Personal Capital’s latest assets under management have now reached over $15 billion as of June 2021. Further, Personal Capital’s average client size has roughly $400,000 from $340,000 several years ago.
In other words, Personal Capital’s clientele is trending towards the mass affluent versus the millennial generation for other digital wealth advisors like Wealthfront and Betterment.
After getting acquired by Empower for $850 million in 2020, Personal Capital now has more resources to grow its platform even further. Personal Capital has been able to accelerate company growth, hire new staff across their San Carlos, San Francisco, Denver offices, and increase their marketing efforts. They plan to open up a new office in Dallas as well.
The Number Of Users Using Personal Capital
Personal Capital currently has roughly 2 million registered users who use their free dashboard and financial tools to help them live better financial lives. New funding will allow them to scale faster to meet the quickly growing demand for their products and services, helping more families reach their long-term financial goals.
“Even for the tech business, this is hyper-growth. And for financial services, it’s unheard of,” said Personal Capital Chairman Bill Harris. “Why are we growing so fast? Because affluent American households want to manage their money digitally – like they manage so much of their lives – and we’re the best way to do it.”
Simultaneously, the average amount clients invest with Personal Capital has grown by 20% over the past year to $400,000, and 38% of the assets are now in accounts with over $1 million.
“The more our clients experience our service, the more they like it,” said Harris. “They’re investing more money, referring more friends, and staying with us at historically high retention rates – well over 95% annually.”
Personal Capital’s financial advisory service includes:
- Personal Finance Management (PFM) software – a dashboard for your financial life, available for free at personalcapital.com and on the app stores.
- Financial planning software – including modules for retirement, marriage, college savings, home purchase, health care and more.
- Dedicated financial advisors – highly trained professionals who work with you as true fiduciaries, acting in your best interest, not their own.
“Brokers are salespeople, who can legally sell the financial products that make them the most money,” said Harris. “Advisors are fiduciaries, who are required to avoid conflicts of interest and provide the best solutions for you. This is a crucial distinction, because inappropriate products and high fees can rob you of half of your lifetime retirement savings.”
“Right now, the financial services industry has descended upon Washington to repeal what’s known as the Fiduciary Rule, which protects your 401k and other retirement accounts. Repeal would be tragic for working people’s ability to retire with financial security,” said Harris, in an appeal to regulators and legislators to stand firmly behind this important consumer safeguard.
Personal Capital Overview
Personal Capital, founded in 2009 by the former CEO of Intuit and Paypal. It has the best free financial software today for people serious about achieving financial freedom sooner.
If you’ve haven’t done so already, I highly recommend you sign up. The more you are on top of your finances, the better you can optimize your wealth. Personal Capital’s latest assets under management are a testament to its value to clients.
Reasons To Use Personal Capital
1) Simplicity And Less Stress. Before Personal Capital, I had to log into eight different financial institutions to track over 30 different financial accounts ranging from brokerage accounts, money market accounts, CD accounts, checking accounts, IRA, and my 401K. My finances were a mess, and I’m sure your finances could use some organization as well.
Now I can just log into Personal Capital to see how everything is doing in one place. It’s important to have a holistic view of your overall financial health so you know where to allocate resources.
2) Net Worth Overview. Gone are the days where you have to use an Excel spreadsheet to manually update every single asset and liability line item to calculate your net worth. Personal Capital updates your net worth automatically as soon as you log in because all your accounts are linked. They provide a pie chart of your assets as well as gives you a historical chart of your net worth progression.
If you cannot find an account in their database, you can simply add it yourself. Personal Capital will also conveniently e-mail you a weekly snap shot of your latest net worth along with how the markets did, upcoming bills, latest insightful blog posts and accounts that need your attention. The more assets under management, the more you need to track your net worth. Below is a sample headline snapshot.
3) Tracks Your Cash Flow. Budgeting is personal finance 101. By tracking your income and your spending like a hawk, you will be able to save a lot more money than if you simply tried to guess everything. Think about all the times you withdrew cash from the ATM machine and had no idea where all the money went a couple days later.
Aggregating all your accounts allows you to see where all your money is going. In the example above, this entrepreneur brought in over $38,000 in income and spent only $3,096. Now that’s great cash flow!
4) Helps You Balance Risk. With so many accounts, it’s often hard to see exactly what’s going where. For example, so many people were too overweight stocks before the financial crash in 2009. With Personal Capital, you can easily see where the imbalances are in your net worth so you can make smart adjustments.
Now the markets are strong, investors are probably too overweight equities and way underweight bonds once again. The Investment Checkup tool analyzes your portfolio’s holdings based on size, style, and sector. Personal Capital excels for those who have assets in the stock market. Personally, I like to maintain a 35%, 35%, 30% split between stocks, real estate, and CDs/bonds.
5) Helps Reduce Fees. One of my favorite tools Personal Capital provides is their Portfolio Fee Analyzer. I ran my 401K through their fee analyzer and discovered that I am paying over $1,750 a year in management fees. I had no idea that my Fidelity Large Cap Growth fund cost $1,200 a year due to a 0.74% expense ratio compared to sub 0.3% for my Vanguard Funds.
As a result, I found a similar Large Cap index fund instead and am now saving $1,000 a year. Without Personal Capital, I would have spent over $87,000 in excessive fees over the next 20 years. Take a look at my example below. Portfolio fees are a serious problem which will rob you of your retirement wealth if you are not careful. Don’t let ignorance rob you of your financial well being.
6) Shows Your Portfolio’s Investment Efficiency. Based on your risk tolerance and investment objectives questionnaire, Personal Capital will give you an idea of where your current allocation is on the Efficient Frontier Curve. The Efficient Frontier Curve is the best returns for a certain level of risk. You want to be on the curve and not above or below.
7) Recommends Specific Dollar Amounts To Invest. Financial advice is useless if there is no actionable advice. Personal Capital will recommend the specific dollar amounts to invest or reinvest in each asset class to get you to an optimal asset allocation. In this example below, the investor is too heavily weighted in cash.
In order to get to his recommended target allocation the investor needs to increase stock holdings by roughly $200,000 and bond holdings by roughly $100,000. The fun part is figuring out which index funds to invest in each category. All investment related charts and analysis can be found in the Investing tab. Personal Capital’s latest assets under management are diversified by clientele.
8) The Best Retirement Planning Calculator. Personal Capital has the best retirement calculator on the market because it uses real data and Monte Carlo simulations to come up with the most realistic financial scenarios for your future.
Other calculators simply ask you to guess input values to then come up with your financial future. The problem with this method is that we often underestimate how much we are saving and spending. You can input different life events such as a wedding or home purchase in your cash flow statement and recalculate your financial future to see how you’ll do.
Leverage Free Technology For Greater Wealth
Get a handle on your finances by signing up with Personal Capital for FREE to track your financial accounts in order to improve your financial life. It takes less than a minute to sign up and you’ll be amazed at how much more clarity you’ll have with your finances.
Personal Capital’s assets under management will likely continue to grow over time. If you would like to use their advisory services, it’s worth signing up for a free consultation.
About the Author: Sam began investing his own money ever since he opened an online brokerage account 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 two of the leading financial service firms in the world. During this time, Sam received his MBA from UC Berkeley with a focus on finance and real estate.
FinancialSamurai.com was started in 2009 and is one of the most trusted personal finance sites today with over 1.5 million pageviews a month. Financial Samurai has been featured in top publications such as the LA Times, The Chicago Tribune, Bloomberg and The Wall Street Journal.
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