Personal Capital is an online wealth management platform with 800,000 registered users. The product has two main offerings: the robust free management dashboard, which includes several useful wealth planning tools and asset management for an additional fee.
The portfolio management team, which works under the Financial Advisory umbrella, manages over $1.5 billion in client assets and is available to Personal Capital users who have over $100,000 to invest. But even if you’re a newbie investor the main free platform is a worthwhile tool that you should consider using.
The Personal Capital Financial Tools Dashboard
The dashboard gives you access to a ton of information for financial planning. To get started you sink each of your asset and credit accounts to the dashboard. Then you get an entire breakdown of your net worth, cash flow, portfolio balances and asset allocation in colorful graphs and spreadsheets.
Within the free dashboard there are a few useful tools including:
Cash Flow Monitoring – A highly detailed report of your income vs. spending. You can review each account, drill down to isolated dates and search for transactions.
Asset Allocation & Portfolio Performance – In the investment portfolio tab you can view account holdings, balances and performance. And the nifty Asset Allocation section gives you a breakdown of exactly where you money is going.
Fee Analysis – The Fee Analyzer calculates your total fee percentage and how the fees you pay compare to a fee benchmark. According to Personal Capital you should pay about 0.50% or less in fees.
Investment Checkup – Check how your portfolio stacks up to a Target Portfolio suggested to you based on your account data and retirement goals. To generate your target portfolio Personal Capital asks you questions like your age, how much income you want to make in retirement and your risk profile. Then it makes an investment recommendation and future projections using Monte Carlo analysis.
Retirement Planner – This tool calculates how on track (or off track) you are for retirement using your retirement spending goals and your current savings.
Personal Capital Financial Advising
If you choose to have your assets managed by Personal Capital advisors use a “big picture” strategy. They take into account your current and future cash flow along with your investment portfolio to develop a plan.
The strategy includes tactics like daily account monitoring, “Smart Indexing” for better performance, diversification to reduce risk and tax optimization. According to Personal Capital tax harvesting and other tax techniques like avoiding mutual funds can increase investor return by 1%.
Personal Capital charges by assets managed with this fee schedule:
- $100,000 up to the first $1 million: 0.89%
For clients that invest $1 million or more:
- First $3 million: 0.79%
- Next $2 million: 0.69%
- Next $5 million: 0.59%
- Over $10 million: 0.49%
Clients who invest over $1 million are considered Private Clients and gain access to benefits like a concierge service and a dedicated Certified Financial Planner in addition to a team of licensed advisors. Each quarter Private Clients also receive a full financial review with analysis of accounts and access to extra products and services from Bank of New York Mellon (where funds are held).
Fees and Fine Print Details
Fees only come into play if you decide to sign up for asset management. So yes, that means all dashboard perks are completely free.
If you invest with Personal Capital accounts are opened for you at Pershing Advisor Solutions, a Bank of New York Mellon. You can fund your account with cash or transfer securities. If you need access to your money, cash can be available to you within a one to three day settlement period. Personal Capital is registered with the Securities and Exchange Commission (SEC).
The Pros and Cons
Of course the pro of Personal Capital is all the tools you can get for free and it only takes a few minutes to sign up to get started. Just input your online username and passwords for your financial accounts and answer a few questions
Personal Capital takes security seriously, which is another big plus. It uses bank-level, military-grade encryption, performs third-party security audits and requires you to authenticate each device you use.
The only small dashboard limitation is the cash flow section. You can analyze your spending habits but you can’t create a budget or set budget goals. Still Personal Capital is excellent to view your overall financial health.
As far as asset management, Personal Capital does charge more than a few other automated advising online services like Betterment and Wealthfront. However the service is geared towards people with a large sum to invest and that type of client may value the extra perks that come with Private Client status.
Alternatives to Personal Capital
Betterment is an automated investment service that has a far lower investment minimum. First it gives you an investment recommendation after you input basic details about your financial goals. You can choose to run with the recommendation or personalize your own plan.
Then you fund your account and money is invested in low-cost ETFs. Everything else including rebalancing and deposits is automated. Like Personal Capital there are tax optimization tools available to help lower your tax costs and increase your return.
Here’s the fee breakdown of Betterment:
- $0 – $10,000 – 0.35% (with a minimum $100 auto-deposit) or $3 per month without auto-deposit
- $10,000 – $100,000 – 0.25%
- $100,000+ – 0.15%
Wealthfront is another automated investment service that creates a custom asset allocation plan for users. It can manage both non-retirement and retirement accounts. The minimum amount you can invest with Wealthfront is $500. Wealthfront will manage the first $10,000 you invest for free. The rest is charged a monthly fee based on an annual 0.25% rate.
Who Will Benefit From Personal Capital
The Personal Capital dashboard is a convenient and visually attractive way to view net worth that anyone can benefit from. But it’s not a platform for newbie investors seeking help managing their assets. Even if you have the required $100,000 to invest you may find coupling the Personal Capital dashboard with a lower costing automated investment alternative gives you the best of both worlds.