While there’s still a lot of skepticism about online advice — especially regarding so-called “robo-advisors” — Sigfig, a San Francisco-based newcomer, made a big splash when the leading online financial site, Yahoo Finance, announced that they will be partnering with them. The list of Sigfig’s partners is impressive (including CNN Money, USA Today, AOL and Forbes), giving the firm access to 100 million monthly users. Yahoo was looking for ways to keep users on their site longer and chose to co-brand with Sigfig to provide customized portfolio management and advice. Users can sign on to get a customized home page, dashboard, stock alerts and even recommendations.
Though Sigfig boasts $200 billion of assets, their ADV shows that their RIA has only $46 million under management. They recently raised an additional $20 million of capital and have 40 employees, mostly engineers; a senior Financial Engines exec was hired to run operations. Sigfig can get paid in a number of ways: brokerage firms working with them pay Sigfig if a client uses their services; advisors in their network pay a 20% referral fee in perpetuity (there are currently 50 advisors in the network); or users can pay SigFig $10 a month.
Sigfig’s founder came from Amazon, where he helped build their credit card payment system. Currently, few wire houses or advisors — who Sigfig says they are going after — are huddling to devise a strategy to combat them. Nonetheless, access to 100 million users monthly and the branding of top online financial sites gives Sigfig an opportunity to go mainstream, which sets them apart from most other robo-advisors and makes them a firm to keep an eye on.
