Personal Capital is the busy person’s answer to managing their investment portfolio. This Personal Capital review will help you see if an account aggregator is the solution to staying on top of all your brokerage accounts and finances as a whole.
Personal Capital Background
Personal Capital started in 2009 as a means to help individuals better manage their finances. It’s no surprise that life is busy. Depending on your stage of life, you have a career, family and other personal and professional obligations to care for. This can leave precious little time to stay on top of your finances and, as a result, they can often be neglected.
The purpose of Personal Capital is to mitigate that and do much of the heavy lifting for you.
You might be thinking this sounds great, but at what cost does it come? That’s the best part of Personal Capital – it’s entirely free to use! That’s right – free. You can’t argue with free.
The founder, Bill Harris, who is the former CEO of Intuit launched Personal Capital in 2009 and has since passed over $1 billion in assets under management as well as being listed as a top 50 “Disrupter” in the Personal Finance space by CNBC. In addition to that, they recently passed having over 700,000 individuals using their platform in as well as having over $120 billion of investable assets being tracked.
The tools offered by Personal Capital used to be available only to the ultra-wealthy. It’s their desire to lower the barrier to entry for wealth management tools to those who are considered the mass affluent – those with investable assets of at least $100,000 on up to $2 million. This is somewhat similar to the goals of other robo-advisors, like Betterment or Wealthfront in seeking to democratize the financial services industry.
How Does Personal Capital Work?
You might be wondering just exactly how Personal Capital works. We’ve said that it’s an account aggregator and that it helps you manage your finances and investments easier – but how is that done on a practical level? How Personal Capital works is it allows you to link all your financial accounts in one place.
For example, you can link the following accounts:
- Mortgage accounts
- Banking accounts
- Credit cards
- Online brokerage accounts
- Outstanding loans
To be clear, you don’t have to link all of these accounts but you have the option to do so. In some instances, it might only make sense to link brokerage accounts, in others it might make sense to link everything – it depends on you and what your needs may be.
The account linking process is a breeze with Personal Capital. You simply provide your log in information for each account to Personal Capital and then go through the process of linking to them. Personal Capital then aggregates the information you make available to them to provide a holistic view of your finances. As a busy person, this is an incredibly powerful tool to have at your disposal.
Security, which is an understandable concern, will be touched on later in the review; just know Personal Capital has multiple layers of excellent security and encryption.
Personal Capital Fees
As mentioned earlier, Personal Capital is free to use! You do not have to pay any fee to use their service. If all you intend on using the platform for is to track all of your online brokerage accounts in one place, that is perfectly fine and is free of charge. In essence, it allows you to use their service as a means to get an ongoing portfolio review.
How does Personal Capital make money? By targeting affluent users, such as individuals with at least $25,000 to $250,000 in assets.
Where this comes into play is that Personal Capital gives the availability to be paired with a CFP® certified financial advisor. This is by no means a requirement, but is something they do offer if you want a financial advisor. The fees for this service are as follows:
- $0 – $1,000,000: 0.89%
- $1,000,0001 – $3,000,000: 0.79%
- $3,000,001 – $5,000,000: 0.69%
- $5,000,001 – $10,000,000: 0.59%
- $10,000,001+: 0.49%
The thing to remember with these fees is they’re going to be on top of the fees associated with the ETFs they’d be putting you in. All totaled, this would come out to roughly 1 percent, which is definitely within the acceptable range to pay for investment management.
One final point on this – after you signup for Personal Capital and begin linking accounts, you will receive a call from one of their advisors if your assets are at least $100,000. The call is simply to let you know of their service and to ask if it’s a need of yours. If not, you can go on your way and continue to use the free service Personal Capital offers.
Personal Capital Advantages and Features
Now that we’ve gone over some background, it’s time to move on to some of the benefits and features Personal Capital offers.
Free Platform – As we’ve mentioned, Personal Capital is free to use. The investing world is rife with fees so this is a breath of fresh air.
Asset Allocation Tool – Asset allocation is often overlooked when investing. Personal Capital can help you see if you’re under or overweight in certain categories.
Net Worth Tracker – Personal Capital takes all of the information you provide them and offers a free real-time net worth tracker. You could do it yourself, but this is much easier.
Investment Checkup – This is a great tool if you’re looking for some direction but don’t want to go the human advisor route. After determining things like your risk tolerance, timeline, etc. the service provides an asset allocation to follow. In short, taken with some of the other features, you get a free portfolio review!
Easy-To-Use Platform – This should be a given and Personal Capital does not fall short. Both their online and mobile platform (which works both on iOS and Android based platforms) are easy to use. As an added security measure, they require an access code when logging in using different devices.
Tax Analyzer – Tax Loss Harvesting is an incredibly useful tool to take advantage of with your investments. Like other robo-advisors, Personal Capital reviews your portfolio with taxes in mind to help you see what opportunities exist to lower your taxable liability.
Fee Analyzer – As stated above, the investment world is full of fees. Personal Capital knows this and helps you lower what you’re paying. They can analyze anything from your 401(k) to all of your online brokerage accounts. They compare what you’re paying against benchmark funds so you can see just how much you could be saving in fees.
Investment Education – Just as with discount brokers, Personal Capital offers a fair range of free investment education and courses. This is a great resource to have.
The platform offers other features, like reminders and other budgeting-related features that won’t be covered here in this Personal Capital review.
Drawbacks to Personal Capital
Nothing is perfect, though there is a lot to like about Personal Capital. The things to look out for are as follows:
Investment Fees – If you choose to go with one of their financial advisors, you could be paying a total of roughly one percent. That is not bad at all and definitely competitive. However, that does not mean you should take it blindly. If you’re comfortable managing your own investments, then you should avoid being paired with one of their advisors.
Asset Allocation Model Is Not Fully Customizable – The asset allocation feature is a solid tool, but it is not fully customizable. Some may not like that. As their approach is a passive, low-cost index fund approach there shouldn’t be too much to be concerned about but some may not like the lack of full customization.
Personal Capital Security
As you’ve seen through this review of Personal Capital, they offer a lot of features that can simplify your investing life. However, that requires linking up your financial accounts. Given the amount of security issues we’ve faced lately, that will give pause to many and that’s understandable.
Personal Capital knows this and takes security very seriously. I know many companies say this, but it’s the case here. For starters, they offer bank-level security that requires two-factor authentication. Meaning, you have to verify each device you plan on using. For example, if you use the desktop version and want to access it on your smartphone they require a code to be input. This code is provided by a call from them to you. If you do not have that code, you will not be able to access your account.
Beyond that, Personal Capital encrypts your account information. In fact, they use the same kind of encryption model the military does – which is 256-bit AES in order to provide peace of mind. To provide another level of security, your information is protected behind a firewall that is meant to provide the highest protection possible – They are compliant with PCI (or DSS Level 1) and have ISO 27001 certification.
If that security isn’t enough, and to provide an extra layer of peace of mind, you can set the system up to send you email notifications of account activity on whatever interval you like. Meaning, if you want to know what’s going on everyday then you can set up to receive notifications every 24 hours.
Personal Capital vs. Mint
Personal Capital vs. Mint has been an ongoing discussion in the personal finance community with the growth of PC and the popularity of Mint. No review of Personal Capital would be complete without some sort of comparison with Mint. Both are solid tools to use to manage your finances, though each has their own merits.
The important thing to keep in mind with Mint vs. Personal Capital is that both are free services that are meant to help you better manage your finances. You can’t go wrong with using either service and the best one for you largely depends on your needs. With that in mind, if you’re looking for an investment component, Personal Capital is the hands down winner given the investing features they provide.
Some other things to look at in the Personal Capital vs. Mint pros and cons discussion:
- Mint is largely budgeting/spend tracking-based. Personal Capital does allow you to track your expenses and has recently added a budgeting component to level that playing field.
- While both are relatively secure, the security found at Personal Capital is more robust, requiring two-factor authentication. With their iPhone app allowing for fingerprint authentication the edge goes to Personal Capital.
- Both platforms allow you to track your net worth, which is a great feature to have.
- Mint does not offer customer service, whereas Personal Capital does and thus offers a smoother and more robust service for the latter.
- There are common complaints with the synchronization with Mint. That’s not the case with Personal Capital as they use Yodlee to sync and thus provide a more effective syncing experience.
Again, when looking at Personal Capital vs. Mint, both are solid tools to use to manage your finances but when taking a side-by-side look the former is the clear winner. This is especially the case when taking a look at the investment piece.
Personal Capital Review – The Final Analysis
Life is busy and we can often allow things that are important to us fall by the wayside. Whether we like it or not, our investments are often one of those victims. This is why a tool like Personal Capital is such a great resource to have.
In our age of systems being hacked, security concerns are of utmost importance. Personal Capital is mindful of that and provides stringent precautions so that your information is protected as well as providing ways to find out what’s going on daily.
In an industry filled with fees and expenses, you can’t argue with receiving something for free. That’s the case with Personal Capital as they allow you the ability to receive free, ongoing, portfolio reviews as well as watching all your online brokerage accounts in one location. Yes, you do have the ability to work with a financial advisor but that is not a requirement to use the platform. If you’re looking for a simple way to stay on top of all your investments in one place, then sign up for a free Personal Capital account today and make managing your investments simpler!
If you're looking for a way to simplify your investing, the free tool at Personal Capital is worth a look!