When it comes to robo-advisors, both SigFig and Betterment offer a range of products and features to help you build your investment portfolio. The company you choose should ultimately align with your current financial situation, along with your retirement and investment goals. Because the account balance minimums, features and management fees vary for each, it’s important to understand how the two companies compare. Below, we analyze the SigFig vs. Betterment match-up and assess how they differ.
Who Should Use SigFig?
SigFig is a robo-advisor that provides online investment services for its users. One of its key perks is that it offers you free management on small balances. For instance, SigFig will manage the first $10,000 you invest for free. After this, you’ll pay 0.25% for its investment services. In addition, it also provides a free online portfolio tracker.
SigFig also functions a bit differently than other popular robo-advisors. Instead of direct management of an individual investor’s money, SigFig allows you to connect your third party brokerage accounts into its Asset Manager service. SigFig partners with three financial institutions: Charles Schwab, TD Ameritrade and Fidelity. This is where the Asset Manager service comes in. If you’ve already got existing brokerage accounts established with any of these institutions, your money will stay there. However, if you want to use SigFig but don’t have an account opened with any of its partners, SigFig will charge you extra fees to open an account with one of them.
While SigFig has many perks, its account balance minimum isn’t the easiest to clear when compared to other robo-advisors. For instance, in order to establish an account, you’ll need at least $2,000 to deposit. This is significantly higher than the minimum balance for other advisors. Betterment, for example, requires $0 to open its most basic account. SigFig also falls short when it comes to available brokers. Again, you’ll have to have an account with one of three banks to use the service.
If you already have an account with any of the three banks that Sigfig partners with, or you don’t mind opening a new one, SigFig’s free portfolio tracker and low-cost portfolio management may be worthwhile. You’ll have to keep the account balance minimum and broker list in mind, but you’ll ultimately receive low-cost investing in return.
Who Should Use Betterment?
Betterment is one of the top robo-advising services in the U.S. With more than $10 billion in assets under management and no account minimum, the company functions as one of the most widely recognized online investment companies. Plus, it also offers what’s called tax-loss harvesting. The automated tax-loss harvesting feature basically minimizes users’ tax liability when selling securities.
Betterment also offers another great perk, but it comes with a price. This is its live financial advisor feature. Betterment’s live financial advisor tool matches users with a certified financial planner (CFP) as long as they’ve got at least $100,000 in total assets. Users who meet this criteria can speak with CFPs over the phone. But users who don’t have $100,000 in assets can also communicate with financial advisors. They can only do so, however, through in-app messaging.
Overall, Betterment is a great choice if you’re looking to open an account with no minimum investment. It’s also ideal if you want to have your investment portfolio consistently monitored. They’re also a great choice because they offer an easily navigable user interface. So if you want a low-cost robo-advising service with automated portfolio management and rebalancing, Betterment is a solid choice.
SigFig vs. Betterment: Products Offered
In the SigFig vs. Betterment match-up, both provide easy robo-advisor access. While the two services can ultimately help you build and transform your investment portfolio, the services and accounts they offer differ.
The products SigFig offers include its free online portfolio tracker, an automated rebalancing feature and two account options for balances below and above $10,000.
Betterment offers its Betterment Digital and Betterment Premium options. In addition, the company also provides Betterment Digital for no minimum account balance. The Betterment Digital account also requires a management fee of 0.25% with any balance up to $100,000. The company also supports 401(k)s, SEP or Roth IRAs and trust investing accounts. But if you prefer direct indexing, which reduces taxes on taxable accounts, Betterment may not be a feasible option for you.
Betterment offers includes its automated tax-loss harvesting tool, SmartDeposit, RetireGuide, the financial advisor service and its comprehensive user interface. The SmartDeposit feature allows Betterment to take “excess” money out of your checking account to put toward your investments. But don’t worry. You get to designate the maximum amount of money you want Betterment to take out of your checking account.
SigFig vs. Betterment: Fees
When it comes to fees, SigFig doesn’t charge transaction, commission or trade fees. In addition, the management fee for accounts with balances between $2,000 and $10,000 is $0. However, for account balances of at least $10,000, the yearly fee is 0.25%. So if you stay below $10,000, you won’t have a yearly management fee.
Betterment, on the other hand, doesn’t charge rebalancing, trade or transfer fees. The annual fees that come with Betterment depend on your account balance. For instance, those using Betterment Digital pay an annual fee of 0.25%. Those using Betterment Premium, however, must maintain a balance of at least $100,00 and pay a yearly fee of 0.40%. Furthermore, there’s no fee for having a $0 balance, and the additional fees paid are associated with Betterment’s investment funds.
Both SigFig and Betterment provide a range of online investing products and features, but the fees, account balance minimums and terms differ for each. SigFig can be a solid option if you’ve already opened a bank account with one of their partners. SigFig is also good for those who value low fees and free portfolio tracking. Betterment, however, might be the better choice if you’d like to establish your portfolio at any account balance. Its low-cost robo-advising and financial advisor service provide you the most bang for your buck. But you know your financial goals better than anyone, so make sure to weigh both companies before making a final decision.
Tips for Investing
- Before deciding which robo-advisor to invest with, it’s important to ask yourself whether you need such an investing service. Is it more reasonable for you to manage your own portfolio, or would you benefit from automated online portfolio management?
- If you’d like additional help with managing your investments, you should also consider hiring a financial advisor. A financial advisor can get you on track with your savings and investment goals. This way, you’ll have an exact plan for growing your wealth. SmartAsset’s financial advisor matching tool can help you find an advisor to work with who meets your needs. First you’ll answer a series of questions about your financial situation and goals. Then the program will pair you with up to three advisors in your area based on your answers. You can then read the advisors’ profiles and interview them to choose who to work with in the future. This allows you to find a good fit while the program does much of the hard work for you.
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