Personal Capital is a hybrid firm that delivers conflict-free, low-cost personal and award-winning tech products to deliver advice based on your total financial picture.
"Hybrid" may be an unusual way to describe a financial advisory firm - but in the case of Personal Capital, it fits. If the word conjures up notions of weak performance as with a hybrid car, though, it would be a mistake not to read this review.
Personal Capital is a hybrid in the financial advisory services industry for the way it combines automated investment services with personal advice from RIA advisors on a platform that aggregates your financial picture.
In fact, Personal Capital has a powerful offering that can work very well, and economically, if you correctly evaluate how your needs match what their "vehicle" delivers.
- Investors seeking a combination of Robo and personal advice
- Investors who want to see all their financial information in one place
- Investors who appreciate extensive online features, including mobile access
- Investors seeking comprehensive spending, savings, and financial-planning analysis software
Personal Capital at a Glance
|Personal Capital||(As of October 23, 2020)|
|Minimum balance needed to access advisory services:||$100,000 in investable assets.|
|Cost per stock trade:||Personal Capital does not charge trade commissions. All trades are included in their annual management fee based on the assets under management (starting at 0.89% for the first $1 million).|
|Cost per options trade:||Same as above.|
|Promotions:||Clients get a free second opinion on their retirement and portfolio strategy with a licensed fiduciary advisor. (Personal Capital values that at $799.)|
|Tradeable securities:||Stocks, bonds, ETFs, mutual funds, private equity.|
|The number of commission-free mutual funds or ETFs:||All of Personal Capital's funds and ETFs are commission-free. Personal Capital Advisors are fiduciaries, meaning they are legally required to act in the best interest of their clients. (That's why they do not use products that charge commissions.) In addition, Personal Capital does not use mutual funds. Instead, a combination of individual stocks and low-cost ETFs is used. (With respect to ETFs, clients are only charged the underlying expense ratio.)|
|The number of no-transaction-fee mutual funds:||Same as above.|
|Customer service hours:||Monday - Friday, 7am - 6pm PST.|
|Account fees:||None, see management fee above.|
|Mobile applications:||Free tools are available on both the App Store and Google Play.|
Is Personal Capital Right for You?
Personal Capital's client approach is long-term. They believe clients' financial lives should be managed through all cycles from savings, 401(k) participation, through pre- and post-retirement. This includes saving for major life events such as buying a house and paying for a child's college tuition, for example.
To become a client, investors need a minimum of $25,000 of investable assets.
Investors today can choose between very qualified financial advisory firms that either provide 100% face-to-face meetings or ones that use online-access financial advice with less human contact. You get what you pay for.
Human access costs more than a Robo advisor. Personal Capital combines both to get personalized advice. They have a very impressive list of high-tech, mobile applications combined with a two-person advisory team assigned to its clients.
The key immediate variable is the quality of human service. The other critical variable is the long-term performance of your portfolio. To answer these questions, investors should research online reviews and interview the firm you are thinking to hire.
The good news is that there are more sources of information about financial advisors than ever before. The challenge is to make an informed decision about the best firm that meets your needs.
|Free access to their dashboard for financial information.||Online reviews complain about erratic client service and questions over rates on certain products.|
|Free financial reports about account balances, income, spending, investment returns, asset allocation, fees, and net worth.|
|Links all clients' accounts in one site for easy evaluation.|
|One-on-one personal discussions with their own two-person advisory team.|
|Advisors are RIAs, so they do not work on commissions.|
|Mobile technology that allows clients to track their spending.|
|The firm has an impressive list of outside financial industry and economic experts.|
Financial-Planning Services at Personal Capital
Personal Capital has an impressive list of award-winning, high-tech financial applications that seek to match its personal advice capabilities to provide a long-term investing plan.
Its applications provide retirement-planning services plus a practical array of software designed to monitor financial activities as diverse as the daily surveillance of spending and saving habits to whether clients are paying excessive fees for investment products.
It even provides advice, but not management, on what investments in your 401(k) would help meet your financial objectives.
This powerful combination of human advice and powerful software analysis can increase short- and long-term spending and savings habits, but this only works if the client is disciplined.
How Personal Capital Invests Your Money
Personal Capital's platform is distinct from other robo-advisors because of its award-winning technology and mobile apps that offer access to financial advisors and individual stocks.
Personal Capital offers investors individual stocks, bond ETFs, and alternative investment asset classes in order to build diversified portfolios. Using its technology, the firm builds portfolios according to its dynamic-asset-allocation methodology, including tax-loss harvesting, tax minimization, regular portfolio rebalancing, and something called "smart weighting" to prevent over-exposure to any asset class or market segment that has high risk.
All investable asset classes and market segments using equity and fixed income instruments are used in portfolios.
Investing is implemented through five model portfolios ranging from full growth to "balanced stability tilt." These reflect the client's risk-tolerance spectrum. Its website lists all current performance results for each portfolio with comparisons to a relevant benchmark.
Personal Capital also emphasizes socially responsible or ESG (Environmental. Social, Governance) investing. It works with an outside firm to use its selection methodology to make company-specific investment selections.
ESG is an investment-evaluation strategy that screens for companies emphasizing business practices that focus on preserving the environment, promoting racial and sexual employment opportunities, and have transparent corporate governance.
It awards companies that have such practices as good business ethics, community relations, and good land-use and pollution-control practices.
Some academic studies have shown that companies with higher ranks on material ESG issues are often more profitable and produce stronger financial results than non-ESG firms.
Getting Started with Personal Capital
Getting started with Personal Capital is a three-step process (which may take some time to complete).
- First, you set up your account by providing your email and phone number.
- Next, you link up all your financial accounts
- Lastly, you provide credentials so Personal Capital can access your information.
Personal Capital's application gathers and presents all of your financial information in a comprehensive view. From there, you can set up a budget, start to monitor expenditures, and see your net worth.
Fees at Personal Capital
Signing up for and using Personal Capital's application is free. It's only when you decide you want access to its human advisors that a tiered fee structure applies.
The management fee starts at 0.89% based on your account balance. (The minimum balance is $100,000.)
- Up to $1 million: 0.89%
- Up to $3 million: 0.79%
- Up to $5 million: 0.69%
- Up to $10 million: 0.59%
- Over $10 million: 0.49%
Individuals seeking long-term financial management and advice that include all life stages from planning for kid's college funding to retirement, post-retirement and wealth management.
The firm offers a comprehensive financial monitoring system when you link external financial accounts, such as IRAs, 401ks, mortgages, loans, credit cards, checking, and savings. This gives clients a great overview of spending and savings.
One special feature is its cash management mobile app that lets clients see all sources of cash receipts and expenditures, including inbound and outbound money flows from your employee, bank account, brokerage, and large purchases.
Another positive feature is its fee analyzer that tells you whether you are paying too much in hidden fees for mutual funds, ETFs, investment, and retirement accounts.
Personal Capital was acquired by Empower Retirement (the nation's second-largest retirement-services provider) in October 2020, so an infusion of new investments from their acquisition may expand the service offering down the road.