SigFig offers several services to individual investors to help them invest for a more secure future, but their primary market is partnering with financial institutions to provide a financial management platform. Individuals can take advantage of the SigFig site’s features, including a powerful portfolio checkup tool that incorporates data from more than 80 online brokers and banks in order to show you where you can improve your investing performance.
To get started, you enter your age, your annual household income, and a date range for the time period during which you want to cash in your investments. There is a short questionnaire that is designed to determine your attitude towards risk. SigFig’s portfolio analysis feature securely connects to your existing brokerage accounts, imports your current holdings, and then presents you with a plan to improve on your returns. This feature connects to most online brokers. We found that it cannot import positions from brokers that allow you to hold fractions of individual stocks, however, such as Motif Investing and M1 Finance.
The portfolios SigFig recommends consist primarily of low-fee exchange-traded funds. You can place the transactions yourself in your existing brokerage account, or move your investing accounts into one of the brokerages with which SigFig partners, and let them do the work.
When you hire SigFig to be your robo-advisor, the initial rebalancing of your portfolio is done with the goal of minimizing the tax consequences. Since the portfolios that SigFig designs seldom hold single stocks, closing out those positions can increase your taxable income. The algorithm sometimes lets you continue to hold onto certain individual stock positions, if only to avoid tax consequences.
Once you’ve signed on as a SigFig customer, you can talk to a financial advisor whenever you’d like. SigFig has partnered with three of the behemoths in the brokerage industry: Fidelity, TD Ameritrade, and Charles Schwab. If your account is already with one of those brokers, getting started with a managed account is fairly simple. If your assets are held elsewhere, SigFig will help move your account into one of their three partner brokerages.
SigFig’s portfolio analysis of your existing positions is intended to highlight those holdings that are hurting your returns by charging high fees, as well as whether lack of diversification or unbalanced allocations are holding you back. The site quickly produces a list of ways to improve your returns, from getting rid of expensive mutual funds to investing all of your cash. SigFig also points out where your geographic investment distribution is off kilter, and whether your portfolio is overly concentrated in a particular asset class, such as U.S. stocks. The algorithm also points out where you’re doing the right thing, such as being diversified across many companies rather than being overly concentrated in just a few individual stocks.
You can have SigFig manage an entire brokerage account or just a portion of it. You’ll be charged the management fee only for the balance that SigFig is handling for you.
SigFig’s mobile apps, available for iOS and Android devices, have the same look and feel as the website, so you can keep up with your investments wherever you are.
Since you’re entering your credentials for your online investing accounts onto a third party site, this is a natural worry. SigFig uses a high level of encryption to protect your information. The firm assures customers that: “Any information you provide to SigFig, or that SigFig collects, will be safely stored and protected by our tried and tested security tools.”
SigFig charges a management fee of 0.25% annually for any amount over $10,000 in your account, billed monthly, for its services. If your account has $100,000 in assets under management, you’ll pay 0.25% of $90,000, divided by 12, or $18.75, each month.