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. 

My Personal Capital Financial Advisor Session With Patrick Dinan, CFP®

For those of you looking for professional financial help, I’d like to highlight exactly what I went through so there are no surprises if you want to get a free financial consultation as well. I’m personally pretty wary about everything and I’m admittedly impatient over the phone.

But after using Personal Capital’s tools for two and a half years, meeting the advisors, and interacting with the leadership team over the past six months as a consultant, I’m confident their financial advisory service can help certain people. Many clients come from traditional brokers like Merrill Lynch, Raymond James, or Edward Jones who are paying more in fees and are not satisfied with the results or their service. Another group of clients are those who’ve been able to accumulate a decent chunk of wealth, but are now finding it too cumbersome to DIY. They’d like another set or two of eyeballs looking after their wealth because they aren’t financial experts.

For your free financial consultation with a Personal Capital advisor, all you have to do is sign up, link at least $100,000 in investable assets (savings, checking, brokerage account, rollover IRA, etc) and schedule an appointment when prompted. If you don’t schedule an appointment, a sales associate will call you to arrange a time with a financial advisor. There will be two calls in total with a financial advisor.

The First 30 Minute Call: Discovery Session

The first call will consist of a five minute intro about Personal Capital and the advisor’s background, followed by a roughly 15-20 minute discovery period about you. The advisor will ask you basic questions about your net worth, budget, goals, risk tolerance, current investing strategy, investing experience, and any other pertinent information.

The discovery process may feel a little intrusive to some, but it is important for the financial advisor to get as much information as possible to provide the best recommendations possible. As a fiduciary, it is the financial advisor’s duty to thoroughly understand your financial background. The visit is almost like a doctor’s visit where you have to share some details before being treated.

Your financial advisor will be able to see the assets and liabilities you’ve linked on your dashboard. But sometimes it’s hard to see what’s exactly what, so the financial advisor will ask you to clarify which mortgage goes with which property if you have multiple properties as was in my case for example. The advisor will also reconfirm your net worth and investable assets. Because I manually input my Structured Notes portfolio into the assets section, Patrick saw around $400,000 less in equity investments than reality. Getting the total figures are important because so much about good financial planning is creating proper asset allocation based on your risk tolerance.

The last part of the call will consist of any final questions from both sides before the advisor conducts a review and recommendation of your portfolio. My objective is to earn 3X the 10-year yield per year in as low a risk manner as possible i.e. 6-9%. The second call will usually be done within a week or sooner, depending on the respective schedules.

The Second 45 Minute Call: The Recommendation

The second call is also free with no obligation and usually lasts around 45 minutes. This is where the real value to you begins. I was pleasantly surprised with how smooth the process was because I received an e-mail from Patrick and a link that showed a customized powerpoint presentation with my recommendations that I could pull up on my computer as he talked with me. Most of you won’t get to sit down with a PC financial advisor face-to-face unless you live in San Francisco or Denver, so having Facetime up and a live powerpoint presentation is really helpful.

The below slide is the agenda for the call. I gave my Rollover IRA account for Patrick to analyze and highlight to all of you. There are a total of roughly 20 charts your financial advisor will go through in the second call. I’ve just highlighted eight of them.

Free Financial Advisory Call

We first went through a brief recap from our discussions from the first call to make sure we spent our time wisely for the second call. My main goal is to produce a 6-9% return on my money with the lowest amount of risk. I want to protect my financial nut I spent 15 years after college building at all costs because it is a passive income machine.

Free Financial Advisor

The below slide shows my current allocation of my Rollover IRA. I recently sold half my positions and am sitting on a large chunk of cash. You’ll also notice that I’m 100% allocated towards Technology, something that nobody should do. But as I’ve written before, my Rollover IRA is my “punt portfolio” where I take very concentrated bets in specific stocks or sectors. My extreme allocation is actually great for illustrative purposes.

Free Financial Advice

Here are the official observations from Patrick about my existing allocation. A couple pros but lots of cons as discussed. Please note that the recommendations provided by Patrick are specific to my own situation and you should not use them as a basis for your investment decisions. That’s the purpose of going through your own financial consultation with them.

Personal Capital Financial Observations

Based on Personal Capital’s model portfolio recommendation for someone my age (37), with my moderate risk tolerance and objective of a 6-9% annual return, here is the recommended asset allocation. The split between stocks and bonds is roughly 75/25, with Alternatives as a new asset class.

Personal Capital Optimal Asset Allocation Chart

Below is my recommended optimal allocation in detail. It’s interesting to see US Real Estate and International Real Estate in my Alternatives section because I’m already so heavily invested in real estate with 35% of my net worth tied to SF, Tahoe, and Hawaii properties. Patrick explained that the real estate alternatives was more focused on commercial real estate with a different return profile. That’s something I never considered. The total real estate exposure is only 5% of the portfolio.

If at any point you disagree with the allocation recommendation, you can voice your opinion and your financial advisor can work on a solution that is most suitable to you. Remember, this is a working relationship with the sole objective to allow you to achieve your goals in the best manner possible.

Personal Capital Optimal Allocation Detail

One thing that is unique with Personal Capital is their belief in Tactical Weighting aka Smart Indexing. The idea is to provide equal weights across styles and sectors so one isn’t overly exposed over time. Most people benchmark their performance to the S&P 500, which is market cap weighted. The stronger the bull run in a particular sector, the higher its weighting. Sometimes, bad things happen if you are overly exposed such as in 2002 with Technology and 2008 with Financials.

Intuitively, having a more equal weighting across sectors through constant rebalancing makes sense. Although it’s arguable as to what is the right steady state sector weighting. We all would rather be more exposed to sectors with the highest growth rates and potential for growth. However, you never know. The Utilities sector is the best performing sector to date, with the Technology sector one of the worst.

Personal Capital Smart Indexing Importance

Below is the theoretical tactical weighting performance since 12/30/90 of $500,000. Due to 1.5% higher returns per annum for Tactical Weighting, one earned roughly $1.7 million more during this time frame.

PC Tactical Weighting Performance

Personal Capital Disclosure

COMPOSING THE IDEAL PORTFOLIO WITH ETFs AND STOCKS

The above slides should provide you a great idea of what you will receive during your second 45 minute financial call. I was curious as to how the portfolios were structured so I asked the following questions you might also have:

How is the domestic portfolio constructed?

Answer: Solely through individual stocks.

How is the international portfolio constructed?

Answer: Solely through ETFs and not individual stocks. The ETF allocation for international is mainly because of the diversification constraints of owning individual companies across multiple countries. 

When do you rebalance and how is it determined?

Answer: Rebalancing is based off our software analytics and careful monitoring of your account to maintain the target weightings.

How many securities would make up my entire portfolio?

Answer: There will be roughly 75 securities total the consists of stocks, alternatives, and bonds. We will build the portfolio using roughly 15 ETFs and 60 individual stocks to keep you diversified. 

Where are the assets held?

Answer: We use Pershing LLC, the institutional clearing house who holds your assets. They hold more than a trillion in assets, is SIPC insured (protects an individual up to $500,000 for fraud), and has additional coverage through Lloyd’s of London. We believe being independent and having Pershing LLC as a custodian adds an extra layer of security for our clients. We never touch our clients money. 

The great thing about the construction of your Personal Capital portfolio is that there are no transaction fees. They are included in the annual 75-95bps fee. In other words, if you tend to rebalance a lot, you get better value with an RIA. This is definitely unique to Personal Capital. Most of the RIA custodians (TD, Schwab etc.) still charge the trading fees. It just doesn’t end up in the RIA’s pocket.

TAX LOCATION AND TAX LOSS HARVESTING

Patrick and I had a good discussion on taxes, one of my favorite topics. Tax location is the practice of allocating dividend bearing securities in tax-deferred or tax-free accounts and allocating capital gains driven securities (growth oriented stocks usually) in taxable accounts. Tax location is good practice especially for those in the 25% tax bracket or higher. If you never plan to sell your Google stock, and Google doesn’t pay a dividend, then it’s better to hold Google in a taxable account for example. Personal Capital will optimize your portfolios using tax location.

Tax loss harvesting is also something helpful to conduct, but difficult to do on your own if you have a well diversified portfolio. Personal Capital is constantly looking to optimize your tax liability by finding losers to offset your winners based on their technology and advisor’s observations. According to Personal Capital’s research, tax loss harvesting can add after-tax returns of up to 1% per year, a boost that covers Personal Capital’s annual fees alone.

In other words, the process of tax loss harvesting is like getting the financial advice for free because there are no mutual fund fees or trading costs when you purchase or sell a security through Personal Capital either. Those 1% expense ratios for owning actively managed funds are now gone for good because Personal Capital builds your customized portfolio from the ground up with ETFs and specific stocks, exactly as a fund manager would do but with the added element of providing individual financial advice. Know that mutual fund companies will incentivize brokerages to sell their products through revenue sharing agreements. Or also known as “pay to play.”

THE FINAL VALUE PROPOSITION

Personal Capital advisors will not only construct an optimal investment portfolio for your retirement, they will also provide ongoing advice as your financial situation changes over time, even if they don’t manage the accounts. For example, you can get advice about your 529 plan for college savings, your 401k, insurance planning, mortgage refinancing, general estate planning, and income distribution strategies. Unlike traditional advisors Personal Capital doesn’t have any incentives to sell products tied to any of these topics so they can truly offer unbiased advice.

Finally, you won’t just get one financial advisor, but a team of two financial advisors and an operations specialist to look out for your portfolio and retirement planning needs. To become a client is relatively easy because it is completely paperless thanks to Docusign and the award-winning user interface they’ve created.

CONCLUSION

Many of us will continue to be DIY wealth managers with the help of various free financial online tools and special types of funds with embedded fees that could help us meet our retirement goals. But for those of you who are looking for more specific guidance so you don’t have to worry as much about your financial future, Personal Capital can help. The tax loss harvesting and consistent rebalancing to ensure you have appropriate risk exposure alone sounds worth it for busy people who aren’t all over their finances.

If you are interested in signing up as a client after the call, I’d start off closer to the minimum amount first of $100,000 and see how the experience goes before allocating more assets. Make your financial advisor earn your trust and hard-earned savings. You can sign up for Personal Capital’s free financial tools here and schedule a call if you are a new user. For existing users, simply schedule a call via your dashboard.

Regards,

Sam

Sam started Financial Samurai in 2009 during the depths of the financial crisis as a way to make sense of chaos. After 13 years working on Wall Street, Sam decided to retire in 2012 to utilize everything he learned in business school to focus on online entrepreneurship.

You can sign up to receive his articles via email or by RSS. Sam also sends out a private quarterly newsletter with information on where he's investing his money and more sensitive information.

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Comments

  1. Lara says

    Great write-up! I’ve always wondered what a free financial consultation was like and it’s good to see they are pretty thorough with understanding one’s financial situation and coming up with a customized plan instead of just trying to aggressively pitch for business.

    I never heard the term “tax location” and didn’t realize there were such benefits to tax loss harvesting. Makes sense, but hard to do if I’ve got 50 stocks in my portfolio. I’ve got a day job!

    • says

      The older I get, I’m finding the less I want to actively manage my money. I want to spend more time traveling, spending time with family, working on my business and crossing off bucket list items.

      The act of tax loss harvesting is a PITA for individuals. If they can enhance after-tax returns by 1%, that’s huge.

      For me, I’m looking for more piece of mind because there’s part of you that actually worries a little more the more you accumulate because the more you have to lose.

  2. David says

    Thank you very much for this, I was hoping that you would do a write-up of the consultation process for Personal Capital because i am currently in the position of needing to decide how I want to utilize their services.

    My account is brand new and I was just recently contacted to schedule a financial review with them. Due to some bad experiences with brokerages in the past I am naturally a little leery of any investment service or counseling. The insight of the process from this article gives me the confidence to at least take the next step to see what they think they can do with/for me.

    • says

      Great to hear David. I’m very leery myself of everything that requires potentially costing money hence the six hours I spent meeting with the advisor, taking notes, asking follow up questions for clarification, and writing this post.

      I think it will help if when you speak to the PC advisor that you read this post and Sam sent you, or something to that nature to get better service at the margin. It certainly won’t hurt!

      Let me know how it goes.

      Cheers

      • David says

        A recent visit to the institution currently managing most of my assets left me walking away shaking my head. They have never really made any money off me because I have never let them touch it (because what I had done before they inherited me as a client was performing like mad). Since my account had sort of fallen into their hands we have never had a fee discussion because they have never really performed any services for me. The time is now approaching where I need to start looking to move those assets around and I want to understand how they will charge me.

        I asked them earlier this year what their fees would be and they would only say “We make money when you make money”.

        My follow-up was to ask them what they would do with my money if I gave them $100K to invest today so I could start to see how things were performing. Their statement to me was “That’s not enough money to get you properly diversified. If you gave me $100K I would just stick it in a CD”.

        Now perhaps that response is justified because my portfolio is not well balanced or diversified but can you see why I would be looking around now to find a better fit for someone to act as steward for my nest egg? As it is I am not really their target client as my assets fall below their the threshold they require for a client to open an account, which is $5 million. I cannot help but wonder if they would ever have my best interests at heart when working with me.

  3. says

    I don’t have time to read all of this right now, but I’ll be coming back. I have wondered about the free consultation and just reading the introduction made me definitely want to do it! Hopefully I’ll get around the reading the rest!

    • says

      Definitely read the post before you decide to do the calls. I spent a ton of time writing this 2,600 word post to help provide people some clarity on what to expect.

      The more you can takeaway from this post, the more helpful questions you can ask about your financial situation beyond the basics since the consulting time is limited.

  4. Ravi says

    It really is a great product PC has created. I love the online interface and refer to it a lot. Even when I am trading for my own account, the charts and graphs I recall for sector/style/allocation come up in my head (though I’m usually ignoring them) as a reminder to consider a more even approach.

    I see myself managing my own investments for quite a while, as the majority of new capital is coming in the form of 401k & Roth contributions (which are automated).

    My weighting will be completely off, and would probably give a PC advisor a heart attack, with what will be nearly 25% alternatives (after my Prosper IRA goes through), BUT I got the idea to wind down my taxable Prosper account from PC in order to quit paying so much in taxes! Right now, it’s only a few hundred $ per year, but that will add up to a lot over even 10 years, and much more over 35+ years.

    Great product! I do plan to at least get the consultation to see if they can tell me anything I don’t already know.

    Kudos for a great creation

    • says

      Good stuff Ravi! I think it’s wise for everyone to DIY finances for a while before hiring some help.

      It’s similar to the idea of encouraging people to do their own taxes before they get too unwieldy so at least you have a basic understanding of investments and your money and can have more fruitful discussions with your financial advisor.

  5. says

    I went through the free sessions as well and found them very helpful. Patrick also did mine and help me discover I had much more bonds (~28%) than intended (5%). When he started to discuss they PC does portfolio management I was surprised as I did not even know they did that. He was never pushy and answered all of my questions. At the time I went through the session, 100k was a third of my total net worth and do not feel comfortable handing someone that much. I tried to get them to take 50k but they explained the way their methods work it would not be that beneficial to me. If all goes as planned around October 100k will be a quarter of my assets and will probably give them a chance.

    You said it is easy to sign up and transfer money but did not state if you actually jumped in. Does PC now have 100k of Sam’s money?

    • says

      That’s cool you spoke to Patrick as well and that e wasn’t pushy. One of the reasons why I asked to speak with him was because he was always nice and friendly when we’d pass by in the halls. I naturally gravitate towards easy going and smiling people because I’m almost always smiling and saying “hi” myself. Another advisor named Tom is really nice as well. I’m slowly getting to know everyone in SF, and maybe I’ll go visit the Denver office sometime as well.

      I absolutely plan to have PC manage at least $100,000 to start this year and go from there. I plan to farm out various tranches of money with a hedge fund, some structured notes, paying down my rental property mortgage, and PC. Good to be diversified.

  6. April says

    I learned a lot from this post, thanks. I like the idea of avoiding mutual fund fees and getting a free consult to boot. Thanks for sharing some of the charts and what your experience was like. I will check it out thanks.

    • says

      No problem April. I’m not sure many people put two and two together that if they go with an RIA like PC, there are never any trading or mutual fund fees to pay because that’s part of PC’s fee and they build your customized portfolio from the ground up.

      Rather pay PC and get ongoing financial help than pay the same fee to an active mutual fund and have nobody to consult with when various financial issues come up.

  7. Gerard says

    Didn’t realize once you are with PC there are no more trading fees and mutual fund expense fees! Why would anybody buy an actively managed fund over the long term for 75-120bps when they could go with an RIA who can help advise during all stages of life on financial needs?

    Seems like active mutual fund fees must come down to compete unless they are superstar performers.

  8. Jason says

    I’ve been through their free consultation and they do call me from time to time. It wasn’t as hard of a sell as I had thought and I did like the fact that it was via video conference, so I could see they person on the other end. They could also show me slides without being there physically. It was a very slick presentation in general and I actually did learn some things about stocks.

    It looks like they have a great dashboard to keep track of your securities. But, for me, it didn’t make sense because of two main points.

    First, the online management tool is still way too light on real estate asset management. It’s never been a focus for them because they don’t derive income from any RE activity.

    Secondly, I have low confidence in the strategy as it applies specifically to retirement. For working people and especially for potential FIRE people, they’re going to be relying only on a small percentage of their portfolio churning out ultra-low dividend percentages and only slightly higher REIT income. Under this plan, even if you save like crazy, it’s still Friskies for dinner.

    Sam, you know RE. I’d talk to PC about providing real estate solutions for their investors. Get them to partner with solid turnkey companies, RE note providers, tax lien suppliers, you-name-it. Then, supply the consumers with the software to track the numbers and maybe even to purchase these things online. The demand is definitely there.

    • says

      Even if you retire early, you’ll still have to manage your money carefully. I would say it’s more important to keep close watch of your money in FIRE.

      I’m not sure whether RE will work with their business model for, but it can certainly be a value-added service on advising on the market, cash flow, and taxation which they do.

  9. Austin says

    I am scared that someone would look at my full financial profile and think: “This guy is either an idiot or a nut”.

    I see PC has a functional affiliate program. You should totally serve opt-in lightboxes on older articles.

    • says

      Nah, they, like me are kinda like financial doctors. We’ve seen it all, and we just want to find reasonable ways to help.

      The goal is to not judge, but take the situation in and come up with a viable game plan. I can see why someone people just love being financial advisors because they are helping people solve pressing problems. Very rewarding experience!

    • says

      No problem. I asked all the questions I could think of that others should know and might think to ask. It bothers me when I don’t have a firm grasp of how everything works if I’m going to be spending money.

  10. Jay says

    I have talked to Michelle but haven’t decided if I want to continue with her or not. Maybe I’ll take your advice and start with 100k first.

  11. Irina I says

    I really like Personal Capital. They reached out to me with an offer for a free consultation in late May. I was really busy then and couldn’t schedule it. I wrote to them about 2 weeks ago (to my personal “advisor”) about scheduling it but never received a response. What gives?

  12. Chip says

    Great article. Thanks for doing the work. I’ve been using Personal Capital’s DIY for a few months and I think I will take them up on their offer for consultation. Thank you for explaining the fiduciary responsibility of an RIA versus a broker. I feel a stupid for not knowing that.

    One question: About a third of the way down, you wrote: “…Patrick saw around $400,000 less in equity investments than reality.” Are saying Patrick found $400,000 that you didn’t know you had? Why isn’t that the headline? Isn’t $400k a big deal for you? It would be for me, I’ll tell you.

    Anyway, thanks again for the very informative post.

    • says

      Hi Chip,

      It’s because I didn’t note my rollover IRA properly, so he couldn’t see. The great thing about the system is that the PC advisor sees what you see, and therefore it’s very efficient when it comes time to giving advice. But the inputs are dependent on us, so we’ve got to be meticulous as well.

      Have a good consult!

      Sam

  13. Frank Rutherford says

    Thanks for the article. I have had my portfolio reviewed several times by different people. I also recently went to a presentation by Ken Fisher’s organization. His concept is similar, but the starting amount under contract is $500K, which is more than I want to do. It also sounds like TD Ameritrade’s Amerivest division also does similar management programs on a smaller scale. I appreciated that almost half of your IRA was in cash as that is somewhat like mine. I keep meaning to invest it, but don’t get around to ‘pulling the trigger.’ Anyway, thanks for the information and sample suggestions from PC. (They have recently called me for a review, but I haven’t decided whether to set it up or not.)

  14. Isabelle says

    How do I get a consult if I have less than the stated amount in assets?
    How do I get any advice if I never have enough for the cutoff? (100K, 250K, etc)

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