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Personal Capital Review (2020)

  • Personal Capital Review (2020)

Who is Personal Capital and why should you care?

Personal Capital is a FREE financial dashboard that offers easy to use software to track and stay on top of your personal finances. But that’s not all.

Personal Capital also provides a full investment management service. The investment management service is similar to a Robo-Advisor, but with much more support. 

Our team spent hours researching Personal Capital. In our review, we’re going to uncover the strengths and weaknesses of Personal Capital.

We will walk you through Personal Capital step by step. 

If you’re interested in Personal Capital and want to know what they’re all about, then you’re in the right place! 

We’re going to cut out the fluff and get right into it.

Let’s go!

Who is Personal Capital 

Personal Capital is an online financial advisor and personal wealth management company. As of today, they have over 24,000 clients and are managing well over 12 billion financial assets.

Since Personal Capital was founded (2009), they have been providing both free and paid for wealth management software. 

Personal Capital offers financial services to high net investors and those looking to track and manage their money. 

How Does Personal Capital Work

Personal Capital has two software products:

  1. Personal Capital Free Financial Dashboard
  2. Personal Capital Wealth Management

These are the two main services that they provide their clients. 

There is no requirement to upgrade to the wealth management service and the free financial dashboard provides a lot of value.

Although these two services are somewhat related, they both offer different features and have distinct goals.

Let’s take a look at each one of their services under a microscope. 

Personal Capital Free Financial Dashboard

The free financial dashboard is a platform where you can create a full picture of your financial situation.

You can add just about any personal financial information to the platform and get a 360-degree view. 

Add your savings account, loans you have taken, investments, your monthly budget, and more. 

The more information you add, the better the free financial dashboard can help you. This is a tool to give you a comprehensive look at your current financial situation.

What Does The Personal Capital Free Financial Dashboard Offer

The Free Financial Dashboard has a lot of great features. Let go over the main free financial tools and explain how they can help you.

  • Net Worth
  • Budgeting 
  • Cashflow
  • Retirement Planner 
  • Fee Analyzer 
  • Education Planner

As you can see, the Free Financial Dashboard covers a large array of personal finance sectors. We are going to take a look at each of them, one by one.

Net Worth

What is your net worth and how do you calculate it?

Let’s not get too technical but general speaking, your net worth is your assets minus your liabilities. 

Personal Capital allows you to connect your personal accounts and track your liabilities and assets. The net worth section gives you the big picture perspective that you need to meet your financial goals.

Budgeting 

Creating a budget and getting on top of your finances is a great wealth-building habit. Personal Capital has an easy to use budgeting tools to help you track money coming into your account and money leaving.

If your main interest is a budgeting platform/software, we don’t think that Personal Capital is for you. Their budgeting tool is great, but they don’t provide a bill payment function. 

Cashflow

Cash is king, and that’s especially true when monitoring your cashflow.

Personal Capital’s cashflow feature allows you to see the income that has come in and the expenses that have left your account over 30 days.

That way you can understand where you stand in terms of cash flow and properly stick to your spending and saving goals. 

Retirement Planner 

Planning for your retirement is a crucial decision to make. We recommend starting early. There are many ways to start investing when you’re young.

The free Personal Capital retirement planner can help you plan for retirement. They have numerous features to help you get a clear perspective of how your golden years will look like. 

Fee Analyzer 

You might not know it, but you could be paying hundreds of thousands of dollars in hidden fees. Generally speaking, financial institutions charge fees. If you’re not sharp, these fees can add up to huge amounts over a lifetime.

The fee analyzer is a feature that allows you to connect your mutual funds, investing account, and retirement accounts. They also have step by step instructions on how to lower 401(k) fees. 

Education Planner

The education planner eliminates the “guesswork” when it comes to financial planning for education.

Simply put the education planner helps you calculate the amount of money you should be saving to cover education costs. 

Free Financial Dashboard Summary

The Free Financial Dashboard is a great way to track and manage your money. 

Personal Capital has great features that allow you to really understand your financial situation and plan ahead.

You can uncover hidden fees, plan for retirement, save money for education, improve your spending habits, and much much more.

The best thing in all of this is that the free financial dashboard is free!

Now let’s look over the Personal Capital Wealth Management tool.

Personal Capital Wealth Management 

If you’re looking for tailor-fit personal advice, Personal Capital Wealth Management could be a good choice for you. 

Before we explain the added features, benefits, and investment strategies, let’s have a glance at their conditions.

Quick Look at Personal Capital Wealth Management Service

Account minimum: $100,000 USD

Fees: 0.49%-0.89% annual management fee

Pros:

  • No commission fees and no hidden fees 
  • Outstanding customer service
  • Wide range of investment management tools
  • Great financial advisors 

Cons:

  • High account minimum ($100,000)
  • The management fee is rather high

Personal  Capital is best for:

  • Passive investors 
  • Investors interested in high-quality (free) financial management tools
  • Those looking for human financial advisors 

Personal Capital Wealth Management (Full Review)

Personal Capital was founded in 2009 and has quickly become a respected wealth management service.

Personal Capital is an online financial advisor. They use Robo-advisor algorithms and human financial advisors to personalize their financial management service.

Their approach includes tax optimization, smart weighing strategy, and dynamic portfolio allocation.

Now that we had a small background check, let’s check look at the services and features that Personal Capital Wealth Management offer :

Personal  Capital

Account minimum 

$100,000

Account management fees 

Fees depend on account balance:

  • $100K-$1M : 0.89%
  • $1M-$3m: 0.79%
  • 3M- $5M: 0.69%
  • $5M- $10M: 0.59%
  • Over $10M: 0.49%
Set up fees

$0

Account fees 

$0

Financial planning 

$0

Tax-loss harvesting 

Fractional Shares 

Portfolio rebalancing 

Investment accounts 
  • Taxable accounts
  • Joint accounts
  • Trusts 
  • Cash accounts
  • Non-retirement accounts
  • IRAs
      • Traditional IRAs
      • Rollover IRAs
      • Roth IRAs

Personal Capital does not directly manage 401(k)s or 529 plans, but they will advise on their allocations

Social Responsibility Investing (SRI)

Mobile apps

Web platform

Customer support 
  • 24/7 phone line
  • Email

Signup & Portfolio Management 

Upon signing up, Personal Capital asks their clients a few questions. These questions are geared to better understand your risk tolerance, investment goals, and retirement planning. 

With help from algorithms and personal preferences, Personal Capital will construct a personalized portfolio.

The process is for you, to better understand how you stand as an investor. It’s all a part of their strategy selection technique.

Your portfolio is managed based on the principles of the Modern Portfolio Theory (MPT). 

If you don’t know what that is, stay with me.

In short, MPT is the theory on how to lower risk while maximizing returns for investors. MPT says it’s all about diversification when it comes down to investing.

Personal Capital offers seven different asset classes

  1. U.S Stocks
  2. International Stocks
  3. U.S Bonds
  4. International Bonds 
  5. Cash 
  6. Alternatives
  7. Unclassified

They also rebalance your portfolio periodically to ensure focused asset allocation.

Your assets will be diversified into the following asset classes. The investment percentage in each asset class will depend solely on how you stand as an investor. 

These asset classes are made up of low-cost exchange-traded funds (ETFs).

Altogether this allows Personal Capital to provide you with a dynamic personalized portfolio. They also monitor and make adjustments to your portfolio. This includes rebalancing and tax optimization strategies such as tax-loss harvesting.

Personal Capital is very proud of the yields they achieve for their investors. Below is a snapshot of their performance. 

Personal Capital Yields

All figures except YTD are annualized as of 03/31/2020

Personal Capital Wealth Management team provides each client with a dedicated personal advisor. 

Even if you don’t use them often, it’s relieving knowing that they’re there for you. 

What Investment Strategies Does Personal Capital Wealth Management Service Offer?

We dove into the nuts and bolts of Personal Capital to find out how they stand apart from the other online brokers.

From our analysis, we found that Personal Capital has five unique investment strategies. This is what separates themselves from the rest.

  1. Dynamic Portfolio Allocation
  2. Personalization
  3. Tax Optimization
  4. Portfolio Rebalancing
  5. Smart Weighting

Let’s have a quick look at each one.

Dynamic Portfolio Allocation-

A big advantage with the Personal Capital Wealth Management platform is that you are able to see your full financial picture. 

This allows Personal Capital to help you efficiently allocate your portfolio. Personal Capital manages your investments and recommends adjustments. They do this to keep your strategy up to date with your changing situation. 

Personalization-

Personal Capital understands that investors are different. They keep investing simple and personalized.

Their approach is specifically fit to your life and financial goals. They create a personal strategy based on your priorities and where you are in life.

Tax Optimization-

Tax optimization consists of tax strategies designed to lower the tax an investor must pay to the IRS.

Personal Capital takes advantage of tax-loss harvesting. Tax-loss harvesting recognizes capital gains and lowers the amount of tax you need to pay. 

Portfolio Rebalancing-

Buying low and selling high is a lifelong investors tip. Personal Capital carries out frequent rebalancing to find market opportunities for their clients.

They strongly stand by rebalancing and their research shows that rebalancing can largely improve a portfolio over time. 

Smart Weighting-

Personal Capital exercise “Smart Weighting” by restraining investment exposure to one specific market sector. In fact, they make sure that your portfolio is well-diversified and balanced.

Wealth Management Features 

Personal Capital offers the full package to their clients. From budgeting and money management to passive investing, you’re in good hands with Personal Capital.

The Wealth Management platform adds some exclusive features aside from what we mentioned above and we wanted to share them with you.

  • Financial advisors- The financial advisors are a big part of the Wealth Management service. They have a team of experts and an investment committee constantly working to improve and maintain strategic investment portfolios. 
  • Advice for 401(k)s and 529 plans- Personal Capital unfortunately does not manage 401(k)s or 529 plans. In spite of that, they do give advice and consult about those accounts. 
  • A complete view of your finances- This platform allows you to have a 360° degree outlook on your personal finances. Having all of your investments, expenses, and streams of income in one place is the right way to take control of your finances. 
  • Socially Responsible Investing (SRI)- With SRI you can invest in a more sustainable future. SRI is a way for interested clients to invest in companies more active in environmental, social, and governance issues. This known as ESG and ESG are the pillars used to evaluate socially responsible companies. 
  • Apps- Personal Capital has apps so you can stay connected on the go. Their apps are suitable for Android and iOS devices. 
  • Cash Savings Account- Like Wealthfront and Betterment, Personal Capital offers a savings account. It is called Personal Capital Cash. The account is FDIC insured up to 1.5 million and they are offering 0.05% APY as of 2020. There is no minimum balance required to open a savings account.

Is Personal Capital Safe? 

Personal Capital believes in constant security.

For starters, Personal Capital requires you to authenticate each computer/device that you sign in on. Before you can access your account you’ll receive a phone call, SMS, or an email confirming your identity.  

This is a great way to maintain account security, in fact, I wish all financial institutions had this level of security.

Personal capital also has fraud detection set up. They have a transactions page where you can see everything that has occurred in your account. This is a fast and easy way to check what’s going on in the event of suspicious activity.

Personal Capital has many layers of security embedded into their platform. We are confident that they take the actions necessary to keep your account safe. 

Should You Sign Up For Personal Capital?

The Personal Capital financial software is no doubt one of the best free financial services on the market. 

You can sync all of your accounts and monitor your financial situation with no obligations to upgrade.

Personal Capital is an extraordinary Wealth Management platform with some of the best free financial tools available.

Personal Capital is a great service to track and manage your money.