OpenSSL Security Update

On April 7, a public announcement was made by OpenSSL about a vulnerability in their encryption software. Referred to widely as “Heartbleed,” the vulnerability affects over half a million websites, including many popular ones like Google and Yahoo.

Since many people use the same password across their accounts, our team wanted to bring this to your attention and make sure you stay protected. Our own engineering team immediately deployed the strongest fix to Heartbleed this past Monday, the same day the vulnerability was publicly announced. We have not found any signs of compromised data.

What you can do to further secure your SigFig account is change your password. Here’s how to do that:

1. Log into your SigFig account at sigfig.com
2. Click on your username in the upper-right corner.
3. Click Your Account/My Profile and then click Change Password.

A strong password for any service should:
* have a minimum of 8 characters
* include at least 3 of 4: uppercase letters, lowercase letters, numbers, punctuation
* not be based off dictionary words, e.g. Passw0rd

For accounts on our partner sites, go here for detailed instructions on how to change your password. Because of the widespread use of OpenSSL software, there is a chance that other online services you use are impacted by Heartbleed, including brokerages. Our recommendation for you is to:

1. Check the websites and blogs of online services you use for announcements on Heartbleed. The appropriate response is for companies to adopt the fix to secure your information and notify users the fix is in place. You can also use this tool to see if a website is vulnerable.

2. Change your password after the company has made the fix. Here’s more information on Heartbleed.

We will continue to monitor the situation actively. Please don’t hesitate to reach out if you have any questions or concerns; we can be reached at support@sigfig.com.

The Google Stock Split

Google is creating an entirely new class of share and issuing them to shareholders as a stock dividend. On April 2, 2014, Google will avoid the typical split of simply doubling the number of existing shares (which would halve the value of each share), and instead split their stock in a rather unusual way.

Why is GOOGLE doing this?

Google is trying to protect their super-voting stock via this unusual split.

Google has three classes of stock with different voting rights on corporate events (like Board of Directors elections): Class A (1 vote each) is what has traded since the company went public; Class B (10 votes each) is primarily owned by founders and insiders; and Class C (0 votes each) is the new kid on the block being issued through the share dividend. Tip: Class C will trade under the old symbol (GOOG) going forward.

If Google did a typical split, they’d double the voting power of the A shares relative to the B shares, which would dilute the founders’ voting power. The founders don’t want that. Instead, the company is issuing the new Class C, which comes with no voting power. The way Google handled their split, the value of the two public classes (A and C) should be approximately the same, since the effective voting power of the Class A shares is virtually zero. As it stands, the company’s two founders, Larry Page and Sergey Brin, own the majority of the Class B stock and it looks to stay that way. Together they control 56% of the votes, impacting non-paltry decisions like who comprises the Board of Directors.

When companies initiate splits, it’s usually to make their shares more affordable to regular investors. Typically, when a company does a 2-for-1 stock split, they announce that for every one of your existing shares, you now own two shares. Same class of stock, they just double the number of shares that are in public hands. But each share is then worth half as much. (It’s like slicing a pie into 8 pieces instead of 4.) At $1,000 per share, Google was too expensive for many investors to buy for their portfolio. But following the split, Google share value will halve, making it more affordable.

By issuing non-voting stock, the company can make the value of each public share more affordable to everyday investors with twice as many shares available, while not changing the voting power of the founders because the new shares have no voting power.

The technicals of the transaction:

The class of shares trading on or before April 2 (known as Class A), will change their trading symbol from GOOG to GOOGL. When the markets open on April 3, these shares of stock will trade under the new, 5-letter symbol.

  • If you owned the stock on March 27, 2014, you will also receive the new class (Class C). This new class will trade under the old symbol, GOOG.
  • If you bought GOOG between March 28 and April 2, you own the Class A shares, but you will not receive the special dividend.
  • If you buy GOOG after markets open April 3, you’re buying the Class C shares.

How SigFig Portfolio accounts for this transaction:

Synced Portfolios should update automatically by their brokerages. Class A shares should list as GOOGL and the stock dividend Class C shares as GOOG. To double-check this, go to Account Settings to verify the last synced time. If your account synced on login, but your portfolio does not list the shares correctly, it is possible that brokerages haven’t yet added the shares to the synced data feed; this may take a day or two.

On Google Split Eve (April 2-3), manual portfolio users will have their tickers updated to GOOGL and SigFig automatically added an equal number of GOOG (Class C) to the manual portfolio. We tried to make it easy for most users, but a few users may have to make some adjustments.

Here’s where the split gets a little hairy in your manual portfolio:

  • If you bought Google stock between March 28 – April 2, delete GOOG to realign the value of your portfolio. You would not be entitled to the Class C stock, so your portfolio value will overstate your actual portfolio value.
  • If you owned Google stock on March 27, but sold it between March 28 – April 2, manually add GOOG to your portfolio. We did not add shares of Class C and will thus understate the value of your portfolio.
  • If you have a manually entered lot, add the appropriate date to the new GOOG holding. Your previous lot will be updated to reflect GOOGL.
  • If you have GOOG on your Watchlist, we have made no changes, so you are now following the Class C shares.

For more detail from Google’s Investor Relations, click here:

https://investor.google.com/financial/class-c.html#tab=timeline

To 2014… and beyond!

Happy New Year everyone!

We’ve got a ton of highlights but here are the top 3 to keep it short and sweet:

  1. Our users now track over $135 billion in assets.
  2. CNNMoney and Yahoo Finance are powered by SigFig. AOL DailyFinance also joined the gang, coming soon to a browser near you!
  3. We went one step further in helping people with their investments. We’ll manage your portfolio for you for $10 a month. (This just in: listen to NPR Morning Edition‘s Steve Henn talk to Mike about it. Don’t just read, listen, and stay for the last 10 seconds : )

Our goal is to help you invest better — to help you overcome neglect, reduce fees, and take smart risks — and we’re just getting started.

So here’s to you and to an incredible 2014.

High-Quality Investing For Everyone

We did it. We figured out how to bring high-quality investment help for just $10 a month.

In our pursuit to help help everyday investors invest better, we never lost sight of one important thing: your investments represent goals and dreams — to be able to retire, buy a house, pay for a child’s college tuition, or maybe strengthen a safety net.

So when we looked across our data and saw people making mistakes they could’ve easily avoided, we knew we could help. We drilled down into a mountain of data to find out what mistakes were coming up most often and created a service to make them a thing of the past.

Here’s what the data shows[1]:

  • Fees – we’re paying too much. Two in three investors can cut their fund fees by more than 80%, equivalent to retiring more than 12 months earlier (or extending retirement by many more years), just by switching to low-cost ETFs with comparable returns.

  • Risk — sometimes we have too much. The majority of investors are poorly diversified and taking more risk than they realize. Half of our users own only three or fewer stocks (so if one company has a bad run, their investments will be hit hard).

  • Risk — other times we have too little. Very few of us are “just right.” Sometimes we end up missing out on returns by sitting out of the market. One in three investors keep more than 10% of their account value in cash, missing out on potential upside

  • Neglect. A properly balanced portfolio is not hard to start, but takes effort to maintain. Many of us make a monthly deposit and never invest it. And many let cash dividends sit idle.

Starting today, SigFig can automatically fix those problems for you with our new asset management service.

It works like this: we start by asking you a few questions to help you determine the balance between risk and returns that’s right for you. Using that information, we design a well balanced portfolio using high quality, low cost index funds from Vanguard, iShares, and Schwab which can be traded commission free. After that, we automatically rebalance your portfolio to keep it on track.

It’s easy to get started, and only takes a couple minutes. The process is 100% online and designed to keep things super simple. (Say good-bye to printers, fax machines, stamps and phone trees.) We’ve partnered with some of the biggest, most trusted brokerages in the country so if you have an account with TD Ameritrade, Schwab or Fidelity, your money stays where it is.

The best part? It’s just $10 a month — and free for accounts with less than $10,000. High-quality investment advice is no longer just a luxury reserved for the wealthy.

So what are you waiting for? Take a peek at more information and get started!

1. Data drawn from anonymized SigFig investors.

Congratulations Professor Kahneman!

The President awarded the Presidential Medal of Freedom to 16 recipients on Wednesday. We congratulate them all.

While the media focused on household names (Clinton, Oprah, Ernie Banks…), we would like to highlight Daniel Kahneman.

Professor Kahneman’s work (much of it with the late Amos Tversky) sheds light on the many, many cognitive biases that affect how we make decisions. As everyday investors trying to make good choices with our money, we can only hope to be as self-aware. (The professor would be the first to note that self-awareness is not enough.)

Aside: His most recent bookThinking, Fast and Slow — is a favourite at the office, and we highly recommend it.