Personal Capital is an investment management company that offers a suite of money management tools, including retirement planning and cash flow analysis. Empower Retirement acquired the company in 2020. Personal Capital Cash is an interest-rate saving account available to U.S. residents with free banking services.
They are a full-service investment manager with a $100,000 minimum and fees beginning at 0.89% AUM. They also offer holistic wealth management and access to Certified Financial Planners.
This article will explore the features of this financial management tool to help you decide if it’s right for you or not.
Highlights
- They offer free net worth tracking and retirement planning software for anyone.
- Every paying Advisory client can access a financial advisor.
- Personal Capital provides tax-minimization strategies, including tax-loss harvesting.
- Stocks and private equity investments are available for some Advisor clients.
Pros
- Free money management tools
- Customized financial planning with CFP(R) advisors
- Accessible live phone customer service
- They have a user-friendly and easy-to-navigate website
Cons
- The minimum deposit for this is $100,000.
- High investment management fee of 0.89% AUM
- Requires a phone call from the firm
Setup of an account
To join Personal Capital, you will need an email address and password. You will also be asked for your phone number and date of birth. Once you have signed up, you must schedule a call with one of their financial advisors. This is regardless of whether or not you are interested in their free tools or advisory services. You will be given a brief biography of your prospective Advisor before the call.
You can link your accounts by following these steps. You can add most financial reports, including:
- Bank
- Investment
- Debt
- Credit card
- Manually entered categories
- Home Mortgage
You’ll have access to financial tools and reports by syncing your accounts with Personal Capital. Anyone can access their free tools, but only those with a minimum of $100,000 qualify for their Advisor’s service.
You begin by answering questions about your finances, goals, and risk tolerance. Your Advisor then looks at your current investments and makes recommendations for how you can improve your financial situation. Finally, you open an account with custodian Pershing and fund it with cash or securities.
Although the tools are free, you can still expect a call from the firm. Some people may find this annoying, but it is still a necessary part of the process.
Planning your goals
Personal Capital Advisors said it has a unique approach to goals and planning. Their process is customized and begins with a conversation with your financial Advisor, during which you will respond to a brief questionnaire. Most investors include retirement as a primary goal. Still, any purpose could be considered, such as saving for college tuition or putting away money for a second home.
This simulator projects your income and spending during both the accumulation and distribution phases of life to come up with an expectation of meeting your long-term retirement needs. Whether you are a paid client or just using our free tools, you can use this tool.
The financial Advisor can guide you and adjust your portfolio for your goals.
Services for Accounts
They offer banking with no minimum amount and full-service financial planning. Their automated deposits have two revolving lines of credit with competitive interest rates and no setup or closing costs.
Personal Capital also offers a Financial Roadmap that is customized to your situation. This Roadmap provides a list of financial tasks that need to be completed, such as insurance analysis, retirement cash flow planning, employer plan analysis, and debt management review.
Financial planning software is available to everyone, regardless of whether they use advisory services. No minimum requirements exist to sync your accounts and use all the tools.
Tools and calculators include:
- Net worth tracker
- Savings planner
- Budgeting
- Cash flow
- Retirement planner
- Investment check-up
- Fee analyzer
- Education planner
The fee analyzer tool could help assess whether you could save money on investment fees. In contrast, the investment check-up will analyze your asset allocation and suggest ways to increase returns and lower risks. For those planning for retirement, the retirement planner may allow you to adjust inputs and investigate different scenarios.
Management of cash
This program places your money in participating member banks through UMB Bank. Your account will be FDIC insured up to $1.25 million.
- High-yield interest-bearing savings account
- Individual and joint accounts
- Bill pay by linking to your checking account
- Direct deposit
- Unlimited deposits and withdrawals
Portfolio Construction
Client responses to an initial questionnaire and interview with a financial advisor determine which assets are included in a portfolio.
To create the portfolio, the algorithm takes into account a variety of factors:
- Assets
- Risk tolerance
- Time horizon and goals
- Health status
- Tax laws
- Legacy goals
- Net worth and income
- Retirement age
- Marital status
- Expected withdrawal rate, and more
According to Personal Capital, syncing data and speaking with a financial advisor provides more information for them to work with. They claim that their algorithm, which is based on Modern Portfolio Theory (MPT), could offer better diversification. Personal Capital’s asset allocation strategy includes allocating varying amounts to different asset classes:
- U.S. stocks, including varying styles, sizes, and sectors
- International reserves, including developed and emerging markets
- U.S. bonds, including diverse government and corporate of different credit quality
- International bonds of varying credit quality
- Alternatives, including real estate and commodities
- Cash
Their Smart Weighting equally weights assets based on size, sector, and style. This portfolio construction method is designed to provide a higher risk-adjusted return.
As an investor, you may choose a portfolio that focuses on socially responsible investing (SRI). This means investing in companies and ETFs that have environmental, social, and governance (ESG) factors.
Portfolio Customization
Customizing your investment plan is based on your tax situation and preferences as well as those of your Financial Advisor. You can request a variety of asset allocations, including the socially responsible option, ETFs instead of individual stocks, restricted buy or sell lists, replacement ETFs or stocks, and special tax-influenced strategies.
Portfolio Management
Every investor’s portfolio differs based on how much risk they’re willing to take.
Personal Capital said they could evaluate stocks and funds to ensure they fit with what you’re trying to achieve, minimizing risk while maximizing returns by monitoring sector and country concentrations. Consider your asset location and choose tax-efficient accounts and funds to minimize your taxes. Municipal bond funds and individual securities can help you reduce your tax bill.
You can be notified when it’s time to adjust your mix by setting alerts. This becomes relevant when your financial situation changes, you veer too far from your goals, or there’s a significant change in the economy.
The client and financial Advisor review progress toward goals regularly, making adjustments as necessary.
User Experience
Desktop Experience
Banking, Investing, Planning, and Wealth Management are all significant categories that could be navigated on their site. Personal Capital provides access to your advisor and educational blog posts through its Wealth Management vertical.
Their overview tab leads you to a dashboard view of your net worth, accounts, spending, and transactions. You’ll find free money management tools in the investing and planning category. In the Banking section, you’ll find the Personal Capital Cash feature.
Mobile Experience
The Personal Capital mobile app is available for both iOS and Android devices. It offers account management features and access to Personal Capital Cash and its portfolio analysis tools. You can also track your cash flow and investments and use the retirement planning features directly from your wearable device. Plus, you may get personalized insights on how much you’ve saved in the year.
The app is missing some features that are available on the desktop version. For example, the Investment Check-Up tool is only available on the desktop, and users who want to open an account need to use the desktop version. There are also issues with account sync and accurate, current data reporting, particularly on the Android app.
Customer Service
Personal Capital can be contacted by phone or email. They also have offices in California, Denver, Dallas, and Atlanta so clients can schedule a meeting in person. The FAQs are comprehensive and well-categorized.
- Phone
- In-person and virtual meetings with advisors
- Physical offices in California, Denver, Dallas, and Atlanta
- Comprehensive FAQs
- No live chat
Security
Your login information is supposed to be permanently encrypted and kept strictly confidential.
Security protocols include:
- Two-factor authentication
- Firewalls and perimeter security comparable with banks and payment cards
- 256-bit AES data encryption
- Daily transaction emails so users can verify their activity
- Personal Capital carries Securities Investor Protection Corporation (SIPC) insurance up to $500,000, which includes $250,000 for cash.
Education
The portal blog is called Daily Capital and has hundreds of educational articles and guides.
The topic categories include:
- Personal Finance
- Investing and Markets
- Financial Planning
- News
- Client Stories
- Guides and Reports
The articles could give you actionable steps to reduce your taxable income or diversify your portfolio.
The robo-advisor provides an analysis of 401K plans offered by large employers. It also publishes papers on a variety of investment topics. This makes it a resource for investors who want to stay informed about it.
Fees & Commissions
Personal Capital Advisors charges declining fees based on assets under management. There are no commissions or transaction fees associated with their money management software.
| $100,000 to $1 million | 0.89% |
| First $3 million | 0.79% |
| Next $2 million | 0.69% |
| Next $5 million | 0.59% |
| Over $10 million | 0.49% |
There are higher AUM fees than with most of their competitor firms like Betterment, Schwab Intelligent Advisors Premium, and Vanguard Personal Advisors.
An account with $100,000 in management fees would cost $890 per year. Termination fees and expense ratios are not disclosed.
So, Is Personal Capital Worth It?
The Personal Capital portfolio is designed for high-net-worth individuals seeking comprehensive financial planning, qualified financial advisors, and a well-researched investment approach. In order to reduce taxes and outperform a traditional market cap-weighted investment portfolio, investors who would otherwise hire a full-service traditional financial advisor can interview a Personal Capital financial advisor.
However, the free portfolio management tools offered by Personal Capital are among the most effective we have found and are suitable for any investor who wants to analyze and manage their investments on their own.
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Personal Capital Summary
Personal Capital is an investment management company that offers a free suite of money management tools, including retirement planning and cash flow analysis. However, the minimum deposit is $100,000 minimum and fees begin at a high 0.89% AUM.
