Review of: SigFig
Reviewed by: Larry Ludwig
Last modified: December 13, 2017
SigFig is a robo advisor service that offers asset management, diversified income, and portfolio tracking. Altogether, SigFig itself isn't a bad service, and its Portfolio Tracker is free. But the recommendations it makes seem simple at best. There are other robo advisors available with more functionality.
Back in 2006, two enterprising “techies” named Parker Conrad and Michael Sha created a website called “Wikinvest.” They applied the function and design of a “wiki” page to create the simplified online portfolio manager. This picked up a few awards and mentions, including a spot on Time magazine’s 2010 list of best websites. In 2012, Wikinvest evolved into SigFig, a registered investment advisory service with a few new functions and capabilities. Here’s our review.personal
SigFig is a robo investing platform that works using third-party investment brokerage accounts. That is, it provides the service while your account is held at Charles Schwab, Fidelity or TD Ameritrade.
The company’s investment strategies work to analyze, monitor and improve any portfolio, automatically balancing and diversifying investments while reducing risk and minimizing fees. SigFig’s goal is to be a middleman between retail investors and advisors while offering you options to stay on top of your investment portfolio.
SigFig offers three tiers of products:
- Portfolio Tracker — A free tracking tool that aggregates your entire investment portfolio in one place. Cost: free. Minimum investment: none.
- Asset Management — Keep your portfolio balanced and diversified while maximizing your investment earning potential. Cost: 0.25% annual fee. Minimum investment: $2,000.
- Diversified Income — Make the most of your CDs, bonds, U.S. Treasuries and bank interest rates in this low-rate environment. Cost: 0.50% annual fee. Minimum investment: $100,000.
Once you’ve linked all of your investment accounts, SigFig gives advice and shows the performance of your entire portfolio.
The Holdings section of the site could be very useful if you have multiple accounts with different brokers (and who doesn’t?). The functionality is very similar to Quicken. SigFig gives a great bird’s-eye view of your complete portfolio.
Within SigFig, you can import only brokerage firms. Unlike with Mint.com or Personal Capital, you can’t manage your credit card or checking accounts. So it may not be the best app aggregator for all your financial accounts.
|Fees||First $10k managed free; 0.25%/year for $10k+; 0.50% for Diversified Income Portfolio|
|Tax Loss Harvesting||— All Taxable Accounts|
|Automatic Deposits||— Daily, Weekly, Monthly, Bimonthly and Quarterly|
|Socially Responsible Investing|
|Access||Website, iOS App, Apple Watch, Android App|
|Customer Service||Phone: M–F 6A–6P PT; Live Chat: M–F 6A–6P PT; Email|
- Tax Loss Harvesting (TLH) — SigFig offers this feature, which has become increasingly common among robo advisors. But SigFig takes a more holistic strategy with investment tax consequences. In addition to TLH, it also provides tax-optimized sales (strategies to minimize taxes from rebalancing) and tax-efficient migration (income-generating investments are held in tax-sheltered accounts). SigFig also engages in “whitelisting” when you first open an account. That’s a process whereby investments that you already hold in your portfolio are retained, as long as they are close to the SigFig allocation. This minimizes the capital gains taxes that might result from SigFig completely revamping your existing portfolio. TLH requires a minimum account balance of $10,000.
- SigFig Mobile Apps — SigFig currently has apps for iPhone, iPad, iTouch, Apple Watch, Android and Windows 8 tablet. For this review of SigFig, I tested the iPhone app.
Once you set up your account via their website, it’s pretty easy to set up on your mobile device too. The mobile app functionality is very similar to the desktop version, which is why we named it one of the best investment apps for smartphones.
- Automatic Dividend Reinvesting — Dividends are automatically reinvested. And new cash contributed to the account is also invested for you. The intent is to minimize “cash drag” by keeping your account fully invested at all times. The account will hold only enough cash to pay the management fee.
- Account Security — SigFig manages your account, but it does not actually take custody of the funds. Your account is actually held through either Fidelity, Schwab or TD Ameritrade. Each of those brokers maintains coverage through SIPC. That means that your account is protected for up to $500,000 in cash and securities (including $250,000 in cash) in the event of broker failure. (SIPC coverage does not extend to losses due to market factors.)
According to Gregg, a representative of the company, analyzing data from $350 billion in tracked assets led to the discovery that 90% of investors in the service had costly problems, from cash flow drag to poor diversification. In an effort to rectify this, SigFig launched a feature called SigFig Guidance.
This is a free automated tool that uses findings from investor data to optimize your portfolio in minutes and find ways to help you stop losing money. By simply connecting any investment account to SigFig, SigFig Guidance instantly diagnoses common problems and offers unbiased, personalized recommendations for how to manage risk, improve returns and lower fees.
Just like FutureAdvisor, SigFig connects to existing accounts; most of the other robo advisors require investors to hand over cash in order to properly invest. It takes only three minutes to analyze your portfolio, identifying common investor mistakes.
Here’s how it works:
- Enter the credentials for your investment accounts and answer the questions on the risk assessment questionnaire.
- Guidance analyzes your portfolio and drills down to compare and contrast current allocations.
- Your report flags problematic aspects in your investments and recommends an optimized portfolio that avoids common mistakes.
SigFig’s Three Product Tiers
The Portfolio Tracker feature is completely free and entails getting a weekly email summary of how your investments are doing. This weekly report includes this week’s top movers, the latest portfolio news and a snapshot of your portfolio performance.
Of course, it doesn’t actively manage your portfolio. But it does provide a high-altitude assessment of your holdings on an ongoing basis.
Use of the Portfolio Tracker also comes with access to other SigFig services, including Investment Account Sync, Reporting Dashboards, External Portfolio Analysis and live support (phone and online chat).
This is SigFig’s primary product offering. It includes the following services:
- Investment Account Sync
- Portfolio Tracker
- Reporting Dashboards
- External Portfolio Analysis
- Live support (phone and chat)
- A free consultation with an investment advisor to discuss your investment strategy
- Personalized Portfolio Allocation
- Cash Optimization (to minimize “cash drag” on invested funds)
- Automatic rebalancing
- Automatic reinvestment
SigFig Asset Management requires a minimum investment of $2,000, with an annual advisory fee of 0.25%. However, the first $10,000 is managed for free.
The Asset Management investment mix is comprised of the following asset classes:
- Treasury Inflation-Protected Securities (TIPS)
- U.S. bonds
- Short-term U.S. Treasuries
- Emerging market debt
- U.S. municipal bonds
- U.S. equity
- Developed market equities
- Emerging market equities
- real estate
Each asset class will be represented by a single exchange traded fund (ETF). The ETFs are commission-free and selected from Vanguard, Schwab and iShares. The exact mix of ETFs will depend upon the brokerage account that you have. For the most part, there will be a set of ETFs unique to accounts held at Fidelity, Schwab or TD Ameritrade.
SigFig Diversified Income Portfolio
This portfolio is one of the features that sets SigFig apart from other robo advisors. The portfolio is invested in income-generating assets and attempts to generate a 4% annual return in relatively safe investments. The portfolio is invested in between eight and 12 ETFs, but the overall portfolio is actively managed.
The asset classes represented by those ETFs include:
- International developing market real estate
- High-dividend equities
- Preferred stock
- S&P 100
- Emerging market fixed income
- Floating-rate bonds
- High-yield bonds
- Investment-grade bonds
- Mortgage-backed securities
- U.S. Treasuries
The portfolio is targeted toward clients with larger portfolios and has a minimum investment requirement of $100,000. The annual investment management fee is 0.50% of your average portfolio value.
|Fees||First $10k managed free; 0.25%/year for $10k+; 0.50% for Diversified Income Portfolio||Digital – 0.25%/year; Premium – 0.40%/year||First $10k managed free; 0.25%/year for $10k+|
|Promotions||None||Up To 1 Year Free||$15k Managed for Free|
|Review||—||Read the Review||Read the Review|
How to Open an Account With SigFig
To start, we suggest trying out the Portfolio Tracker for free. It takes about 60 seconds to create a new account and input your brokerage information.
You will then be taken to the “Overview” section, where you can either add more accounts to your portfolio or see all of your investments at a glance. SigFig will show your overall balance and current holdings, as well as the U.S. stock market ratings of assets in your portfolio.
Below this, you’ll see a breakdown in which you can select “View Holdings” to see all the details. If you click on the “Report Card” tab, you’ll see the current standing of your portfolio and how it stacks up to the market.
Take it one step further and optimize your portfolio with suggestions based on your risk tolerance and several other factors. This process takes only a few seconds to complete, as you’ll be asked a series of questions, including:
- Your age
- Your investment time horizon — less than five years, five to 10 years, or 10-plus years
- Your household income
- The amount of your income that you save
- The amount of your liquid assets
- Your risk tolerance
You’ll then be asked to do a self-evaluation that will determine your risk tolerance. You’ll be asked a series of questions that will determine your reaction to losing money in your portfolio. That will enable SigFig to more precisely optimize your portfolio allocations.
Pros and Cons
- Free Portfolio Tracker — The portfolio-tracking feature is completely free to use.
- Free Portfolio Review — SigFig's expert financial advisors provide complimentary portfolio reviews.
- No Annual Fee Under $10,000 — Your first $10,000 in managed funds are handled without the regular annual fee.
- Competitive Management Fees — The management fee of 0.25% matches that charged by robo advisor competitors Betterment and Wealthfront and is better than TD Ameritrade Essential Portfolios (at 0.30%), Fidelity Go (at 0.40%) and Wealthsimple (at 0.40% an 0.50%).
- Investment Diversification — Your portfolio allocation includes real estate, in addition to stocks and bonds.
- Tax Loss Harvesting — This is a particularly strong feature for SigFig. It goes beyond tax-loss harvesting to include tax optimized sales, tax-efficient migration and whitelisting.
- Inaccurate Advice — The recommended portfolio advice is just OK, as it can be very inaccurate.
- Recommended Funds With High Fees — In our testing, some of the recommended funds were high in fees, whereas some of the other available funds were lower in cost.
- High Fees on the Diversified Income Portfolio — The fee of 0.50% is extremely high, especially since it’s an income-oriented portfolio.
- Limited Investment Platform Options — You must use Fidelity, Charles Schwab or TD Ameritrade. So if you’re currently investing through Ally Invest or E*TRADE, which have lower commissions, you’ll have to move your account.
Using SigFig as an aggregator is great, and the comparison features, daily updates and fee breakdown really give you a good sense of your portfolio. However, while SigFig’s financial advisors may be unbiased, the service does recommend funds loaded with fees.
Also on the downside, SigFig’s calculations do not take into account a longer time frame and rely too much on the Sharpe Ratio for future performance. The recommended portfolio advice is just OK, as it can be very inaccurate if taken at face value. And the recommendations seem to focus on the previous performance of the various ETFs or mutual funds you own, rather than a good asset allocation mix.
Along with the Portfolio Tracker, the Diversified Income Portfolio is one of the most compelling features offered by SigFig. It provides an opportunity to earn above-average returns in relatively low-risk investments. It’s a definite niche in today’s low-interest-rate environment. The caveat on this portfolio is, of course, the fee structure. At 0.50%, it can represent a significant reduction in a portfolio that’s expected to produce only moderate returns.
We would recommend using SigFig for the aggregation features and not so much for the recommendations.