Sigfig Review: Free financial advice rocks
Updated: Mar 3
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Investing in the stock market can be an intimidating task, especially for beginners. However, with the advent of technology, online investment platforms have made it easier for individuals to invest and manage their portfolios. One such platform that has gained immense popularity is SigFig.
How does Sigfig Score:
Cost and Fees: 9 out of 10
Security: 8 out of 10
Ease of Use: 8 out of 10
Features and Tools: 9 out of 10
Overall: 9 out of 10
What is Sigfig?
SigFig is a digital investment platform that aims to help investors make informed decisions about their investments. The platform was founded in 2011 and has since grown to become a leading investment platform with over $835 billion in assets under management.
The platform uses sophisticated algorithms to analyze your investment portfolio and suggest improvements based on your financial goals and risk tolerance. SigFig also offers a suite of investment services, including automated portfolio management, tax-efficient investing, and personalized financial planning.
They offer a fee-free account of up to $10,000 (with an account minimum of $2,000). In addition to their robo-advising and reasonable account requirements, they offer unlimited access to human financial advisors. You won't find that offer with any other robo-advising companies so this really is a key benefit that sets them apart from their competition.
How does Sigfig work?
Sigfig works like most other robo advisors. They allow computer modeling to determine how to allocate your retirement account for growth and security. This is based upon inputs you control such as risk tolerance and timeline.
In addition, they utilize the Modern Portfolio Theory within their software. MPT can be summarized by saying each investment is considered for how they impact the entire portfolio. Other investment strategies focus on an individual stock/bond/etc and how that individual item performs in isolation, but MPT cares about the impact on the portfolio as a whole.
This methodology is neither good nor bad, but simply a guidepost for how decisions about your portfolio are going to be made by Sigfig's software.
Sigfig Pricing
Sigfig is awesome when it comes to cost structure. The first $10,000 you have invested with them is free of fees. After that, you pay a 0.25% fee for managing your portfolio. Compared to Betterment it is slightly better as they charge 0.40% after you have $100,000 invested. And Wealthfront which has the same fee structure.
Sigfig does have a minimum investment level at $2,000 so that is a bit of a downside if you are looking to just test the waters and find the right robo advisor for you.
Pros of Sigfig
Low Fees:
SigFig's fees are relatively low compared to traditional financial advisors. The platform charges an annual advisory fee of 0.25% of your account balance, which is significantly lower than the industry average.
Easy to Use:
SigFig's platform is user-friendly and easy to navigate, making it accessible to beginners and experienced investors alike. The platform offers a range of investment tools and resources, including educational materials and investment insights.
Automated Investing:
SigFig's automated investing service makes it easy to manage your investments. The platform will automatically rebalance your portfolio and suggest changes based on your financial goals and risk tolerance.
Professional Investment Management:
SigFig's investment management team includes experienced financial professionals who will oversee your portfolio and make investment decisions on your behalf. This service is ideal for investors who prefer to have their investments managed by a professional.
Cons of Sigfig
Limited Investment Options:
SigFig's investment options are relatively limited compared to other investment platforms. The platform primarily invests in ETFs, which may not be suitable for all investors.
No Human Interaction:
SigFig's investment management services are entirely automated, which means you will not have direct access to a human financial advisor. This may not be ideal for investors who prefer to have a personal relationship with their financial advisor.
No Direct Stock Purchases:
SigFig does not offer direct stock purchases, which means you will need to invest in ETFs if you choose to use the platform.
Sigfig Alternatives
How to get started with Sigfig
Setting up an account with most personal finance apps is getting really simple. Creating a user name, password, and linking accounts typically only takes a few clicks and Sigfig is no different. You can have an account set up in about 5 minutes if you have the $2,000 handy.
First, follow this link to open your account. This link will take you to their Home Page. In the top right-hand corner, you can click on the "Invest with Sigfig" button to get your account set up.
As with any personal finance app you are asked a bit about who you are and what goals you have. I always focus my investing for the long term. By the time I am near retirement age I shouldn't be setting up new investment accounts. Retirement age would be the only time I would choose to make short term investments, but I probably wouldn't use a robo advisor for that.
As you can see, always invest for the long term!
I love that they lay it all out there for you right away. You get a clear picture of what your portfolio is going to look like even before you provide them a single dollar. What's more, the offer up time to speak with an advisor before you get any further in the process. A clear sign that Sigfig wants you to feel comfortable that their tools will get the job done.
Setting up an account is as simple as creating a user name and password. Providing your email address assures you get up to date portfolio information in the future.
Now that you have set up the basics it is time to fork over your hard-earned dollars and let Sigfig put it to work for you!
Linking an account is super easy. You can transfer money from a checking or savings account or you can move money from another investment account. Sigfig has every integration you can think of so no matter where your money is, you can easily get it over to Sigfig and start investing with their team.
If you want to skip the funding portion at this stage you certainly can. If you choose that option Sigfig immediately offers the opportunity to speak with one of their consultants. This makes sense, if someone isn't prepared to invest their money it might help them if they can speak with a consultant about Sigfig to ease their concerns.
Once you are ready to commit Sigfig really wants to get to know you. They also want to make sure you and they are compliant with any and all regulations so they will ask about that here as well. The more they know about you the better decisions they can make regarding your portfolio.
After you have set up your account, invested your money, and had it allocated to various investment tools you can take a look at your dashboard and portfolio performance. For many, this dashboard will be a place we check our overall balance and nothing else. Others will want to know where and how their money is being invested. Sigfig provides all of that data and more within their super robust dashboard.
Sigfig Features
Automated Portfolio Management:
SigFig's automated portfolio management service uses sophisticated algorithms to manage your investments. The platform will analyze your investment portfolio and suggest changes based on your financial goals and risk tolerance. The service also offers tax-loss harvesting, which can help you save on taxes by offsetting gains with losses.
Diversified Portfolio:
SigFig uses a diversified investment approach, which means your investments are spread across multiple asset classes, including stocks, bonds, and exchange-traded funds (ETFs). This approach helps to reduce your investment risk by spreading it across different types of assets.
Tax-Efficient Investing:
SigFig's tax-efficient investing service is designed to help you save on taxes by optimizing your portfolio for tax efficiency. The platform will automatically harvest tax losses, which can help offset taxable gains and reduce your tax bill.
Personalized Financial Planning:
SigFig's personalized financial planning service is designed to help you achieve your investment goals. The platform will analyze your investment portfolio and suggest changes based on your financial goals and risk tolerance. The service also offers a range of tools and resources to help you plan for your financial future.
Who can benefit from using Sigfig?
I would use Sigfig if my employer didn't offer a 401k, if I were self-employed, or if I had additional funds to invest and wanted a simple solution that was hands-off. Anyone can benefit from a robo advisor and even more, people can benefit from free access to consultants as long as you make an appointment. I'll say it again, the free consultations Sigfig offers is a HUGE benefit that should be talked about more and really does set Sigfig apart from all the competition in this space.
Summary
Sigfig is a great robo advising tool that utilizes Modern Portfolio Theory to ensure your investments are as safe as you prefer and earning a rate you expect. Their fees are in line or better than their competition, but their minimum investment is a bit high. They definitely separate themselves from the heard by offering unlimited access to consultants.