Personal Capital Review

This Personal Capital review aims to explore and explain what Personal Capital is, what it offers to users, and how it compares to others on the market. Like Mint.com and LearnVest, Personal Capital wants to help you with your financial planning. Like them, too, it’s free. The difference is that Personal Capital has an interest in investments. Neither Mint.com or LearnVest have much to offer users wanting to learn more about that aspect of their finances. Personal Capital is different in that its target audience is more knowledgeable about money. So how has Personal Capital reached the stage it’s at now?

 

A useful Personal Capital review must include a historical overview. Personal Capital is an online money management service for which no basic fee is charged. There is a paid service, but it isn’t necessary for every user to sign up for this. Personal Capital will check up on your investment for free, and if you do choose to sign up for a paid service, your first meeting with a financial advisor is free. This gives the system an edge over those which operate through phone calls only (e.g. Mint.com).

The company was set up in 2009, and now has close to a million users. It manages more than $194 billion in assets, is registered with the SEC and has more than $1.8 billion in managed accounts. The team behind Personal Capital have a lot of financial acumen under their belts. The founder, Bill Harris, was CEO of both Paypal and Intuit. Over $103 million in venture capital went into Personal Capital — clearly, a lot of wealthy people believed in it.

Personal Capital isn’t for those just trying to save their first couple of thousand. Its target are those with a net worth between $25,000 and $2 million. These people are rich enough to need financial help but not rich enough that traditional advisors would have targeted them. Personal Capital helps these people out at a very low fee.

Personal Capital Review: Its Main Features

Like all online financial systems, Personal Capital manages your money with the help of automated programs. These programs offer objective advice, but of course they allow Personal Capital to charge much lower fees than traditional financial advisors. They appeal to a niche in the market, noted above, that was traditionally not well served.

Personal Capital supports all kinds of investment accounts, from taxable accounts and trusts to IRAs.

The fees charged on Personal Capital depend on how much you have invested. If less than $1 million, it’s 0.89%. Between 1 and 3 million, 0.79%. For the next $2 million, 0.69%, and so on. There are more figures, but the point is this: the fees are pretty low for what is offered.

Your account is opened for free and you must then connect your financial accounts to the dashboard. On the desktop version of Personal Capital, this is very easy. Accounts stay linked until you either unlink them or change your password, and then the system updates your account information daily. It collects all your information into colourful charts and graphs, showing your investments and savings and analysing your overall portfolio. Elements displayed include account balances, spending reports, net worth, asset allocation, projected investment fees and investment returns. You can click on any of these elements to get more information about it.

Personal Capital’s interface is easy to use and lets you track your transactions daily, down to the fine print. You can categorise your spending and help make sure you can pay bills and stay within budget. Cool features of Personal Capital include showing upcoming bills, how much is the minimum (e.g. on a credit card) and how much debt is outstanding in total.

So far, so similar to Mint.com. Where Personal Capital excels is in its Retirement Planner tool. This is relatively new and helps you manage, build and forecast your retirement savings all in the same place. It uses your input financial data, plus your personal information and expected future events, and then generates a financial plan to help you meet your goals.

The Investment Checkup feature is also something additional to what other services offer. You can put in your risk profile and proposed retirement date, answer some simple questions, and it will recommend a profile for you. It explains the risks of the investment profile, explains what it’s suggested, and generally does as much as possible to guide the first time investor. This is where Personal Capital really comes into its own.

As well as its desktop interface, Personal Capital has a mobile app that works on iOS, Android, and even on the Apple Watch. It can send you email notifications if these would be useful to you.

Personal Capital does suffer from the security risks inherent to any service of this type. Your bank will not cover you if there’s a breach, because you’ve given your data to a third party. In reality, though, chances of a breach are very low with Personal capital. It uses “bank grade” technology, requires you to verify your online and financial accounts multiple times, and is fully encrypted in numerous ways. It isn’t possible to authorize a cheque or perform a withdrawal from within the interface, so hackers couldn’t break in and spend your money. So there is an inherent security risk here, but it’s no higher with Personal Capital than elsewhere.

Pros and Cons

Of course, a thorough Personal Capital review must consider the cons as well as the advantages. In this case, there are a good deal of advantages, but the system isn’t perfect.

Compared to some systems, such as Vanguard or Betterment, the investment management service fees are not as low as they could be. While the website suggests their stock portfolios have performed better than Vanguard’s, there’s no full information on why this is the case. Understandably, this is because the service is aimed at those who don’t know much about investing — their investment element is an expansion of the budgeting tool. This could be either a good thing or a bad thing. In some ways, Personal Capital is an advanced version of Mint.com, but once you’ve expanded into investment areas, it could also be described as a less-advanced version of Wealthfront. It depends mostly on what you’re looking for.