Get A Free Financial Consultation With Personal Capital

Personal Capital Financial Advisor Over the years, a number of you have asked me to write a review about what exactly goes on with a free financial consultation with Personal Capital. Common questions include: Is the consultation really free? Is the consultation a high pressured sales call in disguise? Will I get something out of it even if I don’t sign up? Is it worth it?

The short answers to the questions are: Yes, the consultation really is free. There’s no high pressured sales tactics, just an understanding they’d like to work with you if you’ve found them helpful. You can continue to use their free Financial Dashboard if you don’t hire them. Yes, you will definitely get some good tailored advice and the opportunity to pick someone’s brain who sees and advises on multiple different types of financial situations for multiple different types of people. And yes, spending time getting a review of your finances for free is worth it since it gets you to review your financial situation at the very least.

I sat down with Patrick Dinan CFP®, a Personal Capital Financial Advisor over the course of 1.5 hours and two sessions, which I’ll now share with you in this post I spent about four hours putting together. The post shall provide transparency on the advisory service process as an insider.

My goals for the meeting were three fold: 1) To understand what a prospective client goes through during the call to advise on a better experience, 2) to understand Personal Capital’s value proposition for the 75-95 bps under management a year they charge and 3) learn what specific advice they could give me, a personal finance enthusiast who has been in the business for 15 years.

I’m sitting in a unique position given I’m very familiar with Personal Capital’s free financial tools as a DIY user for two years before I joined as a consultant to help build out their online content six months ago. I’ve gotten to know some of Personal Capital’s financial advisors and I’ve also sat in on various important meetings with the CEO, CPO, COO, and CMO to get a better understanding of the products and their desired messaging.

An important takeaway I’ve gotten from working more intimately with Personal Capital is that Personal Capital is a Registered Investment Advisor (RIA) who has a fiduciary duty to do what’s in your best interest. They are registered with the SEC, and are not a broker dealer. Broker deals only have a “suitability standard” for their clients, not a fiduciary standard, whereas RIAs have a much stricter fiduciary standard. For example, if you want to invest your entire $500,000 retirement portfolio in Apple after you dreamt Steve Jobs reincarnates, Personal Capital won’t let you because that violates your risk parameters and is not in your best interest.

A broker dealer, on the other hand, would probably also advise against such an aggressive move, but if push comes to shove, they could execute the transaction. The more a broker churns your portfolio and puts you into higher fee mutual funds, the more s/he gets paid so long as you don’t leave. But no matter how much your portfolio turns over with an RIA, the firm gets paid a fixed percentage of assets under management. The main way a RIA gets paid more is if you’re happy and your assets continue to grow. Interests are better aligned. 

How To Convince Your Spouse To Work Longer So You Can Retire Earlier

Retiring early on the beachOne can either work hard for their wealth, inherit their wealth, or marry into wealth. No way is the right way to get rich. Although the most honorable way is probably getting wealthy with your own two hands.

When I wrote the post, “Stay At Home Men Of The World, UNITE!” in February of 2012, I was being a little silly. The post was just a fun way of forecasting life as a stay at home man as I sought to build my online media business. Two years later there’s still a huge bias against men who are stay at home dads or non-breadwinners. Men who work traditional day jobs love to poke fun at men who don’t. Women, on the other hand, don’t seem biased at all against men who don’t work. In fact, I know several men and women who don’t work who ended up being secret lovers!

One of the strategies to retiring early is to have a working spouse. I have a couple lady friends who retired at 32 and now enjoy playing tennis and drinking chamomile tea during the day at my club as their husbands work their private equity jobs. One lady worked in advertising, and the other lady worked in corporate retail. When I asked whether either of them missed working they laughed in unison and said, “Not at all!”

During my time away from Corporate America from 2012-2013, I also met a lot of guys at Golden Gate Park (where I also play tennis) who retired early because their spouses worked. They were a little older on the early retiree spectrum (40-50). One husband’s wife is a cardiologist at UCSF Hospital. Another guy’s girlfriend is an executive at Salesforce.com. No doubt both their partners are doing well. All of the early retiree guys employed nannies to take care of their children during the day so they could play tennis as well. Gotta love it.

Thanks to the strengthening equality of men and women in the work force, more men are able to break free from corporate bondage to live alternative lifestyles. Men can be the stay-at-home parent now. Men can drink beers at the country club after a round of golf with their buddies and not have to worry as much about money anymore. The equalization of the sexes for career advancement and pay have been a big boon for men as well.

In this article, I’d like to share some tips from early retirees who successfully convinced their spouse or partner to continue working so they don’t have to. 

The Best Way To Gain Financial Security Is To Develop Financial Buffers For Your Financial Buffers

Financial Buffer Moat around Osaka CastleLeaving my job in the spring of 2012 was not an easy decision. Even if you have all your ducks in order, it’s still a leap of faith where you hope fluffy pillows await instead of jagged rocks. One of the main reasons why I wrote my book, “How To Engineer Your Layoff” was because negotiating a severance was the key financial buffer that gave me the courage to break free.

Before figuring out how to get laid off in order to gain a severance, my only real financial buffer was my various passive income streams which equaled about $78,000 a year at the time. I did input a Blue Sky scenario of $118,000 a year gross if things worked well on the rental property front after a couple years. But Blue Sky scenarios are never to be used in important life altering decisions.

$78,000 a year in passive income might seem like a healthy figure, but I live in San Francisco where the median condo price is around $800,000 and the median single family home costs around $1 million. Food and gas are also expensive and entertainment costs can quickly spiral out of control if you let them. We’ve had a terrific 100+ comment discussion on my post wondering how people in expensive cities live a comfortable life making less than six figures a year. It’s definitely possible as the comments have suggested, but it’s not easy, especially if you’re over 30, have a family, and no longer want to live like a college student.

I didn’t want to compromise my lifestyle in early retirement by eating dog food and living in the boondocks just to have all the time in the world. Otherwise, retirement is counterproductive. When I started writing this post, I could only recall two financial buffers. But as I kept on writing, I realized there were many more.

I’m confident you’ll find more of your own financial buffers than you first realized as well. Many people I’ve professionally consulted with have asked about building alternative income streams while working so that one day they don’t have to work. This post is for all of you and a revelation that the world isn’t as scary of a place after all. 

What’s The Most Amount Of Travel Miles And Credit Card Rewards Points You’ve Accumulated A Year?

Beautiful Santorini, GreeceWhen I was a young buck, I used to travel like a maniac for work. I was based in Manhattan and had to cover clients in Florida, Bahamas, Iowa, Texas, Colorado, and California. Then there were the necessary quarterly or semi-annual pilgrimages to Hong Kong to kiss the ring. When you’ve got a corporate card with unlimited credit, you feel a little better about taking red-eyes to your 8am meetings. But after a while, the novelty wears off and all you want to do is take the Chairman’s Flight (fly in the middle of the work day).

Travel miles and credit card rewards points was my combination of choice because not only would I gain more points flying more miles, I would then gain rewards points for every dollar I spent on the ticket, hotels, food, and entertainment. For example, I’d earn 16,100 points for flying to Hong Kong from New York City roundtrip + 5,000 points for the cost of the business class ticket + 2,500 points for seven nights in a hotel + 1,000 points for food + 500 points for entertainment. The total rewards points accumulated would therefore equal ~25,000 for a one week business trip to Asia.

I used to have a Delta Skymiles credit card, an American Airlines credit card, and an AMEX corporate card as part of my arsenal of spending tools. After racking up 130,000 travel miles one year and accumulating roughly 180,000 credit card rewards points, I realized that having three travel credit cards was inefficient so I consolidated to just two. (See: What Is The Ideal Number Of Credit Cards One Should Have?)

I was so proud of my 130,000 travel miles that I actually included that stat in a line item on my resume in my 20s. I know, a rookie move. In retrospect, I don’t know how impressive the stat was since I’ve heard of people travel 300,000 – 500,000 miles a year, which I find absolutely amazing. But those folks were either executives who constantly flew first or business class internationally, or worked in the airlines industry.

Equity Or Cash Compensation? Deciding What’s More Valuable To An Employee

Lt. Governor Gavin Newsom and Mega YachtThe only way someone can truly get rich is through equity. Think about all the billionaires in the world. Almost all of their net worth comes from their equity stakes in huge businesses such as Microsoft, Google, Facebook, and Berkshire Hathaway. The only people who are going to get rich making a salary are perhaps investment bankers, hedge fund managers, strategy consultants, doctors, and big lawyers. But even those guys aren’t going to crush it with their six figure salaries unless they become partners in their respective firms or practices.

Every once in a while I go jogging along the mansions in Pacific Heights on Broadway and Lyon St in San Francisco. I specifically choose this area because it’s inspirational to see beautiful homes. All of the homes are valued between $10-$25 million dollars. And guess what? Every single one of the owners is an entrepreneur.

There’s the Getty family (Getty Oil), the Ellison family (Oracle), the Haas family (Levi’s), and the Sachs family (Yammer), to name a few of the owners who are clustered in these few blocks of extreme wealth. Even if I made a million dollars a year, I’ll still never be able to afford a $20 million dollar home. Just the property tax alone costs $220,000 a year.

Ownership is the key to building outsized wealth. And ownership is one of the main reasons why I’ve chosen to pursue entrepreneurship. It is truly a fantastic feeling to build something out of nothing and create an asset that is potentially worth a great deal. Even if someone offered $2 million for Financial Samurai, I’m not sure I’d sell my baby. Only really evil people sell babies right? Besides, the government would get half. (Related: How Much Do I Have To Make As An Entrepreneur To Replace My Day Job Income?)