Thus, from the start, SigFig’s platform has been more of a managed accounts platform than a pure-play, standalone roboadvisor. The firm forged partnerships with major brokerages like Schwab, Fidelity and TD Ameritrade.
“We felt like the vast majority of our users, like 80-90%, had portfolios that could be optimized and better managed,” said Sha. ”So we built out what the world likes to call roboadvice. The thing we did quite differently is predict that this is going to be a huge trend over the next four to five decades, and it’s probably going to permeate the financial industry not just in terms of disruptors and new startups adopting tech, but also major players who need better technology to manage investments going forward.”
SigFig’s roboadvisor has consistently won plaudits, most recently being named the best performing roboadvisor in Backend Benchmarking’s Robo Report and Robo Ranking for the second quarter.
Today, SigFig’s direct-to-consumer service comes with a $2,000 account minimum. The servce has no management fee on the first $10,000 invested, after that, it charges a 0.25% annual fee, but users are also given access to live advisors. The offering serves $835 million in assets in over 18,000 user accounts – but its institutional offerings serve many times more than that, with exposure to over a trillion dollars in invested assets.
Beyond Robo
Sha points out that in the early days of roboadvisors, most people thought of them as a new product, channel, segment and audience – it was investing for young people, mostly millennials, who only wanted to engage with their finances via a mobile device – but for SigFig, the roboadvisor is just the tip of the iceberg. Like many advisors, the company has recognized that most of the world’s wealth is not held by millennials, thus it has increasingly sought to work with institutions and intermediaries.
While SigFig has continued to serve clients via a direct-to-consumer roboadvisor, a legacy of its days as Wikinvest, Sha and his partners have also built out an enterprise business-to-business solution to allow institutional partners to integrate its technology for advisors’ use, or offer a white-label version of its roboadvisor to their customers.
Putting roboadvisor-like technology in the hands of advisors and institutions helps to create a higher quality client experience, said Mercurio, and also offers firms the opportunity to streamline their operations.
“Legacy advisor platforms are really optimized for face-to-face conversations, in an office, around a desk or conference table, with the client facing the advisor,” said Mercurio. “In the pandemic, that distribution approach is completely thrown upside-down, and advisors are trying to figure out how they engage with clients remotely and asynchronously – how do they continue a conversation through a portable method of communication that allows clients to contact them when convenient, and allows them to be immediately available to clients when they are needed?”
Early on, the company’s institutional clients white-labeled the SigFig roboadvisor to serve consumers directly, said Mercurio, building the investing capabilities into their core banking services.
In time, advisors at those institutions demanded similar technology for their own practices.