Personal Capital was founded in 2009 and launched in 2011, making it one of the first robo-advisors. Personal Capital is both a personal financial dashboard with free tools and analyzers as well as a robo-advisor that manages portfolios, for clients with balances of $100,000 or more. Its minimum balance shows Personal Capital is aiming for a much more affluent client than most other robo-advisors (many of whom have $0 minimums).
On the other hand, that higher-net-worth client will also get their own human financial advisor along with the Personal Capital algorithm. This service is not cheap, starting at 0.89% per year of assets under management, which is again, quite a bit higher than most robo-advisors, but it is still less than the 1% or more charged by traditional human advisors. Overall, the company has a good reputation and has continued to attract clients, now managing more than $8 billion.
Free suite of financial tools
Access to professional financial advisors
Tax minimization and optimization on all accounts
$100,000 minimum balance
Higher fees than competitors
No online chat or 24/7 support
Personal Capital has been around for almost a decade and has not encountered any issues in terms of breaches of trust or privacy. The company is quite transparent in how its operations work, with links to its detailed investment strategy methodology and to its regulatory filings made with the Securities and Exchange Commission (SEC).
In terms of data protection and privacy, Personal Capital uses multiple layers of security in every component of their systems to keep your accounts and your money safe and your information private. Data is encrypted with AES-256 with multi-layer key management, including rotating user-specific keys and salts with strict internal access controls where no individual at Personal Capital has access to your credentials. In addition, its website's encryption is rated A+ by the world-renowned Qualys SSL Labs, a stronger rating than most major banks or brokerages.
Personal Capital has also partnered with Yodlee, a financial technology industry veteran, to facilitate aggregation of your accounts. With over a decade of experience connecting with financial institutions, Yodlee provides an added layer of safety. Your bank and brokerage credentials are only stored at Yodlee, not in Personal Capital's database.
On the financial tools side, Personal Capital shines as a free financial aggregator and analyzer. You can link your external banking and investment accounts and get an in-depth look at your financial situation, project future outcomes, and get tips on where you can improve.
Tools also include a net worth calculator that accounts for all of your assets and liabilities, as well as a fee analyzer to help you figure out which investments are costing you relatively too much and how to fix those issues. The retirement planner tool helps you figure out if you’re on the right track to meet your retirement goals or if you can expect a shortfall.
Desktop and Mobile Experience
The desktop and mobile experience are comparable to one another, with the same features and functionalities. The app is available for both iOS and Android.
Research and Insights
Personal Capital does not offer any economic or financial research beyond the tools included in its dashboard. The company’s blog, daily capital, offers investor education, market insights, and economic news in a fun and easy to understand format, organized by broad topics such as retirement planning, saving for college, and taxes and insurance.
For its managed account clients, Personal Capital has a financial advisor on call ready to answer questions, provide financial advice, and otherwise support the client with the platform. For all other users, support can be reached during market hours or via its offices located in California or Denver.
In addition, their website features a “support portal” addressing solutions to known issues, a comprehensive getting started guide, and a frequently asked questions (FAQs) section.
On the downside, there is no live chat option for either current or prospective clients and no 24/7 support option, although the company’s Twitter account (@PersonalCapital) seems to be responsive to client inquiries and issues.
Personal Capital offers robo-advised managed accounts, advising taxable (individual and joint), IRA, and trust-owned accounts. The company will help advise you on your 401(k) and 529 accounts but will not be the custodian for them or manage them on your behalf.
Personal Capital employs a “smart beta” type of strategy that builds off of the mean-variance optimized strategies informed by Modern Portfolio Theory (MPT). The company augments this traditional index approach with innovative solutions made possible by proprietary technology and decreasing trading costs. The result is a portfolio enhanced by the value of a personal advisor relationship and backed by the expertise of an expert Investment Committee. To do so, they combine math with a qualitative assessment to determine what asset allocation is right for you.
Commissions and Fees
While the financial dashboard tools are free, the managed accounts of the robo-advisor have a fee starting at 0.89% of assets managed. This is a steep management fee, compared to several other robo-advisors who charge just 0.25% or less. The justification for the larger cost is the extra personalized services that are included in Personal Capital’s fee: access to human financial advisors who are ready to advise you via phone; tax-loss harvesting and other tax minimization strategies; and automatic rebalancing.
Still, many of Personal Capital’s competitors are now bringing on the same services (human advisors, tax-loss harvesting, rebalancing) for fees starting at just 0.50%, making Personal Capital one of the pricier robo-advisors.
What You Need to Know
With high minimum balance requirements and a pricey cost structure, Personal Capital is best fit for the type of higher-net-worth investor who likes having “a guy” but also likes the calculability and rationality granted by a robo-advisor and its investment algorithms. Alternately, if you’re interested only in Personal Capital’s free dashboard of financial tools, the self-directed investor who wants to tweak and optimize every last facet of their household wealth will benefit from the intuitive analyzers and projections it offers.
Personal Capital is therefore not a good fit for hands-off investors who want automated investment but either don’t have $100,000 or more to invest or who may, but do not want to pay a premium for the option to talk to a human advisor.
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