Personal Capital Review – A Hybrid Robo-Advisor Worth Trying

Personal Capital helps you take control of your financial life. Get access to insight-driven wealth advisory services and free online financial tools. It is a hybrid robo-advisor that offers human advisors as well as automated investing tools.

Pros & Cons

There are so many FinTech tools that can help you with your wealth building plans, like roboadvisors.

However, where Personal Capital differs is their hybrid approach which combines roboadisor tools alongside human financial advisors.

In fact, it has two types of services — a financial tracking tool where you can track all your accounts and track your retirement plans and goals.

The other service is the financial advisory side which offers both human advisors and computer generated tools.  Want to know more about what Personal Capital offers and whether it is the right fit for you?

Read our review, including an overview of the services, how much you’ll need to use to use their services, and who it’s best for.

What is Personal Capital?

Personal Capital is a is a FinTech company founded in 2009 and has more than $8 billion in assets under management as of November 2018.

It’s one of the most popular tools out there which could be because it offers an array of free investment finance tools such as a cash management spending tracker, 401k fee analyzer and an investment checkup.

Paid tools include getting access to a team of dedicated advisors and account management.

Fees & Features

Account Minimum: $100,000

Wealth Management Fees:

• First $1 million: 0.89% ;
• $1-3 million: 0.79%;
• $3-5 million: 0.69%;
• $5-10 million: 0.59%;
• Over $10 million: 0.49%

Free tools

• Retirement simulators
• Fee calculators
• Educational materials
• Budgeting software
• Net-worth tracker

Types of Accounts

• Taxable
• Roth IRA
• Traditional IRA
• SEP IRA
• Trusts
• 529

Customer Service: Financial advisors available by phone and email

Personal Capital Services

Personal Capital offers a number of free tools you can start using once you sign up for an account:

Spending Analysis

This tool will take a look at your cash flow and divides it into set categories. It can also track income sources and when your bills are due.

Education Planner

Compare how much college costs and work out an annual savings plan based on that amount.

401(k) Fee Analyzer

You can use this tool to see how much in fees you’re paying towards your retirement plan.

Retirement Planner

Use this tool to check if you’re on target for retirement, based on your current financial habits and how much you plan on spend once you’re retired.

It also takes into account your expected Social Security income, taxes, life expectancy and any assumptions on your investment returns.

Investment Checkup Analysis

Once you’ve linked your accounts, you can get Personal Capital to recommend an asset allocation based on your risk tolerance and how much you may need to increase or decrease your assets to meet those recommendations.

An important part of any Personal Capital review should be highlighting that you get these tools for free. There’s no catch. All you need to do is link your existing accounts — checking, savings, mortgage, credit cards, investment and retirement accounts — and you’ll be able to play around with Personal Capital's free financial dashboard tools.

Once you log into Personal Capital, you’ll be able to see your private client dashboard. It gives you your entire financial snapshot in once place such as your net-worth, portfolio balances and allocation and cash flow.

There’s also a holdings module which shows you how your investments are doing — view them by dollar amount, whether they’ve gained or lost money, or view them by its percentage of your portfolio.

How Does Personal Capital Make Money?

Personal Capital earns revenue from its asset management services. It takes a personalized approach by looking at a your financial picture with a holistic view instead of just your assets.

It claims it’ll help you reduce risk while increasing returns, apparently outperforming the S&P 500 more than 1.5% annually.

Personal Capital will also automatically rebalance your portfolio when it passes your asset allocation preferences.

What is Tax-Loss Harvesting?

Their strategy also helps clients find tax-loss harvesting opportunities.  How Personal Capital is able to do that is because it creates a tax-efficient portfolio using ETFs and individual securities. 

Its investment strategy involves a basket of funds using individual stocks knowing that using index funds — which charge annual fees — can eat more into your cash in addition to Personal Capital’s fees.

Personal Capital also introduced a new service last year in 2018 when you can select a more socially responsible investing strategy with U.S. equities based on environmental, governance and social factors.

However, Personal Capital can’t support all types of accounts. While it does support taxable, trusts, joint, Traditional and Roth IRA accounts, here are the ones it doesn’t support:

• Solo 401(k)
• Partnerships
• 529 Accounts
• Simple IRA
• SEP IRA
• Custodial Accounts
• Trusts
• 401(k)
• Non-profits
  
• Checking & Savings account
• Annuities
• Money Market & CD's
• Limited Partnerships

The good news is that Personal Capital can give you advice on both 529 and 401k plans even if it can’t directly manage them themselves.

If you decide to listen to their advice, you’ll need to make the necessary changes yourself.

Clients also get access to a dedicated financial advisor (though the fee one does offer this to some extent) and have a fiduciary duty to clients — aka they’re bound to look after your best interests.

You also get access to more tools such as ones that help you with home financing, stock options, private banking services and estate or tax planning advice.

Personal Capital Alternatives

Personal Capital FAQ's

How to Get Started With Personal Capital

1. Register and Link Accounts

Connect all of your external financial accounts (IRAs, 401ks, mortgages, loans, checking & savings) and get a comprehensive view of your money. Once you have linked your accounts, schedule a free consultation* with a Personal Capital Advisor.

2. Talk with an Advisor

We'll discuss your investing goals, risk tolerance, retirement and planning for the big stuff like a new baby, starting a business, saving for college or remodeling your home.

During this time, we’ll walk you through our Retirement Planning tool that will help you map out your short and long-term goals.

3. Create Your Plan

You’ll receive a comprehensive assessment of your entire financial life. We'll help you identify your retirement goals to make sure we build an investment plan that fits your needs.

Your Advisor utilizes the most powerful tools in the industry, providing you with deep insights to help you create a personalized, tax-optimized financial plan that will meet your goals.

Should You Signup for Personal Capital?

Personal Capital seems it be one of those rare tools that offers tools for most types of investors.

On one hand, this who are interested in a more DIY approach will love the company’s free financial management tools — which are comprehensive without the need to pay for additional services — to gain clarity into their financial picture.

Then there’s the services for high net-worth investors who are interested in more hands-off investing and want the help of a dedicated team and access to more comprehensive computer generated tools.

However, investors need to keep in mind that the fees are more expensive compared to other robo advisors - albeit there’s no access to a human advisor — but it can be cheaper than traditional advisors.

All in all, it doesn’t hurt to give Personal Capital a try considering it’s free — you can always sign up for their management services if you choose at a later time.