Personal Capital Or Wealthfront? The Best Robo-Advisor For Your Money

The two most popular digital wealth managers today are Wealthfront and Personal Capital. They are both based in my hometown of San Francisco, and I've met with the senior management of both over several meetings throughout the years. No other reviewer has conducted the same amount of thoroughness or has the same amount of access.

Wealthfront and Personal Capital have exploded in popularity because they have allowed everyday people to either manage their net worth for free or have their net worth managed for them for a low cost.

You used to need at least $500,000 in assets to go with a private wealth manager. Then you'd have to pay a 2-3% fee of your assets under management each year for generic advice.

Wealthfront Overview


Wealthfront  is an automated investment service based on asset allocation and low fees. Most refer to Wealthfront as a robo-advisor. The service is built around Modern Portfolio Theory, or MPT, and your risk tolerance. This theory states the optimal mix of asset classes is more important than individual security selection.

Wealthfront accomplishes this through the use of exchange-traded funds (ETFs) focusing on a relatively narrow range of very broad investment classes.

The ETFs are centered on six asset classes:

  • U.S. stocks
  • Foreign stocks
  • Emerging markets
  • Real estate
  • Natural resources
  • Bonds

The bond ETFs are further broken down into municipal bonds, corporate bonds, Treasury Inflation Protected Securities (TIPS), emerging market bonds, and dividend stocks.

The use of ETFs enables an investor to hold as many as 10,000 underlying securities and to do so with extremely low fees.

The Efficient Frontier / Modern Portfolio Theory By Harry Markowitz

Getting started with Wealthfront. You start out by completing a short questionnaire used to determine your personal risk tolerance. Based on your answers, Wealthfront will design your asset allocation mix. This mix will remain constant regardless of the size of your portfolio.

Account minimums. The minimum account size is only $500. There is also a minimum withdrawal amount, which is $250, and you cannot draw your account below the $500 minimum. This makes Wealthfront a real option for the truly small investor.

Wealthfront fees. Using my exclusive sign-up link, the first $5,000 in your account is managed free of charge — amounts in excess of $5,000 are charged an annual fee of 0.25%. This fee is incredibly low compared to the 1.5% – 3% companies like Goldman Sachs, Edward Jones, Raymond James, and Bank of America Merrill Lynch charges.

Areas of improvement. One of the issues with Wealthfront is that they optimize your portfolio based on a short questionnaire and the assets you let them manage. Therefore, they can't see your entire net worth and allocate accordingly. As a result it's up to you to decide whether their allocation recommendation is appropriate.

Below is a sample of a recommend investment portfolio allocation based of a 10 risk tolerance. You can manually adjust down your risk tolerance to get a different investment mix.


-> You can sign up for Wealthfront here with my exclusive link.

Personal Capital Overview

Personal Capital Review

Personal Capital has a higher investable minimum of $100,00, compared to $500 for Wealthfront for 2018. But, Personal Capital has FREE award-winning financial tools for everybody to use to track and manage their wealth.

The biggest difference between Personal Capital and Wealthfront is that Personal Capital has human financial advisors along with their sophisticated investment algorithms to automatically invest and rebalance their client's portfolios. In other words, Personal Capital is a hybrid digital wealth advisor that leverages the best of both worlds for a higher fee.

Individual account management. Each account under management is assigned a dedicated investment advisor, whether or not you use the wealth management service. This is an outstanding feature, given how low Personal Capital’s fees are compared to other investment advisory firms. You can have a free account review with a financial advisor to see if they add any value before signing up.

Investment management strategy. Personal Capital also uses low-cost ETFs to create portfolio models. Personal Capital also uses a basket of at least 60 individual securities (for equities). Personal Capital also likes to deploy “Smart Indexing” where they try to create equal weightings in various sectors so your portfolio is diversified and doesn't get too heavy in one sector or another e.g. bull market in technology might increase your original tech weighting from 10% to 25%. Smart Indexing automatically rebalances the weighting back to 10%, or whatever the original weighting is.

Customer service. The reason why many people buy Apple computers is because they enjoy the Genius Bar service whenever they need to learn something, or when something goes wrong and needs fixing. Having a human financial advisor to e-mail and speak to regarding financial questions is very reassuring for many people.

Personal Capital fees. Personal Capital has award winning free financial tools that anybody can use to track their net worth, plan for their retirement, and x-ray their portfolio for excessive fees. It's the best free financial software on the market. I've used them for five years now to grow my net worth, and so should you.

If you want to be a Personal Capital client, their fees are the following: 0.89% of the first $1 million under management; 0.79% on the next $1 to $3 million ; 0.69% on the next $2 million; 0.59% on the next $5 million; then 0.49% on balances above $10 million. Like Wealthfront, there are no trading fees.

Fantastic free tools. My favorite free Personal Capital tools are their Retirement Planner and Investment Checkup tool. After you link your accounts, you just go to the main Investment tab and click on the respective links. Here are two snapshots of what you can get as Personal Capital uses their sophisticated algorithms to analyze and suggest free advice.

Planning for retirement when paying for private grade school
Sample retirement planner calculator.
Personal Capital Investment Checkup Tab
Investment Checkup snapshot

Final Verdict

Sign up for Wealthfront if you want a low cost pure digital robo-advisor to manage your money. You want everything automated and don't need any hand holding. I actually prefer Betterment better.

Sign up for Personal Capital for its free award winning tools so you can analyze your investments and better plan for retirement. Only after you are comfortable with your finances do you want to consider getting hybrid financial advice.

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. 

In 2012, Sam was able to retire at the age of 34 largely due to his investments that now generate roughly $200,000 a year in passive income. He spends time playing tennis, hanging out with family, consulting for leading fintech companies and writing online to help others achieve financial freedom. 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.