Personal Capital offers advanced financial tools and premium management services. But is the hybrid-advisor the right investment platform for you?
Personal Capital Review
When it comes to financial advice and management, you typically have only two choices: the relatively new industry of robo-advisors on the cheap end of the spectrum or traditional financial advisors on the expensive end.
However, now thanks to companies like Personal Capital, you no longer have to choose. As a hybrid-advisor, Personal Capital combines the strengths of human financial advisors with computer-generated robo-advisor algorithms for a more balanced investing experience.
Although, it's worth keeping in mind that they aren't for everyone. While many robo- and hybrid-advisors have no or low account minimums (Betterment and Wealthfront, for example, at $0 and $500 respectively), Personal Capital targets investors with accounts of $100,000 and up.
Management fees are at a premium too, starting at 0.89% and dropping in increments of 0.10, depending on your account balance:
|Account Balance||Management Fee|
|$100,000 to $1 million||0.89%|
|Up to $3 million||0.79%|
|Up to $5 million||0.69%|
|Up to $10 million||0.59%|
|$10 million upwards||0.49%|
For such premium management fees, you get a team of human advisors to supplement their robo-advisor. Once your account hits $200,000, the team gets replaced with two dedicated financial advisors.
However, compared to the industry-standard of 0.25% to 0.50% at the higher-end of the spectrum, this makes Personal Capital rather costly for anyone with less than $10 million in their account.
To be fair, the company also has a wealth of advanced financial tools to help with your money management. Available for free (even without an advisory account), these help give you an all-in-one snapshot view of your finances. This toolkit includes your net-worth and portfolio performance, as well as spending analysis and retirement planners.
Personal Capital also recognizes the need for socially responsible investment (SRI) strategies and doesn't fail to deliver. The company has also recently introduced a retirement paycheck feature for optimizing withdrawals (including tax-optimization).
But are their financial experts, toolkit, and SRI offerings worth paying such a high price?
Let's find out!
- Management fees: 0.49% to 0.89% depending on account balance
- Account minimum: $100,000
Personal Capital is Best For
Being a premium hybrid-advisor, Personal Capital certainly isn't for everyone. Still, the following features make it an attractive solution:
- Specialization in investors with a high net-worth
- Hands-off approach to investing
- Free, advanced financial management tools (sign-up required, but available without having to engage in their advisory services)
- Tax-optimization strategies, especially for retirement planning and withdrawals
Where Personal Capital shines, they shine brightly. Their premium management fees are a hefty price to pay, but these pros may make it worth the high cost for some investors.
+Free Financial Tools
As mentioned in our introduction, Personal Capital offers an advanced toolkit for financial planning and management, without requiring you to sign-up for their hybrid-advisory services.
All you need to do is register for a Personal Capital account and link all your financial accounts. These will include:
- Bank accounts (including checking, savings, and Certificates of Deposit [CDs])
- Credit and/or debit cards
- Investment accounts
- Employer-sponsored retirement plans
- Mortgage accounts
- Loan accounts
You'll then gain access to a dashboard where you can monitor your finances without having to log into each individual account. The dashboard will provide summaries of:
- Your total net-worth (including assets and liabilities)
- Account balances (all accounts)
- Your cash flow (income and expenses) for the past 30 days
- How much unused cash you have that could be invested
- How well you're performing in terms of budget
- Your retirement savings target for the year
There are also specific features included in the free financial toolkit, which we explore in the next few highlights.
+Cash Flow Analysis
As part of their free toolkit, Personal Capital offers a cash flow analyzer that tracks your deposits and spending on the accounts you've linked. Your cash flow is summarized in a graph that compares the current month with the previous.
For more detailed information, you can expand the income and expenses tabs, which includes monthly averages.
Using similar data as the cash flow analyzer, Personal Capital's transactions checker categorizes your account activity in a table. You can choose to display your transactions all together or according to specific categories, namely:
You can also label individual transactions with sub-categories and filter activity for specific time periods.
This way, you get a more detailed overview of your transactions without having to log into each account and keep track yourself. It also makes it easier for you to separate expenses when filing your tax returns.
By tracking your accounts, Personal Capital will recognize upcoming bill payments, including those for credit cards, mortgages, and loans. The toolkit will send you reminders with the due date, statement balance, and minimum payment due displayed.
As long as you've linked all your accounts, Personal Capital will be able to give an accurate figure for your current net-worth, updated weekly. This can save you considerable time that would otherwise be spent logging into each individual account to tally up your assets and deduct your liabilities.
+Investment Portfolio Overview
Regardless of where your investment portfolios are held, if they've been linked to Personal Capital's toolkit, you'll get an overview of your overall performance.
Many funds carry hidden fees that bleed money without you realizing it. Personal Capital's fee analyzer will show you exactly how much you're losing to fees, with an estimation of your lifetime fees according to your current contributions and savings target date.
Personal Capital boasts one of the most advanced retirement planning calculators available.
Taking your projected income, investments, and Social Security benefits into consideration, the tool shows you when your retirement income is likely to run dry and how well it's performing according to your goals.
You can even push the retirement planner to its maximum capabilities by playing around with the scenario simulator. Manually add life activities such as paying for a wedding, travel, or buying a house, and the program will let you know how they affect your retirement plan's performance.
Finally, Personal Capital's free toolkit includes an education planner that lets you compare specific colleges to see how much you need to save up. Additionally, the tool will also calculate the projected tax benefits of a 529 college savings plan.
Moving on to Personal Capital's premium services, they offer three “packages” based on your account balance:
- Investment Service ($100,000 to $200,000) offers a portfolio of tax-efficient exchange-traded funds (ETFs) with a weighted average expense ratio of 0.8%. Rather than mimicking the S&P 500 by using indexes, Personal Capital uses Smart Weighting to distribute investments equally among all sectors for portfolio diversification. You'll also get 401k advice and 24/7 phone support.
- Wealth Management Services ($200,000 to $1 million) carries the same benefits as the Investment Service above, as well as a dedicated team of two financial advisors and portfolio customization capabilities that include individual ETFs and stocks. Additionally, you'll also get a fuller financial and retirement plan, including a 529 college plan, better financial decisions support, and tax-loss harvesting.
As mentioned in our introduction, Personal Capital also offers socially responsible investment (SRI) strategies. This is a relatively new addition to their services, having been introduced in 2018, and allows investors to put their money where their mouths are in terms of environmental, social, and governance issues.
+Dedicated Financial Advisors
Personal Capital's approach to the availability of their financial advisors warrants a separate section.
As mentioned above, clients with an account balance of $100,000 to $200,000 have 24/7 access to Personal Capital's team of licensed and certified financial planners via telephonic support, as well as email and video chat.
Once your account exceeds $200,000, this team gets replaced by a dedicated team of two certified financial advisors, who you'll share with other clients. The difference here is that instead of pot-luck in terms of which advisors you get, you'll always talk to the same two, subject to their availability.
And when you qualify as a Private Client (accounts of $1 million+), you get preferential access to that two-man (or two-woman) team, with an increased number of questions they'll answer.
Because Personal Client acts a fiduciary, you can have peace of mind knowing that any and all recommendations their financial advisors give you will be in your best interest. They aren't motivated by commissions to upsell you.
Personal Capital clearly has a lot to offer, especially for clients with a high net-worth. But there are also a couple areas where they fall short of most competitors in the robo-/hybrid-advisory industry.
-Overly Simple Budgeting Box
As part of the cash flow analyzer's budget performance report, Personal Capital gives you the option of setting up a budget box. Once again, your expenses are tracked and analyzed.
However, the budget box is exceedingly simple. You won't be able to assign budget allowances to any of the expense categories.
In fact, pretty much the only thing you can do is see how your expenses compare to the previous month's. All told, it seems rather redundant considering the cash flow analyzer already does the same thing.
Of course, the budget box is part of Personal Capital's free toolkit, so this shouldn't be a major point of contention.
While independent personal advisors are certainly more expensive, charging in excess of 1% on average, in the world of robo- and hybrid-advisors, there's no denying that Personal Capital is rather expensive.
In fact, unless you have at least $10 million in assets to put into your investment account, just about every competitor is cheaper. Most charge a maximum of 0.50% in management fees, compared to Personal Capital's 0.59% to 0.89% for accounts below $10 million. Betterment Premium, the robo-advisor's hybrid model, only costs 0.50%, and Vanguard Personal Advisor Services 0.30% (up to $5 million).
While Personal Capital certainly offers a lot in exchange for their premium fees, there's no denying that you can get similar services elsewhere for far cheaper.
Is Personal Capital Right For You?
Ordinarily, we shy away from giving any sort of definite answer to this type of question. After all, investment is a highly personal playground and the suitability of any online discount brokerage or robo-/hybrid-advisor is going to depend on your financial situation and goals.
However, unless you have at least $10 million to invest, we're going to recommend looking elsewhere. As mentioned in the previous section, the services Personal Capital offer in exchange for their premium (read: highly expensive) management fees are matched by many of their competitors at a much lower cost.
Their free financial tool-kit, on the other hand, is something that we feel everybody stands to gain from.
Please note: this article is not saying that Personal Capital isn't worth the purchase.
If, as a high-net-worth investor, you'd feel more secure with a company that specializes entirely in clients with a high net-worth, then Personal Capital is one of the most attractive platforms in the industry.
And if you manage to hit that $10 million+ benchmark one day, they're certainly going to be worth transferring to.