Personal Capital Review – Organize Your Investments

Personal Capital hit the stage and took a great approach to helping people get their finances and investing in order.

Over the past several years they have improved and become one of the most used budgeting and investment tracking apps in the world.

This review of Personal Capital will give you more information about the company, insight to all the features, and detail the pros and cons of using Personal Capital as your main personal finance app.

Is Personal Capital Legit?

Personal Capital is one of the foremost applications of technology and finance for the everyday consumer, Personal Capital’s aim since the outset has been to avail the consumer a better and effective money management system that they can benefit from.

This was the reason behind the congruence of the most advanced technology with the most experienced financial operators and advisors that came together to create an easy-to-use software that can be part of every household in America.

The total assets that are tracked through their service is a whopping $500 billion. Their growth curve seems to be moving upwards, and steeply. All in all, one would certainly say that Personal Capital is as legit as it gets in the asset management category.

Services Offered

Personal Capital offers two sets of packages for a new user: the free service and the premium service. But unlike most other models of subscription, the free service actually comes with a host of features along with a team of financial advisors that help you manage your money better.

The paid service offers wealth and investment management. If you begin with a balance over $100,000, two financial advisors are assigned to your account and they provide all sorts of advice and help to manage your investments better.

Once you open a free account, you can begin linking all your financial accounts to the service and the dashboard will start loading up with different indexes to indicate different aspects of your accounts and wealth.

You can then avail a host of services that are designed to suffice specific requirements.

Budgeting

Everything from monthly spending target to actual expenses can be tracked in real time at Personal Capital. After adding multiple bank accounts to Personal Capital, a complete breakdown of each account’s wealth can be undertaken.

Everything from the swipe of your credit and debit card along with every bank transaction is available and can be monitored. As part of the budgeting feature, Personal Capital also helps you keep track of your monthly payments and maintains a history of those as well.

So, your entire household can be summarised in monetary terms on Personal Capital. Aggregate total income and aggregate expenditure will then allow you to understand the proportion of expenditure to savings and whether there are specific changes required to do a better job at it.

Retirement Planner

When it comes to retirement, people begin saving for it as soon as possible. They would have different ways of approaching the idea of retirement planning such that they save enough to be independent and comfortable in the future.

By running a few numerical algorithms against retirement goals defined, Personal Capital allows you to have a realistic hold on every feature of your retirement fund.

From expected income till a specific age to life goals such as buying a home or getting married, Personal Capital accommodates several such individualistic features to create a very realistic projection of your retirement fund.

In fact, there are other accommodating features where Personal Capital allows you to create multiple retirement scenarios and creates projections for all of them. What’s more, by combining the value of several assets in one place, you will have a much better hold of your entire retirement plan by using Personal Capital’s planner.

The Investment Checkup

This feature allows you to evaluate your investments from the past and make better investment decisions in the future. The process is also thorough and not just for the sake of persuasion.

You fill a risk assessment questionnaire and follow it up with an elaboration on your investment goals, which then ends up becoming the blueprint upon which past performance is evaluated and future goals are assessed. Charts regarding your asset allocation, existing portfolio and investment performance are created.

This is then followed up with recommendations that would improve the existing portfolio and also help create a sound and appropriate asset allocation plan that would accommodate your needs and risk factor as well.

Net Worth Calculator

Another interesting feature is the Net Worth Calculator that most of us might have some fun with. Majority of people are not aware of their net worth at any given point in time.

But, by aggregating all your assets and pitting them against your liabilities, Personal Capital can come up with a figure that determines your net worth.

Cash Flow Analyzer

The cash flow analyzer is an important tool to make you understand the streams in which you spend money and what types of activities or responsibilities are the most expensive to sustain.

By establishing a budget against your income and expenses, you can create an entire cash flow chart that tracks your expenditure over the past months or years.

Wealth Manager

The paid service on Personal Capital indulges in wealth and asset management while assigning a highly qualified financial advisor for your account. But you need to invest over $100,000 to avail these services.

In return for these services, Personal Capital takes a percentage of the assets under management (AUM). The fees for this service are as follows:

• Up to $1,000,000: 0.89% of AUM
• 1 to 3 Million: 0.79% of AUM
• Next $2 Million:0.69% of AUM
• Next $5 Million: 0.59% of AUM
• Over $10 Million:0.49% of AUM

Sign up for a Free Personal Capital Account>>

Company History

Founded in 2009 as SafeCorp Financial Corp. by Bill Harris, Rob Foregger and Louie Gasparini, Personal Capital got its current name in 2011 when it was renamed and publicly launched. Its headquarters are in San Carlos, California, while they have offices in San Francisco and Denver.

They have been growing from strength to strength since their inception and have always approached financial services by adding a technological element to it. The number of consumers using their free service already crossed the 800,000 mark in 2015.

In December 2016, their round of Series E funding raised $25 million from IGM Financial, yielding a total of $75 million raised at the closing of the round. Current figures only seem to be pointing upward as they have hit more than 1.6 million registered users with assets worth over $6.5 billion under their management.

Alternatives

Personal Capital is somewhat unique in the personal finance world in that it competes with both budgeting apps and robo-advisors. To really look at the alternatives we need to break them up into these two groups

Budgetting Apps

There are two apps that are direct competitors on the budgeting side of Personal Capital

Mint.com

Mint is famous for being a free budgeting app and is truly one of the most comprehensive. As far as just straight budgeting I would say that Mint.com is actually the better choice.

However when you compare Personal Capital vs Mint, Personal Capital is by far the more comprehensive with much better guidance on investing.

YNAB

YNAB simply stands for “You Need a Budget”. It is one of the most comprehensive budget tools available and it is free.

Where YNAB shines is for the hard core budget minded person, because they really can adapt to however you want to do your budget. Where it does not measure up is that it can feel like drinking from a garden hose.

So if you are just dipping your toes into the budgeting lifestyle, this tool will probably feel a bit overwhelming. On top of that, they have no support for investing like Personal Capital.

Other Robo-Advisors

Robo-advisors allow you to invest your money while an algorithm does all the balancing of your portfolio for you. You only fill out a short questionnaire to determine your risk tolerance and from there they handle all the investing.

Betterment

Betterment has become the standard that all robo-advisors are judged. The platform is very easy to get started with and super simple to keep up. It really is a great investing product.

When you do the comparison of Personal Capital vs Betterment they differ in one two ways. The first is personal service.

With Personal Capital, once you reach $100,000 in investments you get two financial advisors who work with you to make the best investments. With Betterment there is no option to work with a person.

Where Betterment is a better deal, is that you can invest for any amount with their platform. You don’t need $100k to get investment advice.

Blooom

Blooom is a unique in that they only manager your employer sponsored retirement account (401k, 403b, etc.).  They actually sync with your account and will do the investing for you, based on your risk tolerance profile.

The great thing with Blooom is that you only pay $5 per month for their service. If you are a person who has $100,000 in investments this amounts to 0.006% of fees. Personal Capital charges 0.89% of fees.

The drawback here is that with Blooom you only work with employer sponsored accounts.

Pros

• Free service includes a vast range of features that can be helpful to masses everywhere.
• The combination of all the features available on Personal Capital allows you to create a comprehensive and holistic view of your financial life. It is one of the most enlightening aspects of life when it comes to expenses and the various ways in which the idea of budgeting and investment can be looked at.
• The service has been created keeping in mind the variety of people that might use it, due to which the representation of most features is very simplistic and easy to understand. The interface is minimalistic and focuses only on those features that are required.
• The investment checkup feature is also highly useful and would work well to be the foundation of understanding the basis of your investments. It can help improve future decisions and also identify personal drawbacks in the style of investment in the past. This can be used to improve performance in the future.
• The scrutiny involved in certain features such as the retirement planner is commendable and allows a very realistic understanding of the future of your wealth and the potential events that might affect the accumulation of the same.
• The fees involved in setting up the premium service are very simple and include everything in one fee. There are no hidden charges for additional services or any other such gambit. This makes it that much easier to manage and operate regularly.

Cons

• The models that it uses to come up with suggestions for asset allocation are pre-determined. These predetermined criteria are generally sufficient for most customers but might not be useful if you want to customize the same according to your specific requirement that they do not have in the system.
• When compared to robo-advisors that are available in abundance these days, the services offered by Personal Capital are quite steeply priced in comparison. However, some would argue that the human advisors add that much value above the robo advisors, but that is open to interpretation.
• You need a minimum of $25,000 in investment assets to be considered a client of Personal Capital. Other competing services require a much lesser amount of money to be considered a client.
• The fee for wealth management is also pretty steep when compared to other financial advisors in the market who do the same for a living and charge approximately 0.25% of the AUM or account balance. That is a vast difference as compared to the 0.89% charged by Personal Capital.

Personal Capital Review Final Thoughts

I believe Personal Capital would make a positive addition to your life. If you sign up only for the free service, it still has a series of advantages that will allow you to organize your assets and your life a little better than if you were to do it all mentally and on instinct. Moreover, it does not interfere or hinder any other daily functions and just does its bit in the background.

With the variety of services it offers and the ease of operating the entire suite of services that are offered, it would only help you make better decisions moving forward rather than worse ones.

If that is the case, there is no reason why you should not be using a service that consolidates all your wealth in one place, creates projections of expenditure and budget and helps you achieve your retirement goals as and when you want. Sign up now if you haven’t already!