SigFig: A simple way to boost investor returns without the fuss

Founded in 2011, SigFig has gone onto establish itself as a registered investment advisor with over 800,000 customers and a combined total of $400bn in assets under management. SigFig’s main purpose is to help average retail investors analyze and optimize their entire portfolios by ensuring their investment funds, brokers, and advisors are providing the most bang for their buck, and to eliminate many of the conflicts of interests which plague the current advisory industry.

Cut down portfolio fees with SigFig’s optimization algorithms

SigFig’s proprietary algorithms track a variety of portfolio metrics and offer actionable, unbiased advice by suggesting more effective fund alternatives or recommendations to switch to brokerage accounts offering vastly reduced fees. Focusing on these two portfolio metrics alone could help investors significantly boost their overall returns. CoFounder and CEO Mike Sha estimates the average investor could save up to $5000 in fees per year by optimizing their portfolios, a cost saving which could lead to performance gains of between 4-5% on the average portfolio. SigFig’s ability to help investors keep more money in in their own pockets at the expense of Wall Street advisors is a powerful tool in the advisory world, and one which investors of all levels are likely to warm to.

Command and Conquer: Keep Your Portfolio Under a Single Roof

In order for SigFig to work its magic, investors start by importing or syncing all of their existing investment and brokerage accounts and signing up for SigFig’s free “portfolio tracking” feature. All portfolio data is then compiled into an easy to read dashboard overview, outlining a variety of metrics including an investor’s overall account balance, current holdings, as well as benchmarked performance figures against all key U.S stock markets.

The service comes with an easy to use, polished interface typical of modern financial applications and is available on a wide range of mobile platforms which will appeal to investors who like to follow their portfolio under one roof and on the go. The free service also offers a variety of streaming quotes, and market news tailored to an investor's holdings and sectors of interest.

In short, the free tracking service will appeal to investors with multiple broker accounts and who want a clear snapshot of their holdings in a single package - nothing revolutionary, but something the service does well. Investors wishing to take SigFig’s service one step further can sign up for one of their manage solutions, and in all honesty it is only at this stage where the real benefits of the SigFig service come to the fore.

Stay optimized and up to date with SigFig’s Managed Account Solutions

SigFig offers two managed account options for users of its service, a “Diversified Income” plan which will appeal to investors with large fixed income portfolios, and an “Asset Management” plan which aims to implement all portfolio recommendations on the investor’s behalf. The “Asset Management” option will have the widest appeal to investors, allowing them to leverage SigFig’s “report card” feature which uses proprietary algorithms to assign “SigScores” based on a five star rating system to key aspects of investor’s portfolio including diversification, fees, and return. Should any of these key areas fall below five stars, investors can run the optimize feature which attempt to maximize the efficiency of an overall portfolio based on an investor’s risk tolerance and several other factors.

The process is straightforward, with investors required to complete a short questionnaire before the platform’s algorithms spring into action attempting to maximize returns in the most cost efficient way. The “Asset Management” account will continue to optimize the investor's portfolio automatically, so even the most broker adverse investor can relax knowing their portfolio is being managed as effectively as possible. Account minimums for the “Diversified Income” plan start at $100,000, with the service aiming to optimize an investor’s portfolio of fixed income assets including CDs, corporate bonds, and treasuries. The “Asset Management” plan has an account minimum of just $2000 which is an extremely low hurdle rate to gain access to a professional advisory service.

Obtain Actionable advice at an affordable price

Like most other startups involved in the FinTech space, SigFig’s fees for their advisory services are extremely competitive, ranging from a yearly fee of 0.25% to 0.50% of total assets for their managed solutions, to a portfolio tracking service which they offer free of charge. The managed solutions include a “Diversified Income” option which strives to optimize an investor's fixed income investments including bonds, CD’s, treasuries, and other income producing assets with a minimum investment if $100,000.

The other option is a full managed “asset management” service which automatically optimizes and rebalances a portfolio based on the investor’s risk tolerance. The minimum deposit for the “asset management” service is just $2000 which is extremely low by traditional stands in the professional advisory market and will undoubtedly appeal to a investors with smaller accounts looking to make the most out of their money.

Summary

In summary, SigFig gives power back to the average investor by creating a more transparent playing field from which to manage their portfolio. The powerful suite of algos within the service provide investors an “apples to apples” comparison of the different products and services on the market allowing them to optimize their portfolio in a cheap and efficient way, and ultimately boosting annual returns.

While SigFig's current incarnation may lack some tools demanded by more sophisticated investors, the powerful suite of analytics and low account minimums should create a fair deal of value for everyday retail investors in drastic need of optimizing the cost structure of their portfolio. Given how hard won most returns are in the market these days, SigFig’s service offers retail investors a welcome way to cut through the various layers of hidden fees and performance charges applied by brokers - and that can only ever be a good thing or investors.