Personal Capital Review 2021
In addition to their Robo-advisor investing and wealth management services, Personal Capital offers a suite of best in class FREE financial planning and tracking tools — including the widely popular Personal Capital app where you can track your budget, investing performance, expense, retirement accounts and more.
- Best in class free budget and investment tracking tools
- Bank level security
- Personalized wealth management
- Innovative company
- High minimum investment for advising support
- Fees higher than other Robo-advisors
Personal Capital is an online-only wealth management firm and advisory service. The company is considered to be of the most significant disruptors in the digital investing age.
Personal Capital offers a robo-advisor investing service and a suite of free services and helpful financial planning tools —including the widely popular free Personal Capital Android and Apple mobile app that’s like having a financial planner in your pocket.
While you don’t have to work with their investment management team, for a fee, the company also offers dedicated financial advisors and full portfolio management based on modern portfolio theory for high-net-worth individuals.
In this Personal Capital review, I’ll walk through why I think it’s the best free investment account and retirement planning performance tracker available.
Personal Capital Overview
Personal Capital is a U.S.-based investment service company headquartered out of Redwood Shores, California, with additional branches in San Francisco, Denver, Dallas, and Atlanta. The company was started in 2009 by four individuals: Louie Gasparini, Rob Foregger, Paul Bergholm, and Bill Harris.
These co-founders had a common goal: to provide a more personalized and streamlined investing experience by giving customers access to their full financial picture in one place.
Personal Capital seems well-positioned to capitalize on the growing trend of online-only financial services companies (which is especially popular among millennials). As of December 31, 2020, it’s estimated that Personal Capital has over 2.8 million users, with over $16 billion in assets under management.
Let’s take a closer look at the services that the company offers and how you can use them to get a better handle on your finances.
Personal Capital Products & Services
Wealth Management Services
Personal Capital’s Wealth Management Services can be broken down into 3 tiers:
- Investment Services ($100K to $200K Investment)
- Wealth Management ($200K to $1M Investment
- Private Client ($1M+ Investment Assets)
Investment Services is Personal Capital’s entry-level wealth management offering for investors with between $100,000 and $200,000. The benefits of the basic investment services account are as follows:
- Customer support from their team of financial advisors whenever you might need it
- Personal Capital’s Robo-advisor will professionally manage your funds
- You’ll have access to the company’s suite of useful investing tools
- Your funds will be invested in ETFs only
If you have over $200,000 to invest, you can open a Wealth Management account and enjoy the same benefits as a standard account, as well as the following benefits:
- Access to two dedicated financial advisors
- Free consultations available to speak with sector-specific investment specialists, like real estate and options
- Ability to invest in individual stocks in addition to ETFs
Investors with over $1 million will have access to Personal Capital’s highest level of wealth management service: Private Client.
In addition to the benefits included in the Investment Services and Wealth Management plans, Private Client account holders receive:
- Exclusive access to Personal Capital’s Investment Committee
- More in-depth estate, tax, legacy, and wealth planning advice
- Access to invest in private equity and hedge funds
- Private banking services offered only to private clients
- Ability to trade individual bonds (in addition to ETFs and stocks)
A complete comarison chart of these plans can be found here
Personal Capital’s Wealth Management plans gives investors access to their robo-advising service along with personalized advice from the company’s certified financial advisors.
Wealth Management Account Holder Features:
- Smart Weighting limits your investment risks by making sure your funds aren’t overly invested in one sector. This tool helps ensure your portfolio is well-diversified and, therefore, more resilient to potential market shifts.
- Dynamic Portfolio Allocation helps meet your evolving financial needs by dynamically making adjustments to your investments as your financial situation changes.
- Tax Optimization lets account holders take advantage of tax-advantaged investing strategies, such as tax-loss harvesting.
- Intelligent Rebalancing automatically rebalances your accounts at the best times without any action on your end.
Socially Responsible Investing
Personal Capital offers Socially Responsible Personal Strategy accounts that aim to invest your funds with companies that align with your values.
In the past, a socially responsible investing strategy might include a blanket rule of “no investing in oil funds.”
Personal Capital takes this idea one step further by factoring in what you value the most. For example, if you want to focus on companies that have embraced renewable energy or if you want to avoid investing in conflict minerals, your funds can be routed into assets that align with these values.
Personal Capital offers a high-yield savings account called Personal Capital Cash.
This account has no minimum balance requirements, no monthly fees, and offers 0.05% APY. You also get the peace of mind that comes with having your funds be FDIC-insured (up to $1.5 million, too!). Personal Advisory Clients enjoy a slightly higher APY at 0.10%.
For most clients, the withdrawal limit is set to $25K per day; however, personal advisory clients can see that raised to $100K per day and wire up to $1,000,000 with no fees. Deposit limits are currently set at $250,000 per transaction. See their site for more details.
Personal Capital’s most popular product is their spending tracker, which offers a variety of free budgeting and financial planning tools.
You can access this spending tracker with your online account, along with a variety of other tools. However, the easiest way to access these tools is in the Personal Capital app, which has a 4.7-star rating (out of 5) in the App Store and a 4.5-star rating (out of 5) in the Google Play Store.
Here are the main financial tracking services you can use:
Investment Checkup is a tool that automatically monitors the performance of your investment portfolio and suggests opportunities for better allocation when needed. It helped me discover that my Roth IRA held the wrong asset classes and that I need to be invested in a total stock market ETF like VTI.
Retirement Planner continuously monitors your financial progress as you move toward your stated retirement goal. You’ll have real-time access to information that will let you know whether you’re spending too much or saving the right amount.
Net Worth Tracker:
Net Worth Tracker is one of my favorite features that Personal Capital offers. On your financial dashboard, you have real-time access to your net worth.
Fee Analyzer is an interesting feature that tracks the fees you pay within your financial investments and alerts you if the fees are higher than average. The fee analyzer will also help you realize the total impact that certain fees might have throughout the lifetime of your retirement account.
Cash Flow Monitoring:
Cash Flow Monitoring is a tool that lets you pay close attention to how much cash is moving in and out of your accounts.
Education Planner helps you determine how much you need to save for any upcoming education expenses.
How Much Does Personal Capital Cost?
One of the coolest things about Personal Capital is that the spending and budgeting tools I mentioned above are all free to use. You only pay money if you have a Wealth Management account.
On that note, Wealth Management account fees operate on a tiered fee structure depending on your account balance ranging from 0.49% to 0.89%.
Tiered fees for Personal Capital are:
|$100,000 – $1,000,000||0.89%|
|$1 – 3 Million||0.79%|
|$3 – 5 Million||0.69%|
|$5 – 10 Million||0.59%|
My Favorite Personal Capital Features
There are a ton of amazing features in the app, but here are my favorites that I use every day.
Every morning, I start my day with a cup of coffee and spend 5 minutes checking in on my finances.
It’s a routine I’ve kept up with now for over seven years, and I always start with the Personal Capital dashboard on my phone.
The dashboard has changed a ton over the years and now has several amazing features. Some of these features include the ability to see your net worth (assets-liabilities), cash to invest, and performance of your investments (the “You Index”). You can also see the amount you owe on your credit cards, the amounts you have in your bank accounts, your monthly cash flow, the amount you’ve contributed so far this year to your retirement accounts, and your monthly budget that you can customize.
It’s an insane amount of information that has been absolutely essential in helping me reach financial independence and become a millennial millionaire.
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The Retirement Forecast
The hands-down beast of the Personal Capital app is the retirement tracker, which is pretty much my favorite online tool to use.
It also helps me keep track of whether I’m maintaining my investing path growth to sustain early retirement and can help you figure out when you can realistically retire, depending on a bunch of variables.
Here’s my actual retirement investment path, which I’ve set to walk away from work at the age of 35 completely. Even though I’ve already reached financial independence, I’m still making and investing money, but have set my Personal Capital retirement date as 35 for future forecasting purposes.
It says I have an 88% chance that my current investment portfolio will last me 60+ years. This percentage will likely continue to increase as I add even more money to my investments.
I’ll take it! I have so much fun playing with this one tool. It’s my personal finance dashboard.
Investment Allocation Tracker
Investing growth is the OG passive income, and diversification is a central component of my investing strategy and any solid investing strategy.
One awesome Personal Capital feature that I used early on when setting up my own investing portfolio was the target allocation feature that makes free optimal investment recommendations based on a series of questions you answer when setting up your profile.
It recommended me to get more exposure to international stocks, as a way to hedge only US performance. And, it motivated me to study the idea further and eventually buy shares of Vanguard’s Total International Stock Index Fund (VGTSX) to diversify my portfolio.
While I am always naturally skeptical of any tool that recommends an ideal investment allocation, none has been more spot-on than Personal Capital. It’s definitely worth checking out and comparing it to your current strategy.
The Retirement Fee Analyzer
Did you know that the average investor is paying at least 3-4x more in fees in their retirement accounts?
Yup, it’s insane, and over time, the fees you are potentially paying to have your investments managed can add up to you having hundreds of thousands of dollars less in your portfolio once you retire.
That means just your 401k and retirement fees alone can stop you from retiring up to 5-10 years early. Yeah, seriously, these management fees really add up.
You can use this feature to identify where you are paying too much in fees, how your fees compare to others, and how much of your investment earnings are being lost to fees (which is most shocking for most people).
Check out how much you are being charged to manage your investments, then you can attempt to reduce your fees as much as possible.
The Monthly, Quarterly, and Annual Review
At the end of every month and quarter, I do a quick analysis of my spending patterns to see what I’ve spent too much money on, so I can make adjustments over the next period.
Then at the end of the year, I pour a glass of wine and do a massive year-end review, where I analyze my spending patterns across all categories and make adjustments for next year’s strategy.
Unfortunately, my spending went a little rogue last year because I got married, and it messed up my previous three years of maintaining my spending target, but so far this year, I’ve stayed on track.
Here’s a snapshot of the Personal Capital cash flow dashboard that you can easily customize to show you how much you’ve spent in the past week, month, or year.
Weekly Cash Flow & Investing Performance Email Updates
Another awesome free feature that I use is the weekly cash flow and investing performance update. These are actually one of my favorite emails that I get all week – haha, I know, I’m such a nerd.
But seriously, the updates are legit and give me a high-level snapshot of how well my investments are doing relative to the market, how much money I’ve spent compared to last month, as well as how my cash flow compares to last year. That’s a ton of info in an email.
Financial Scenario Analysis
The financial scenario analysis is a great new feature that I’ve just started playing around with that could help you make better financial decisions – or at least understand what impact it will have on your finances.
It can be difficult to predict how making a certain decision can impact your finances, but now you can test/compare multiple incomes or spending scenarios.
I mean, who doesn’t like A/B tests for your money? You can compare all kinds of scenarios with the tool – like the impact of selling your home, inheriting money, paying for a wedding, doing a big renovation, or really anything you can come up with. You can also save the scenarios to edit later.
How To Sign Up for Personal Capital
Personal Capital has a very slick website and a seamless sign-up process. To get started, click the Get Free Tools button on the top right-hand corner of your browser.
You’ll then land on an easy sign-up form where you’ll be instructed to enter your email, password, and phone number to create an account. Once that’s done, you’ll be presented with a neat questionnaire asking for your personal details.
Next, you will be prompted to search for and link your external financial accounts. This is how Personal Capital will access and populate your financial data.
Personal Capital uses a variety of security protocols to keep your account and data safe. For starters, they have a dedicated security team that’s constantly testing the system for vulnerabilities. The company also uses leading-edge encryption and fraud detection technology.
Personal Capital seems to use some of the more advanced security measures that I’ve seen advertised on financial websites.
Personal Capital offers self-service support to free account holders. You can also submit requests on this online form.
Phone & Contact Information
Only Wealth Management clients have access to phone support.
If you’re interested in becoming a Wealth Management customer, call this number: 1-855-855-8005.
Aside from their headquarters, the company has branches located in Denver, Atlanta, San Francisco, and Dallas.
Pros and Cons
- One of the best spending trackers on the market (and it’s free!)
- Fantastic budgeting and financial planning tools (and they’re free, too!)
- Personalized Wealth Management services available
- Very high buy-in for Wealth Management/Robo-advising account ($100,000 to start)
- Wealth Management/Robo-advising fees higher than the competition
- You’ll still have to keep track of some of your finances by hand
Alternatives to Personal Capital
The main alternatives to Personal Capital are Mint, YNAB, Betterment and Wealthfront. Of those services, it’s going to be hard to find one that beats the ease-of-use and user-friendly dashboard that Personal Capital offers.
Mint vs. Personal Capital
I’m also a huge Mint fan as well and use it too, but it doesn’t come anywhere close to the functionality of Personal Capital, which has way more features and gets updated a lot more frequently.
Check out my full comparison of Personal Capital vs Mint.
Let’s take a second to answer some of the most common questions I hear about Personal Capital.
How Does Personal Capital Work?
Personal Capital’s financial planning and retirement tool combines all your financial institution account balances under one roof — including your checking account, savings account, 401k account, IRA accounts, brokerage accounts, credit card accounts, student loan accounts, mutual funds, etc.
This results in a clear overview of your entire financial life.
For example, if you’re interested in tracking your investment strategy, you can easily see your expense ratios or assess your risk tolerance based on your asset allocation. You can also see where you’re spending money and how effectively you’re saving it. It’s also easier to determine where you can cut back on spending to save more.
Is Personal Capital Legitimate?
Yes. Personal Capital is a legitimate company and service to use. They’ve been in business since 2009, have over 2 million customers, and manage over $10 billion in assets. What’s more, management accounts are FDIC-insured.
Is Personal Capital Worth the Fee?
First of all, there is no fee to use Personal Capital’s app and budgeting tools. You will pay a fee if you have over $100,000 to invest with their Wealth Management division.
That said if you prefer to take a hands-off investment approach, but also want the benefit of having access to certified financial advisors, the advisory fees (0.89%, decreasing with higher account balances) might be worth it to you. If that seems steep, I recommend researching other top Robo-advisors.
How Does Personal Capital Make Money?
Personal Capital mainly earns money by charging advisory fees on Wealth Management accounts. They currently manage $10 billion—not exactly a small number. If you sign up for a free account, be ready to get ads that encourage you to enroll in a Wealth Management account.
Can Personal Capital Be Hacked?
Personal Capital is no more or less likely to be hacked than any leading online financial company. With that in mind, the company does seem to have a very robust security platform.
Is Personal Capital A Good Tool For Investing?
The road to financial freedom is filled with a seemingly endless amount of traps designed to get you to spend and waste money.
If you want to get a better handle on your finances and don’t mind sharing your data, a Personal Capital account is a no-brainer. Having access to all of your financial accounts in one place might make it easier for you to achieve your financial goals.
At the very least, it’ll prevent you from having to log in and out of several accounts regularly. There is a reason I log into Personal Capital every day – it helps me track everything I need to know about my money – investment performance, cash flows, budgets, and early retirement trajectory.
When it comes to their Personal Capital’s Wealth Management division, due to the relatively high fees that they charge, you might want to do your homework there to see if it makes sense for you.
If you’re interested in learning more about what funds I recommend, check out my Millennial Money Portfolio post.
Thanks for reading, and here’s to achieving financial independence!