Personal Capital is one of the premier online investment advisory platforms that provides clients with electronically facilitated wealth management services. Personal Capital started in 2009 and has seamlessly blended digital advice with human advice to provide the best service possible at a lower price than traditional investment advisers. The Personal Capital pros and cons will be reviewed here.
I’ve personally spend over 1,000 hours consulting with Personal Capital between 2012 and 2015 in their offices in San Francisco and Redwood City. I’ve sat down with senior management more than 30 times to get insights about the company, their strategy, and their growth.
Finally, I’ve used Personal Capital’s free financial tools to manage and grow my net worth since 2012. During this time, I’ve seen my net worth growth by more than 5X thanks to better money over site.
Given my experience, I dare say no other personal finance writer else has as much insights as I do about Personal Capital.
First let me share a brief overview of Personal Capital before getting into the pros and cons.
Personal Capital Company Overview
Total Equity Funding: $215.3M in 8 Rounds from 12 Investors as of 2021. Acquired in August 202 for $825 million by Empower, a SF Bay Area company. Company was acquired in 2020 for $850 million by Empower.
Headquarters: Redwood City, California with offices in Denver, San Francisco, and Dallas.
Description: Personal Capital is the leading digital wealth management firm.
Founders: Bill Harris, Louie Gasparini, Rob Foregger.
Categories: Financial Services, Wealth Management, Finance, FinTech.
Sign up link: Personal Capital
Founded: July 1, 2009
Contact: firstname.lastname@example.org | (855) 855-8005
Employees: ~600 as of 2020
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.
Personal Capital Funding History
Personal Capital Pros And Cons
As you can tell from the company overview, Personal Capital is made up of experienced industry veterans. The company has raised a significant amount of funding and are clearly here to stay for the long-term.
I recently had lunch with Mark Goines, Vice Chairman and Eric Weiss, Chief Marketing Officer in San Francisco to get an update about their operations. Personal Capital has grown to over 400 employees with a new office in Atlanta, Georgia.
They also run roughly $15 billion in client assets under management, while tracking over $950 billion in assets from users who use their free financial app as of 2Q2021.
I highly recommend everybody sign up to track their net worth, analyze their investments, and plan their retirement cash flow. The firm is clearly doing well and will be around for a long time to come.
Now let’s talk about the Personal Capital pros and cons.
Pros Of Personal Capital
* Built from the ground up as a hybrid digital wealth adviser. Because they are the pioneers in the human + digital adviser business, they are the experts in providing the best wealth management experience possible. Their engineers and product managers are always focused on developing the best products for their customer base.
* Nimble. Unlike big giants like Fidelity, Vanguard, and Charles Schwab, Personal Capital can more easily introduce new products to market.
* They are a fiduciary. Unlike many brokers, Personal Capital follows the fiduciary rule of following the client’s best interest. That means no hidden fees, no selling products with kickbacks, and no selling products that have underperformed due to higher commissions.
* They have the best free financial app online. Personal Capital has developed the premier free financial tool to help you manage your net worth, x-ray your portfolio for excessive fees, manage your cash flow, and much more.
I’ve used their free app since 2012 and it really is the best. Before, I had to individually track my finances with an Excel spreadsheet every month. Now, everything is automated since I’ve linked up all my accounts.
* Very focused on real-time issues. In June 2020, Personal Capital came up with a new Recession Simulator tool. This is the perfect tool given what’s going on with the coronavirus pandemic and the lockdowns. This new tool shows Personal Capital is very focused on helping its users through thick and thin.
Cons Of Personal Capital
* Fees are higher than most of its competitors. Personal Capital isn’t the lowest cost provider because they have human financial advisors to help answer questions and provide guidance towards your goal of financial freedom.
There are competing firms that only provide digital advice, thus their fees are of course lower. If you plan to just use Personal Capital’s free financial tools, then the fees don’t matter.
Here’s a fee comparison snapshot:
* Still require some manual tracking in the free app. Personal Capital has been able to link up a large majority of financial accounts on its platform, but there are still certain accounts or individual investments you must manually input on your dashboard to track.
* No promise of outperformance. There are no guarantees in life, especially when you are investing money in the stock market and bond market. Personal Capital builds a model portfolio for you based on your risk-tolerance and goals. In a bull market, you may underperform because you are too risk averse. In a bear market you pay also underperform because you are too risk loving. The performance is highly dependent on an individual investor’s comfortability.
Features Of Personal Capital’s Free Tools
Once you sign up for Personal Capital, you can take advantage of all their free financial tools to help you manage your money. I’ve used their awesome tools since 2012, and I highly recommend you do too. Here are the main highlights.
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 And Fee Analyzer. 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 all of your income and expenses whatever the sources may be. This will help you see where you’re spending mone 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 and make it consistent with your goals and personal preferences.
Personal Capital Is Worth Trying
Most do-it-yourself investors make mistakes that cost them a lot of money over time. And many who call themselves “advisors” are actually conflicted brokers incentivized to sell you high-fee products. Some have good intentions, but still use mutual funds inefficiently.
As the modern way to manage your net worth, Personal Capital combines award-winning technology and financial tools with experienced people. This makes it both smart and easy to transform your financial future. Personal Capital’s advisors are fiduciaries with decades of combined experience managing money for high-net-worth and institutional clients, and they possess a strong desire to drive change and improve the industry.
Personal Capital is the smart way to get a real-time grasp of your finances. Independent and set up to avoid conflicts of interest, they’ve developed a simple way to invest better that delivers maximum diversification, a smart index approach, low fees, tax management, disciplined rebalancing and full transparency.
The more you are on top of your finances, the better you can optimize your wealth. Try out Personal Capital’s free financial tools first to better manage your finances. I’m sure you’ll find some areas to optimize if you’ve never tracked your finances in one place before. If you need extra help, you can also sign up for a free financial consultation first before deciding to be a client.
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. See the full Personal Capital review for more.
Personal Capital Pros And Cons is a Financial Samurai original. Financial Samurai was started in 2009 and is one of the premier independently owned personal finance sites today. Also see Traditional Advisor Or Robo-Advisor.