas it would cost $2.08 a month to invest $2,000 with SigFig.
The ETFs included in your portfolio are commission-free. The exact mix of ETFs will depend on your time horizon, risk tolerance, and other factors.
Platforms and tools
The entire website is easy to use, is very straightforward in its design and offers a lot of interactive opportunities. At the very beginning, you can fill in the blanks, and what you choose to fill in is used to create your profile:
- I am ___ years old and I want to invest for the _______________ term.
- My household income is $___________ of which I save ______%.
- My liquid assets are worth $__________ and my risk tolerance is (choice between very low, low, moderate, high, very high.)
No part of the website is wasted. It’s all used toward helping you manage your money well, as you can see from the three panels below.
SigFig’s team knows customer service. In fact, SigFig’s website says, verbatim:
A friendly SigFig team member is here for you:
- Live Chat on the SigFig site (Monday-Friday, 6AM-6PM PT)
- Phone at 1-855-9-SIGFIG (Monday-Friday, 6AM-6PM PT)
- Email at email@example.com
- Or schedule an appointment with our Financial Consultant here
Ease of use
SigFig is easy to use, which is part of its appeal. It takes the complex process of your unique situations and distills it into concrete options that fit your situation. (Note: If you’re wondering how that works, SigFig uses the Sharpe ratio, or standard deviation to measure a fund’s risk-adjusted returns. The higher a fund’s Sharpe ratio, the better a fund’s returns have been relative to the risk it has taken on. Because it uses standard deviation, the Sharpe ratio can be used to compare risk-adjusted returns across all fund categories.)
SigFig also takes advantage of tax loss harvesting, a trading technology that utilizes features of the tax code in an attempt to reduce your tax liability. SigFig may elect to sell holdings with losses to offset any realized gains, thus lowering your tax liability.
It’s commonly understood that if you sell stocks or funds that have appreciated in your taxable account, you will generally pay taxes on your capital gains. On the other hand, if you sell assets that have lost value, those losses can offset the impact of any realized gains.
Ultimately, it may strike you as strange not to go directly to the source when it comes to investing, but if you’re into the gorgeous overview and easy-to-understand projections of what it’ll mean to you to invest a certain way, SigFig could be an option for you as a great tool to have in your arsenal when planning your very personalized financial goals.