Personal Capital Review – 2020

Personal Capital is a wealth management service, with useful tools for free users. Our Personal Capital review will cover both sides and help you figure out what’s right for you.

If you are simply looking for an easy way to track your net worth and track your progress toward financial goals, then a free Personal Capital account is the perfect tool.

While they have a handful of great free resources for planning retirement and managing finances, they also offer advising and financial planning services to those with at least $100,000.

If you meet their account minimum, Personal Capital has many useful features and may be the right service for you. If you don’t meet their minimum, their free tools are still a valuable asset and a solid way to track your net worth.

How Does Personal Capital Work?

Personal Capital operates as both an online alternative to traditional financial advisors and as a provider of tools and information to do a base-level analysis of your financial situation.

Personal Capital lets you freely plan for retirement while accounting for a wide range of factors that might affect your retirement. You also get free access information to help educate yourself on different financial topics.

As a wealth manager, Personal Capital gives you access to professional financial advisors. They also have some much-appreciated quality of life improvements, such as the ability to link several different accounts. 

This lets you see all of your account information in one place, allowing you to consider your 401(k), IRA, checking account, savings account, and any other places you might’ve stored money.

What separates Personal Capital from their competitors is the level of customization and completeness offered in their services. 

By providing you tools for budgeting and investment planning alongside questionnaires that take your non-financial preferences into account, Personal Capital aims to be a place where you can plan out all aspects of your financial life.

Personal Capital’s Key Features

Personal Capital’s key features can be best broken down into those freely available and those which require an account.

Free Tools

The retirement planner offered on Personal Capital’s website is reason enough to create a free account.

Using a few details like your current age, yearly savings, and expected retirement spending, the retirement planner simulates thousands of scenarios and gives you a breakdown of how much you’ll have by the time you retire and how long it will last. 

Taking into account other sources of income like Social Security, Personal Capital’s tool does a wonderful job explaining how and where your money will go in retirement. It even gives you an estimate of how likely your portfolio is to last a certain number of years.

This tool is incredibly comprehensive, and I would recommend it to anyone who is new to saving. If you’re wondering why building a budget is useful, using a retirement planner can help motivate you to stick to your budget and save over time.

Most everything else available for free from Personal Capital is very standard, but that doesn’t mean it’s not useful! Their accounts dashboard summarizes all of your financial accounts into 1 tidy place so that you can easily track your net worth.

They also have a budgeting tool that’s easy to use and helps illustrate where your money is going.

Personal Capital also has a tool to help keep track of your upcoming bills, and their cash flow graph is a nice addition too. But, compared to other software like Mint, which is also free and offers many more tools, it’s hard to say it adds a ton of value.

Read: Personal Capital vs. Mint

Still, though, at the end of the day, free is free. You may find you like their style of illustration or the specific articles they have on offer. 

Since creating a free account only takes 1-2 minutes, it’s worth checking out.

Personal Capital’s Premium Options

This is where many of Personal Capital’s features fall. But, what is by far the biggest highlight is their wealth management and planning service. 

They charge a management fee ranging from 0.89% to 0.49%, depending on your account balance. You also need a minimum of $100,000 in your account to access these features.

With that in mind, let’s talk about Personal Capital’s wealth management. 

Boasting a team of experts that includes Harry Markowitz (often referred to as the father of modern portfolio theory), Personal Capital certainly has some heavy hitters helping you manage your wealth.

As such, your portfolio will benefit from more modern management strategies: rebalancing, tax-loss harvesting, weighting sectors more equally than the S&P 500, etc. But my favorite part is the low fee ETF strategy.

Pros & Cons Of Personal Capital

Pros: 

• Useful free tools and retirement planner
• Educational articles about managing finances
• High-quality professional portfolio management
• Able to regularly contact your financial advisor / financial advising team
• Employs strategies like tax-loss harvesting to minimize tax bills

Cons: 

• $100,000 account minimum
• High Management fees for accounts between $100,000 – $1 million

How Much Does Personal Capital Cost?

If you use any of Personal Capital’s wealth management services, the fee starts at 0.89% if your account has between $100,000 and $1 million. The fees scale down as follows:

• $100,000 – $1 million: 0.89%
• $1 million – $3 million: 0.79%
• $3 million – $5 million: 0.69%
• $5 million – $10 million: 0.59%
• $10+ million: 0.49%

While this isn’t terrible as far as management fees go, there are better options out there. Both Betterment and Vanguard charge respective fees of 0.40% and 0.30% for similar packages. If you like the idea of having a more personal touch, Facet Wealth is another solid option.

That said, Personal Capital’s service improves if your account has at least $200,000. Once you reach this point, you’re given access to two dedicated financial advisors. 

These two professionals will work with you individually to create a plan for your wealth that’s best from both a financial perspective and an overall life one. They’ll take into account your specific preferences (sending a kid or grandkid to college, socially responsible investing, etc.), all without extra fees, 

If you’re in this tier and want a high level of customization, consider giving Personal Capital a try.

Is Personal Capital Safe?

As a company that markets itself towards wealthy clients, safety is of the utmost importance. Luckily, Personal Capital does a good job of making sure your information is kept safe. 

When you first log in to your account from a new device, you’re asked to input a security code sent via text, email, or phone call. This helps prevent fraudulent logins even in situations where your account’s details are discovered.

Also, Personal Capital doesn’t allow you to transfer money out of an account via the website. So, even if someone was able to get into your account, your money should be safe.

Any money you have stored in your Personal Capital account can have FDIC insurance up to $1,500,000, so your money is also safe in the event of insolvency.

How Does Personal Capital Make Money?

The answer to this question is simple: management fees. The fee mentioned earlier, which ranges from 0.89% to 0.49%, depending on how much is in your account, is all-inclusive. This means it takes into account all fees associated with using Personal Capital as a management service.

The company has also raised over $265 million from investors to fund operations and growth.

How Is Personal Capital’s Customer Service?

Personal Capital is known to have excellent customer service, with either a designated advising team or named financial advisors at your disposal. 

Once you’ve set up an account with at least $100,000 in it, you can directly contact your advising team at-will. Personal Capital also doesn’t limit how much you can chat with them. Thus, you get a direct line of open communication with the people managing your account.

Similarly, if your account has at least $200,000, you can contact your assigned personal advisors as often as you’d like. 

How Could Personal Capital Improve?

Personal Capital prides itself on pursuing high net worth individuals. While this lets them focus on providing valuable services to those they serve, it’s also the source of the high account minimums and management fees.

Though Personal Capital provides a useful service, the high account minimum means most people won’t be able to use it. Lowering the account minimum would be a useful way for them to improve, making them much more accessible.

How To Get Started On Personal Capital

Getting started on Personal Capital is surprisingly easy! Both processes of creating your initial account and linking multiple accounts take almost no effort whatsoever.

To create your initial account, you’ll need to enter an email address, password, and phone number. You then link a bank account, though you can temporarily skip this step. 

That’s all it takes. You’ve created your free account! 

Next, fill out some relevant information like age, planned retirement age, and current savings. This is all used in Personal Capital’s financial modeling tools and helps autofill information as you use them.

If you want to link multiple bank accounts, it’s as easy as logging in to your account(s) from within the Personal Capital website. 

After using your institution’s credentials, Personal Capital will take about one minute to verify all your information. This process is automatic and requires no further input from you. After it’s done checking your account, you’re set up!

To use Personal Capital as a wealth manager, simply reach out to a financial advisor. You’ll have to verify your identity with relevant documents (social security number, address, etc.) and link an account to transfer funds into a Personal Capital account.

You’ll also fill out a brief questionnaire about your investment goals, how long you want to invest for, and your risk tolerance. Your financial advisors will then use these questions to manage your portfolio in a way that best suits your needs.

Should You Use Personal Capital?

If you are simply looking for an easy way to track your net worth and track your progress toward financial goals, then a free Personal Capital account is the perfect tool.

If you’d like to use them as your investment manager or advisor, you’ll want to compare fees with the competition and decide if the features are worth it to you. For those of you looking for a way to compare advisors, check out SmartAsset.

At the end of the day, however, Personal Capital has millions of paying customers because their product is solid.

Compared to other advising options like Facet Wealth, Personal Capital offers traditional account management fees (% of AUM) which many people are familiar with.

Like other financial advisors, Personal Capital’s downward sloping fee structure means someone who has more money will pay less in fees, making it more attractive as your net worth increases.

The management fee at the highest levels is relatively low, and constant access to such well-respected financial experts and personal advisors is a valuable service. If this is you, you should definitely check out Personal Capital.