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Personal Capital may be many things, depending on how you use it. Founded in 2008 by a former CEO of PayPal and Intuit — the creators of Quicken software — Personal Capital is a free financial planning and investment tracking app. Similar to Mint.com, the app focuses on investing rather than bill paying, allowing users to consolidate investment accounts, track spending, forecast retirement progress and gain insight into asset allocation and investment fees.
The other part of Personal Capital’s business is a hybrid of algorithm-driven, robo-advisor services and traditional financial planning for which investors are charged an annual portfolio percentage. The company offers tiered services depending on the total assets invested. For users with $100,000 to $200,000 in assets, Personal Capital offers investment services through the help of an advisory team. Managed investment portfolios include exchange traded funds (ETFs), which are managed for tax efficiency with equal weighting in each sector. They also offer advice on 401(k) investments, budgeting and spending, along with regular access to an advisor.
Personal Capital also offers wealth management services for those with $200,000 to $1 million in investments. This includes investment management of a portfolio of ETFs and Stocks, along with the help of two advisors, a full financial plan that considers college savings and other financial decisions, as well as tax loss harvesting. For customers with more than $1 million in assets, Personal Capital’s private client services include all wealth management services, plus estate planning, private banking and access to things like deferred compensation strategy and donor-advised funds.
Who should consider Personal Capital
Anyone can use the free account aggregation and monitoring tools, which lets you play around with retirement assumptions and see what today’s savings might yield for a future return. You can also view your investment portfolio holdings by sector, asset class, expense ratio and more, which can provide a perspective on your portfolio.
The other services Personal Capital offers may be a solid option for hands-off investors who have amassed some savings and would like professional help. If you have at least $100,000 in investable assets, when you sign up for the free tools you will be prompted to set an appointment for a phone consultation with a live advisor. This person evaluates your portfolio holdings and shares recommendations for professional management. The specifics of that management will depend on the level of assets you decide to invest. Even if you don’t decide to invest with Personal Capital, going through the process of gathering assets and discussing your financial picture with someone can be an eye-opener.
If you are a socially conscious investor, Personal Capital can help you create an investment strategy to restrict certain businesses or industries according to your preferences.
Personal Capital fees and features
|Amount minimum to open account|
|Account fees (annual, transfer, inactivity)|
|Tax loss harvesting|
|Tax loss harvesting detail||Personal Capital's tax optimization process focuses on three key areas: tax allocation, tax loss harvesting and tax efficiency.|
|Offers fractional shares|
|Ease of use|
|Mobile app||iOS, Android|
|Customer support||Phone, 24/7 live support, Email, 5 branch locations|
Strengths of Personal Capital
- Award-winning dashboard offers a complete financial picture. The free tools are fairly robust, offering a high-level view in terms of your net worth. Linking all your accounts will provide the most accurate overview of your financial state.
- Money management that grows with your wealth. As your assets grow, you get increased access to Personal Capital’s sophisticated wealth management services, which means more help in making important financial decisions.
- Options for education and estate planning. At every wealth management service level, there is a focus on big-picture financial planning. Personal Capital advisors will professionally review your 401(k) and other retirement assets, and offer advice on college savings plans and estate planning strategies.
Drawbacks of Personal Capital
- High management fees. Personal Capital charges an asset management fee of 0.89% for portfolios between $100,000 and $1 million, which is higher than fees charged by low-cost robo-advisors.
- High minimum balance. To gain access to financial advice through Personal Capital, you’ll need at least $100,000 in invested assets. Comparatively, Schwab’s Intelligent Advisory offers similar robo-advisor services for account balances of at least $25,000.
- Upselling. Once you sign up for the free tools, you may be contacted about paid services. If you meet the minimum asset requirements for other service tiers, Personal Capital will try to win more business.
Is Personal Capital safe?
More than a decade after Mint’s launch, most fintech users are comfortable linking financial accounts to another platform. Personal Capital’s safeguards are safely in line with contemporary standards. The company imports data from your financial accounts through Yodlee, which connects with financial institutions using modern security protocols. Personal Capital’s website does not store your account credentials and no transactions are made through the company’s platform. Data shared with Personal Capital is protected through a highly rated encryption standard, a multi-layer process involving “keys” only users would know.
For your protection, all investment securities are held by an SIPC member broker custodian, protecting your securities up to $500,000. You can check their brokers credentials by searching for Personal Capital Advisors Corporation at brokercheck.org.
Additionally, the startup has solid leadership and financial technology experience behind it. Company executives have done stints at Intuit, Yodlee and E-LOAN, and there are a handful of certified financial planners on the wealth management side. The board of advisors includes Nobel Prize-winning economist Harry Markowitz, behavioral finance expert Shlomo Benartzi and former Securities and Exchange Commission commissioner Luis Aguilar.
Final thoughts on Personal Capital
With many free features designed to attract users, Personal Capital is worth consideration. Its asset allocation models are fairly rigid, but they seem to outperform comparative benchmarks over time. Investors should carefully consider the asset management strategy before signing up for investment advisory or wealth management services. In the meantime, the financial planning tools and initial consultation will give the average investor insights into their current state and where they would like to go.