Whether you’ve got $2,000 (the required minimum) or $200,000, SigFig’s low fees are its major attraction. This robo-advisor turns out tax-efficient, diversified portfolios for free if your portfolio cuts under $10,000. If you’re over that, it’s only 0.25% annually.
- Portfolio tracking
- Tax loss harvesting features
- Diversification of investments
- Free annually for first 10k managed
- Free current portfolio review
- Superior technology
- Limited investment platforms available
- Reports of broken syncing with brokers
Who Uses SigFig?
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:
Get a Free Portfolio Analysis from SigFig
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.
Setup a Managed Account with SigFig
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.
SigFig Advisor Connection
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.
SigFig 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.
SigFig Platform 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 3 panels below.
SigFig & Its Ease of Use
SigFig is easy to use, which is part of its appeal. It takes the complex process of your unique situation 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.)
Check Out SigFig Today
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.
Frequently Asked Questions
How much money do I need to invest in ETFs?
You can buy a share of any number of ETFs for as low as the price of a share. You will likely pay commission, so it’s wise to have a few thousands dollars ready to invest. Prepare yourself to keep that money invested for several years.
Some ETFs don’t charge trading commission. You could take advantage and buy a single share at a time with no additional costs.
What risks are there with ETFs?
There are always risks inherent with any investment. Perhaps the biggest risk in ETFs is market risk. Like a mutual fund, ETFs are just an investment vehicle. If you buy an S&P 500 ETF and the S&P 500 goes down 50%, nothing about how cheap, tax efficient or transparent an ETF is will help you.
Other risks like complex exposure, tax and counterparty risk are present also. Before you dive into any investment, discuss the risks and rewards with your financial professional.
It took months for them to set up my account properly. They underperformed compared to other robo advisors. I went to manage my account and they decided at some point to stop managing my account without notifying me. Their website and apps are buggy af
Jerry E Goldress
No connection to Merrill Lynch