Personal Capital Review and first time checked a few years ago after becoming frustrated with Quicken. I wanted a service that focused more on the investing side of personal finance: retirement, asset allocation, and taxes.
Personal Capital Review summary
A free and easy-to-use personal finance software that syncs up all your accounts in one location. Personal Capital creates summaries of your spending, net worth, and most importantly, your investment portfolio. The upsell is its wealth management service.
Let’s take an in-depth review of how the Personal Capital app performs on these fronts.
Personal Capital is two services combined into one.
- First, there’s the free financial tracking tool, which lets you monitor not only your spending but also your bank, credit card and investment accounts in one place. That’s not to mention the free Retirement Planner, one of the most comprehensive calculators out there.
- Then there’s the paid financial advisory service, which provides a combination of computer-generated advice and personal consultations with a team of dedicated human advisors.
Personal Capital Fees & Features
|Fees||Wealth Management: First $1 million: 0.89% ; $1-3 million: 0.79%; $3-5 million: 0.69%; $5-10 million: 0.59%; Over $10 million: 0.49%|
|Accounts||Taxable, Joint, Traditional IRA, Roth IRA, Rollover IRA, 401(k), Trusts, 401(k) Guidance|
|Tax Loss Harvesting||Yes|
|Automatic Deposits||Weekly, Monthly|
|Access||Web-Based, iPhone App, Android App|
|Customer Service||Phone: 24/7; Email|
Review What Is Personal Capital?
Personal Capital is one of the hottest fintech (financial technology) products on the market. Founded in 2009, the goal of Personal Capital was to provide a blend of cutting-edge technology with objective financial advice. The company has grown by leaps and bounds and as of November 2018 has more than $8 billion in assets under management. There’s been talk of the company going public with an initial public offering, or IPO, too. That remains to be seen.
Unique Features Offered by Personal Capital
- Retirement Paycheck — This feature provides users with guidance on how to withdraw money during retirement in the most tax-efficient way.
- Retirement Planner — Find out if you are on target for retirement. Currently, this feature is available only on the website and iPad app.
- Budgeting — Follow weekly, monthly, and yearly income and spending habits with the Cash Flow Analyzer Spending tool. Currently, this is available only on the mobile app.
- Education Planner — This feature can help you compare the costs of specific colleges and determine your annual savings needs to meet your educational goals.
- Exclude From Advice — After you sync an account within Personal Capital, you can now exclude it from any of the investment recommendations.
- 401(k) Fee Analyzer — This useful feature tells you how much your retirement plan is costing you. If you’re like most people, the amount lost to fees will surprise you.
- Investment Checkup — Monitor the health of your investment asset allocation. By determining your risk profile, Personal Capital will recommend an asset allocation that’s right for you.
- Asset Allocation Target — Are you overweight or underweight in any of the major equity categories?
- Upcoming Bills — Shows a report of upcoming bills and their due dates.
- Email Notifications — Get daily or weekly summaries of your investment portfolio and spending.
- Personal Capital Cash — Personal Capital’s new Cash account pays interest to the tune of 2.30% APY without requiring any fees. Unlike with a traditional savings account, there are no transaction limits, plus no minimum required balance. Your account is insured by the FDIC for up to $1.25 million, too.
Testing the Free Personal Finance Software
To give Personal Capital a complete test, I created a free account. I then added more than 15 accounts: bank accounts, credit cards, my mortgage, and investment accounts (which I primarily focused on). For this review, I used accounts that contained taxable investments, IRA, 401(k), 403(b), and alternative investments such as those offered by peer-to-peer lending service Lending Club.
I had no issue syncing up these accounts, and the process was painless.
Is It Really Free?
Yes! Believe it or not, Personal Capital’s free version is really free.
Although the company provides the sort of custom advice you’d expect from a Robo advisor — along with consultations with real human beings — there are plenty of valuable tools available in its free version.
Without paying a dime, you can link all of your existing checking, savings, mortgage, credit card, retirement, and investment accounts and track your spending, create a budget, monitor your net worth, find out how far along you are on your retirement savings journey, and analyze your fees. That’s quite a lot of value for absolutely zero dollars. Just go to personalcapital.com, sign up, and start managing your financial accounts.
Personal Capital’s Retirement Planner
With Personal Capital’s Retirement Planner, you can finally answer the question of whether or not you have enough saved for retirement, and with a reasonable degree of confidence.
This feature allows you to access spending goals and income events and project future portfolio value. Then the Retirement Planner pulls all this together and tells you what kind of shape you’re in for retirement.
There aren’t many right retirement-planning tools out there. Even the paid tools I’ve seen lack many features. Personal Capital’s tool is perhaps one of the most comprehensive I’ve seen — free or paid. There’s a multitude of variables available in it, and you can play many what-if scenarios with your finances.
You do not have to enter your assets and accounts manually; it automatically populates the information.
Similar to the Retirement Planner tool, Personal Capital’s 401(k) Analyzer derives your annual 401(k) expenses from the accounts you add within the service. Then, based on some assumptions that you can adjust, you can see the annual fees that are eating into your retirement plan over time. Even in my family’s case, in which our annual expenses are 0.38%, at the time of retirement, the total cost out of our retirement plans is expected to be over $500,000! You must pay close attention to the annual fees within your 401(k) plan.
Review Personal Capital Security — Is It Safe?
The security is similar to Mint’s service. Personal Capital requires you to register each computer you use. You must authorize the device you’re using. You can choose from either an email or a phone call to verify.
It’s a poor man’s version of two-factor authentication. There’s nothing wrong with this, and in fact, I applaud Personal Capital for having this feature. I wish this level of security were available with all financial institutions.
Once your computer is registered, you will not need to go through this process again.
On iOS devices that support the fingerprint scanner, log into Personal Capital’s app via a swipe of your finger. It’s not foolproof, of course, but it’s a nice touch and an added layer of security.
The account information you enter within Personal Capital is stored by the platform in a one-way encryption token to gain future access to your account.
You cannot perform any withdrawals or transfers from within Personal Capital’s service. All information via the service is read-only.
Lastly, unless you enter your account information into comment fields (which you shouldn’t do), your account information won’t be displayed anywhere.
Personal Capital’s Wealth Management Service
The website, of course, is free to use (following the freemium model). You’re under no obligation to use the fee-based advisor service.
However, for a fee, Personal Capital Advisors can help manage your financial portfolio. Currently, Personal Capital manages over $8.5 billion in assets.
Their annual fees for investment services are as follows:
Personal Capital Fees
|Deposit Amount||Personal Capital Fees|
|For Clients Who Invest $1 Million or More|
|$10 Million or More||0.49%/yr.|
You need at least $100,000 to start using this service. Personal Capital is apparently trying to go after higher-net-worth individuals and squarely compete against the high-fee financial advisors like Edward Jones.
Is It Worth It?
The fees at Personal Capital are much lower than those charged by traditional financial advisors. Wealth management, trade costs, and custody fees are included — you do not pay trade commissions.
Every account gets a dedicated advisor, even if you don’t use the wealth management service. It’s been reported each advisor within the firm handles approximately 200 clients. You can schedule a consultation with your advisor within the app.
Wealth Management Features
- Smart Indexing — Incorporates Modern Portfolio Theory and equal sector/size weighting.
- Supported Accounts — Traditional IRA, Roth IRA, Joint Accounts, Trusts, and Taxable accounts.
- Minimize Fees by Direct Investing — By directly investing in stocks instead of ETFs you can reduce annual fees.
- Tax Loss Harvesting — Minimize taxes in taxable accounts.
- Automatic Rebalancing — When your portfolio varies passes your determined asset allocation, Personal Capital will automatically rebalance your portfolio.
- Advice for 401(k) and 529 Plans — Personal Capital cannot directly manage these accounts but will give advice.
- Socially Responsible Personal Strategy (New) — A new service from Personal Capital allows clients to select a personalized socially responsible investment strategy for their portfolios.
The asset allocation gets interesting. Personal Capital uses baskets of individual securities and ETFs to create a model portfolio. Personal Capital is well aware annual fees can decrease the performance of your investments for the long haul. Using index funds with annual fees adds expenses on top of Personal Capital’s management fee. Therefore, using index funds decreases your annual return. Instead, Personal Capital invests in individual stocks in a basket of funds.
By investing in individual securities, your portfolio is more tax efficient as well (if your investments are in taxable accounts, of course). So while the basket of funds won’t mirror an index fund exactly, it will come very close and should have lower fees and taxes. Also, with individual securities, Personal Capital can better manage the taxes you pay via a process called tax-loss harvesting (TLH).
Personal Capital also offers “Personal Funds” that target a specific investment objective, but you own the individual securities rather than a mutual fund.
Can You Download Your Data from Personal Capital?
If you use either the Chrome or Firefox browser, exporting files from Personal Capital is easy. All you have to do is click on the “CSV” icon under “All Transactions,” and you’re all set.
Currently, there’s no way to print reports directly from the app. However, we hear that this is something Personal Capital is working on at the time, so hopefully, this feature will be available shortly.
Review Personal Capital Pros & Cons in 2020
- Complete View of Your Finances – Encompasses all of your finances in one easy-to-use service. Personal Capital, gives you access to all your finances in one location. Personal Capital calls it a “360° View of Your Financial Life.
- Powerful Investment Checkup – It’s a decent starting point and should be adequate for most individuals, though it doesn’t give concrete and actionable items, and I suspect the reason is to upsell you on their advisor service.
- Support via Many Apps – Personal Capital has an app for Apple iPhone, iPad, Apple Watch, and Android. It’s similar to the desktop edition and can be used on the go.
- The You Index – It’s a performance metric of all of your current stock, ETF, and mutual fund holdings extrapolated backwards. It does not include your cash, money market funds, individual bonds, options, or other alternatives. Basically showing how your stock portfolio is performing over time.
- Easy to Use – Account setup is brain-dead simple. Their user interface navigation and reporting are well laid out.
- Custom Allocation of Unknown Assets – Personal Capital now allows you to categorize unknown assets.
- Great Reporting – Similar to Morningstar’s X-ray tool, Personal Capital offers a great way to drill down into asset allocation and performance.
- All-Inclusive Wealth Management Fee – Personal Capital’s paid service annual fee includes everything to manage your account. So there are no hidden fees.
- Personal Capital Cash – Personal Capital’s new savings account pays out an APY of 2.30%, way higher than the national average.
- Asset Allocation Is Not Customizable – Personal Capital has predetermined asset, allocation models. This is adequate for most but not if you want to vary from the recommended allocations.
- Budgeting Tool Needs Improvement – You can monitor cash flow and spending. Budgeting within Mint is easier to use. The spending feature within Personal Capital is available only on the mobile app and not within the website.
- Cannot Reconcile – You cannot reconcile your monthly bank statements to ensure all transactions are accounted for. However, since the transactions are coming from your bank directly they should be in sync.
- Expensive Wealth Management Service – Compared to traditional advisors, Personal Capital is much cheaper, but it’s expensive when compared to Robo advisors without human guidance.
- High Minimum for Wealth Management – To consider to be a client of Personal Capital you need at least $100,000 of investment assets. This minimum is higher than competing Robo advisor services.
- No Import Option From Quicken – You cannot import your data from Quicken into Personal Capital.
- Sales Calls from Personal Capital – If you use the free tool Personal Capital may contact you to become a customer of their paid service.
Personal Capital Review Summary
Personal Capital’s financial software is free to use. You’re under no obligation to use wealth management services.
Personal Capital’s finance software is currently the best online service for monitoring your portfolio. Unlike Mint, you can use it to manage your investment accounts. This is why we’ve put it on our list of recommended investment tools.
In fact, I like Personal Capital so much that it has replaced Quicken for managing my finances.
The retirement planner is second to none; I found it very useful to perform many role-playing situations. The investment checkup tool is excellent for high-level recommendations.
Compared to traditional advisors, the wealth management service is cheaper than the standard 1% to 2% advisors usually charge, but it’s not cheap when compared to competing Robo advisors.
However, for those who don’t know how to allocate their investments appropriately, Personal Capital is a godsend. If this describes you, then you should consider the lower-than-average-cost financial advisory service.
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