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Digital Wealth Management<br />
Mike Sha, SigFig<br />
“We saw an<br />
industry rife with<br />
high fees, opaque<br />
pricing, and<br />
complex products<br />
that required<br />
aggressive sales<br />
tactics and only<br />
targeted very<br />
wealthy clients,<br />
and we sought to<br />
change it by<br />
democratizing<br />
access to<br />
inexpensive, highquality<br />
passive<br />
advice.”<br />
Mike Sha<br />
SigFig<br />
What was the vision behind founding SigFig?<br />
Mike Sha is Co-Founder and CEO of SigFig, a digital wealth advice platform<br />
that helps everyday people invest better, with asset management services<br />
as well as a portfolio tracker that tracks hundreds of billions of dollars of<br />
assets. Prior to SigFig, Mike held senior roles at Amazon, where he<br />
launched and built the Amazon Visa Card into one of the fastest growing<br />
consumer loyalty cards in history, was one of the original inventors of<br />
Amazon's Prime program, and built sophisticated fraud detection models<br />
that leveraged statistical data analysis in preventing online fraud.<br />
SigFig was founded based on the very simple belief that intuitive, easy-to-use technology could help Americans invest better. We<br />
saw an industry rife with high fees, opaque pricing, and complex products that required aggressive sales tactics and only targeted<br />
very wealthy clients, and we sought to change it by democratizing access to inexpensive, high-quality passive advice.<br />
What are the problems you see with the traditional wealth management industry?<br />
Only approximately 5% of Americans have enough wealth to attract quality financial advisors, and all American investors have been<br />
marketing active management products that research suggests only enrich the managers with fees that are not justified by any<br />
consistent historical outperformance. Moreover, there was a distinct absence of excellent digital experiences available to even those<br />
clients who worked with highly-compensated advisors; the industry had not yet begun to provide high-quality digital experiences.<br />
How do you balance any competitive tensions both serving consumers directly and providing an enterprise<br />
platform for financial institutions?<br />
We seek out partners who have the same philosophical bent towards prioritizing the customers’ well-being and being completely<br />
transparent about fees to avoid any tension.<br />
Describe the process from beginning to end for a consumer to have a personalized portfolio built by SigFig.<br />
What is your philosophy around what types of underlying investment vehicles you use to build portfolios?<br />
Our investment committee selects exchange traded funds with the lowest overall expense ratio, lowest possible tracking error vis-àvis<br />
the relevant benchmark, and greatest liquidity available in order to satisfy the asset classes that our investment algorithm has<br />
determined will create the blend between the ‘market portfolio’ and the risk-free rate advocated by modern portfolio theory. In order<br />
to determine the appropriate allocation between the market portfolio and the risk-free rate, our clients take an online Risk Tolerance<br />
Questionnaire (RTQ), which reveals their capacity and willingness to take on risk.<br />
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