Empower (Formerly Personal Capital) Review

On August 18, 2020 Empower Retirement announced its acquisition of Personal Capital, one of the first digital investment managers and our best robo-advisor for portfolio management. On February 16, 2023 the company name officially changed to Empower. Empower distinguishes itself with a comprehensive array of free money management tools for investment management, retirement planning, and cash flow. Empower Personal Cash (formerly Personal Capital Cash) enables any U.S. resident to access a high interest rate savings account with a lineup of free banking services. 

Empower is a full service investment manager and requires a $100,000 minimum with fees beginning at 0.89% AUM. While the free tools are suitable for anyone interested in tracking their finances, higher net worth individuals and families will appreciate the personalized investment management services along with holistic wealth management and Certified Financial Planner access Empower offers. We’ll take an in-depth look at Empower's features to help you decide whether it is a fit for your financial needs.

Account Setup

To sign up with Empower you’ll provide an email, choose a password, list your phone number, and date of birth. You’re required to schedule a call with a financial advisor whether you are interested in only the free tools or the advisory service. You’ll receive a brief biography of your prospective financial advisor.

The next step enables you to link your accounts. This process is fast and secure. You can add most financial accounts including:

• Bank
• Investment
• Debt
• Credit card
• Manually entered categories
• Home mortgage

After syncing your accounts, you'll have access to the free financial tools and reports described in detail below. Anyone can access the free tools, although only those with a minimum of $100,000 qualify to use Empower investment management with financial planners.

To sign up for Empower, you answer intake questions which cover your financial situation, goals, and risk appetite. Your advisor then reviews your current investments and presents you with a personal financial strategy. Next, you’ll open your account at custodian Pershing and fund it with cash or transfer securities. 

Even if you’re using the free tools, you can expect a call from the firm. This may be considered an annoyance by some, but it’s a small price to pay for access to the robust financial analytical software.

Goal Planning

Goal planning is unique at Empower and goes beyond marking a box entitled retirement, college planning, or vacation. The goal-setting process is customized and begins with a conversation with your financial advisor after you’ve responded to the brief questionnaire. Although most investors include retirement as a goal, any goal can be considered, such as saving for college tuition or cash for a second home. 

The customizable Empower Retirement Planner is available for both paid clients and free tools users. This simulator projects your income and spending during both accumulation and distribution phases of life to come up with a reasonable expectation of meeting your long term retirement needs.

As your goals and situation evolve, your financial advisor is there to guide you and adjust your portfolio as needed.

Account Services

Empower offers banking with no minimum amount and Empower provides all the services available at a full-service financial planning firm. Automated deposits are available and encouraged. While margin is not available, two revolving lines of credit can be accessed. These loans have no setup or closing costs, and they offer competitive interest rates. 

The Financial Roadmap is unique to Empower and takes your account and loan information to create a customized to-do list of financial tasks. Topics might include items like insurance analysis, retirement cash flow planning, employer plan analysis, debt management review, and more. The list evolves along with your individual situation. 

Empower’s financial planning software is available to anyone who signs up for the platform, whether they use the Advisory services or not. There is no minimum required to sync your accounts and use all of the tools.

Calculators and tools include:

• Net worth tracker
• Savings planner
• Budgeting
• Cash flow
• Retirement planner
• Investment check-up
• Fee analyzer
• Education planner

The fee analyzer assesses whether you could be saving money on investment fees, while the investment check-up analyzes your asset allocation and suggests ways to increase returns and lower risks. The retirement planner allows you to adjust inputs and investigate the success of various retirement scenarios. We found the calculators and tools to be incredibly helpful and, thanks to account syncing, they provided very individualized and actionable insights.

Cash Management

Empower Personal Cash is a free savings product with no minimums. The program is administered through UMB Bank. After opening an account, your money is placed in participating member banks. The account is FDIC insured up to an aggregate of $1.25 million, well above the standard $250,000 a single bank offers. 

Available features include:

• High-yield interest-bearing savings account
• Individual and joint accounts
• Bill pay by linking to your checking account
• Direct deposit
• Unlimited deposits and withdrawals
  

Portfolio Construction

Empower offers a customized investment process, individualized for each client. The portfolio is driven by the client's responses to the initial questionnaire and interview with the financial advisor.

The algorithm creates the portfolio by integrating the following factors into its calculation:

• Assets
• Risk tolerance
• Time horizon and goals
• Health status
• Tax laws
• Legacy goals
• Net worth and income
• Retirement age
• Marital status
• Expected withdrawal rate, and more

Empower takes a very thorough and deep look at your finances and individual data when it makes its recommendations. The data synced to Empower and drawn out through the call with the financial advisor gives Empower more to work with than most robo-advisors have, and the model this feeds into looks to provide more actual diversification than other robo-advisors using an algorithm based off Modern Portfolio Theory (MPT) alone. The asset allocation employed in the Empower strategy includes varying allotments to the following asset classes:

• U.S. stocks, including varying styles, size, and sectors
• International stocks, including developed and emerging markets
• U.S. bonds, including diverse government and corporate of varying credit quality
• International bonds of varying credit quality
• Alternatives, including real estate and commodities
• Cash

The Smart Weighting asset allocation differs from other automated advisors' market capitalization asset class weighting, where portfolio sectors replicate those in market-cap weighted indexes like the S&P 500. The firm’s smart weighting equally weights assets based on size, sector, and style. This portfolio construction strives to provide a higher risk-adjusted return than the market cap-weighted allocation. 

Investors can choose the core portfolio or a socially responsible investing (SRI) option where companies and ETFs that represent strong environmental, social, and governance (ESG) factors replace comparable funds and equities. 

Portfolio Customization

Customization is an area where Empower excels. Driven by the client and financial advisor, the customization accommodates your tax situation and unique preferences. Clients can request distinct asset allocations, the socially responsible option, ETFs only in lieu of individual stocks, restricted buy or sell lists, replacement ETFs or stocks, special tax-influenced strategies, and more.

Portfolio Management

With the father of Modern Portfolio Theory, Harry Markowitz, on the advisory board, it’s no surprise that Empower portfolios are created along the efficient frontier. Simply put, each investor portfolio is crafted to provide the highest returns for the given risk level. 

The portfolio management is designed to fit the user's goals and preferences. Funds and stocks are evaluated to ensure that they maximize returns, minimize risk, and add to the portfolio’s diversification. The portfolio is also measured for sector and country concentrations, which adds to the portfolio's goal of maximizing returns for any given risk level. The tax optimization strategy includes appropriate asset location in the most tax-efficient accounts, tax loss harvesting, and choosing tax-efficient funds. Municipal bond funds and individual securities can aid in tax minimization. 

Rebalancing is aided by technology alerts which notify managers to adjust the client's asset mix. Rebalancing is triggered when a client's financial situation changes, assets drift too far from goal, or there is a tactical shift in the economy. 

The progress towards goals is reviewed regularly between the client and financial advisor and adjustments are made when needed.

User Experience

Desktop Experience

Empower’s platform is among the most user-friendly we’ve reviewed. The navigation is intuitive with the major categories listed on the menu including Banking, Investing, Planning, and Wealth Management. The Wealth Management vertical is the client’s link to the paid Empower features with quick access to your advisor and the educational blog. 

The overview tab leads to a comprehensive dashboard view with net worth, accounts, spending, and transactions. The investing and planning categories include all of the free money management tools. Banking, as one would expect, is the door to Empower Personal Cash.

Mobile Experience

The mobile app is available for iOs and Android and offers account management, Empower Personal Cash, and many of the portfolio analysis tools. It’s even accessible on your wearable device. Like the desktop version, users can track cash flow, investments, and use the retirement planning features. The app also provides personalized insights such as how much you’ve saved this year. 

A few desktop features are lacking on the app. For instance, the Investment Check-Up isn’t available on mobile, and users who want to open an account need to do so using the desktop version. In addition, there are some issues with account sync and lack of accurate current data reporting, particularly on the Android app.

Customer Service

Customer service is above average at Empower. Users can contact the company by phone and also via email. Advisory clients can email and phone their investment representatives to schedule either virtual or in-person meetings. Additionally, the company has offices in California, Denver, Dallas, and Atlanta for in-person financial advisor meetings. The FAQs are comprehensive and well-categorized. Chat is not available.

• Phone
• Email
• In-person and virtual meetings with advisors
• Physical offices in California, Denver, Dallas, and Atlanta
• Comprehensive FAQs
• No live chat

Security

The platform employs the highest security protocols. Client login information is encrypted and unavailable to company employees.

Security protocols include:

• Two-factor authentication
• Firewalls and perimeter security comparable with banks and payment cards
• 256-bit AES data encryption
• Daily transaction emails so users can verify their own activity
• Empower carries Securities Investor Protection Corporation (SIPC) insurance up to $500,000 which includes $250,000 for cash. Many other firms offer excess insurance to cover company malfeasance and/or bankruptcy. As is standard across the industry, there is no type of insurance that can protect your account from losses due to the investment markets.

Education

The educational portal blog is called Daily Capital and includes hundreds of well-written educational articles and guides. 

The topic categories include:

• Personal Finance
• Investing and Markets
• Financial Planning
• News 
• Client Stories
• Guides and Reports

Many of the articles are of the actionable variety, answering common questions like how to reduce taxable income or taking market events and dovetailing them into a favorite topic of diversification or concentration risk. They do, of course, usually end the analysis with a plug for the service. The robo-advisor also publishes analysis of the 401K plans offered by some large employers like Amazon and Walmart that are very interesting. Amongst this lighter content, however, are white paper posts that go deeper into the reasoning behind Empower’s approach. Sophisticated investors will appreciate the Empower research and deeper coverage of investment topics.

Commissions & Fees

Empower’s money management software is available for free and is well worth checking out.

Empower charges a declining fee schedule, based on assets under management. There are no commissions or transaction fees. 

The AUM fees are higher than most competitors with financial advisors like Betterment, Schwab Intelligent Advisors Premium, and Vanguard Personal Advisors.

Final Verdict

Empower is best for high-net-worth investors seeking a well-researched investment approach, qualified financial advisors, and comprehensive financial planning. Investors who might otherwise hire a full-service traditional financial advisor can interview an Empower financial advisor to learn about their strategies to minimize taxes and outperform a traditional market cap weight investment portfolio. 

Unfortunately, the large account minimum puts Empower out of reach for many as a robo-advisor. That said, the free portfolio management tools are the best we’ve found and suitable for any investor who seeks to analyze and manage their own investments. 

Methodology

Our mission at Investopedia is to provide investors with reviews and ratings of robo-advisors that are comprehensive and unbiased. Our team of researchers and expert writers, led by Michael Sacchitello, spent months evaluating all aspects of a robo-advisor’s platform, including the account setup process, goal planning tools, account service options, portfolio construction offerings, portfolio management, mobile and desktop user experience, educational content, fees, and security. As part of this evaluation, we extract critical data points that are weighted by our quantitative model that produces a powerful star-scoring system.

With the individual investor in mind, we’ve designed a comprehensive ranking methodology to find the best overall robo-advisors and the best robo-advisors across nine key categories. Each advisor is then scored across multiple variables to rate performance in every applicable category. The score for the overall award is a weighted average of the categories.