Founded in 2009, Personal Capital is the pioneer hybrid robo-advisor to help democratize access to affordable financial wealth management services.
One of the questions that often comes up is how does Personal Capital make money given it has the best FREE financial tools on the web to manage your net worth, optimize your investments, and plan for your retirement.
The answer is that Personal Capital doesn’t make any money from its free financial app. Instead, their free financial app acts as a lead generator for them to contact those users who link more than $100,000 in investable assets. A portion of those contact will eventually become clients.
It’s a pretty smart idea to invest in building an award winning app, provide massive value to the user, and then see if some users would like to have their money professionally run.
Personal Capital requires a minimum of $100,000 under management to gain access to professional hybrid money management advice (algorithm + human).
They charge 0.89% of assets under management under $1,000,000, with fees scaling down to 0.79% for money between $1 – $3 million, 0.69% for the next $2 million, 0.59% for the next $5 million, and 0.49% for money over $10,000,000.
Before you become a client, try out the app for several months and get a free hour consultation with one of Personal Capital’s advisors to see if you like what they have to offer.
As of 2H2020, Personal Capital runs around $12.5 billion in assets under management. It’s my best guesstimate that with a payroll of ~400, and four locations around the country, they are close to generating an operating profit. The key for the company is to continue growing AUM as their business scales quite nicely.
Those free financial app users who elect not to have their money professionally managed can still use Personal Capital’s free financial tools without a problem.
Personal Capital Detailed Overview
Total Equity Funding: $215.3M in 8 Rounds from 11 Investors as of 2019.
Headquarters: Redwood City, California with offices in Denver, Atlanta and San Francisco
Description: Personal Capital is the leading digital wealth management firm.
Founders: Bill Harris, Louie Gasparini, Rob Foregger
Categories: Financial Services, Wealth Management, Finance, FinTech
Free sign up link for their app: Personal Capital
Personal Capital Management
Bill Harris is now solely Chairman, while Jay Shah got promoted to CEO on April 24, 2017. Mike Arnsby was added as CFO in 2016. Mike helped take Yodlee public in 2015.
Free Financial Tool Features
Personal Capital has the #1 free financial software on the web today. You don’t need to be a client to take advantage of tracking your net worth, x-raying your portfolio for excessive fees, and planning your retirement. Here are some of the tool’s key features, which can also be accessed via your mobile device. I highly recommend everybody sign up and link their accounts.
1) Retirement Planner. This tool helps you to know if you’re on track to retire, and even allows you to make adjustments for major life changes, such as job/career/income changes, illness, childbirth or saving for college.
2) 401(k) Fund Allocation. Even though Personal Capital can’t manage your employer sponsored retirement plan, they can analyze the plan and make asset allocation suggestions based on all of the investment options available in the plan.
3) Net Worth Calculator. Track your assets and liabilities so that you can quickly find your net worth at any time. This tool will help you to really know if you’re on track to reach your long-term financial goals.
4) Cash Flow Analyzer. Use this tool to create a budget, where you can track your income and expenses whatever the sources. This will help you see where you’re spending money, so that you can free up income for savings, investing, and debt payoff.
5) Investment Checkup tool. This can provide a risk assessment of your portfolio, including your retirement plan. It will make suggestions to help you improve your asset allocation plan to make it consistent with your goals and personal preferences.
Sign Up For Free Today
Personal Capital is an all-in-one financial management platform with an emphasis on successful investment management. Take advantage of their free financial tools because it’s absolutely free. I began tracking my net worth with Personal Capital in 2012 and have seen my net worth skyrocket since due to better financial optimization.
About the Author: Sam began investing his own money ever since he opened an online brokerage account online in 1995. Sam loved investing so much that he decided to make a career out of investing by spending the next 13 years after college working at Goldman Sachs and Credit Suisse Group. During this time, Sam received his MBA from UC Berkeley with a focus on finance and real estate.
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