I’ve been using Empower’s free financial tools, previously know as Personal Capital, to track my net worth, manage my cash flow, and optimize my investments since 2012. Let me share with you the most thorough and honest Empower review about their free financial application.
From 2013 – 2015, I was also a consultant for the firm. Therefore, I have intimate knowledge of their people, their technology, and their product. I still keep in regular contact with all the senior management.
It’s my belief that Empower Personal Capital is hands down the best free financial tools platform you can find online. It helps you manage your finances and achieve a more secure retirement. I’ve tried everything from Excel, to Mint, a plethora of other financial apps, and nothing comes close to Personal Capital’s tools.
With the Empower Personal Dashboard, you can do the following things for free:
- Automatically track your net worth
- Analyze your investment portfolios for excessive fees
- Analyze your investment portfolios for proper asset allocation
- Track and manage your income and expenses
- Run various retirement planning calculations to ensure a better financial future
Empower Personal Capital currently has $1.3 trillion plan assets administered and $284+ billion in assets under management. And over 17.8 million Americans trust Empower with their finances to create the future they want. This amount is a testament to their money management capabilities and product offerings.
Their competitive advantage is that they built their company from the ground up with technology at its core. As a result, they are much more flexible in tailoring offerings to meet consumer demand. Let’s move onto the detailed Personal Capital review.
Empower (Personal Capital) Review 2023
Let me share some of the reasons why Empower Personal Dashboard is the best free wealth management tool today. I’ve been using Empower to keep track of my wealth since 2013.
1) Simplicity And Less Financial Stress
Before Empower, 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 Empower to see how everything is doing in one place. Their technology has made such a positive impact on my finances, I became instantly motivated to write this Empower review to help as many other people as possible.
It’s important to have a holistic view of your overall financial health so you know where to allocate resources.
2) Easy To Review Your Net Worth
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. Empower Personal Dashboard 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. Empower 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. Below is a sample headline snapshot.
3) Easy To Track 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 Empower Personal Dashboard, you can easily see where the imbalances are in your net worth. You can then make smart adjustments.
With so much volatility in the stock market, investors may be too overweight equities and too underweight bonds. Fortunately, this Empower review shows you how their wealth management tools can help investors with their portfolio allocation.
The Investment Checkup tool analyzes your portfolio’s holdings based on size, style, and sector. Empower Personal Capital excels for those who have assets in the stock market. Personally, I like to maintain a 20%, 30%, 35%, 10%, 5% split between stocks, bonds, real estate, alternative investments, and risk-free investments like CDs and money markets.
5) Helps Reduce Investment Fees
One of my favorite tools Empower Personal Dashboard 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 Empower, 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. Check out my post on how to reduce 401k fees with Empower Personal Dashboard.
6) Shows Your Portfolio’s Investment Efficiency
Based on your risk tolerance and investment objectives questionnaire, Empower Personal Dashboard 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. Empower will recommend the specific dollar amounts to invest or reinvest in each asset class to get you to an optimal asset allocation. When I engineered my layoff in 2012, I was focused on having the appropriate asset allocation to sustain my retirement.
In this example below, the investor is too overweight cash and underweight US stocks, US bonds, and international stocks. In order to get to his recommended target allocation the investor needs to increase stock holdings by $282,500 and bond holdings by $72,500.
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.
8) The Best Retirement Planning Calculator
Empower Personal Dashboard has the best retirement calculator on the market. 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. The tool will then recalculate your financial future to see how you’ll do. Everybody should give it a try.
9) Free Recession Simulator
After the global pandemic began, Empower came out with its Recession Simulator. It provides users and clients the ability to view how their current portfolio would have done during past recessions. The idea is to allow users to see what might happen if the next recession is like the past.
Below is an example of the Recession Simulator at work. Notice how the Projected cash flow is short about $800/month in retirement if the simulated recession plays out according to the variables.
If you believe the variables (duration of recession and depth of decline), then you would try and save more or change your investment style. Thanks to aggressive Fed rate hikes, another recession could occur in the next 18 months. The yield curve is the most inverted since 1981.
More Great Empower Features
If the above features weren’t enough for this comprehensive Empower Personal Dashboard review, here are even more great features and accolades.
Award Winning Technology – Lauded by MacWorld as the Best Financial app on the web.
Easy To Use – All you’ve got to do is sign up, press the “+” to link all your desired accounts, fill in the respective user names and passwords and everything will get downloaded on the Empower Personal Capital dashboard. The more accounts you link, the more comprehensive picture you will receive of your finances. It only takes a couple minutes to sign up.
E-mail updates – Every week you’ll get an e-mail update of your net worth, the latest Personal Capital news, and a snapshot of the markets. You can also subscribe to Empower’s The Currency blog to gain insights.
Tax Loss Harvesting – Empower practices tax loss harvesting and tax location for their clients. Tax loss harvesting alone gains up to 1% in after tax return a year.
Smart Indexing – Smart Indexing aka Tactical Weighting is the practice of investing in equal weighted sectors or styles. In bull markets, one sector can grow to an outsized percentage, such as during the dot com bubble or the financial bubble. When the market corrected, people lost a lot of money. But if they practiced Smart Indexing, by constantly staying disciplined with equal weightings in the sectors, they would have outperformed.
Free Portfolio Review With An Advisor – If you want to get a free 1X1 session with a portfolio advisor, you can. Simply click this link, sign up, link your accounts and ask for a free session. It’s worth $799 for free. There’s no obligation to sign up and use Empower Personal Capital to manage your money after.
Leverage Empower Personal Capital For Free
This Empower Personal Capital review demonstrates how helpful it is to leverage free financial tools. When you know where your money is going and where it’s being invested, you gain a tremendous amount of confidence in your financial well being.
One of my biggest goals on Financial Samurai is to help everyone achieve financial independence sooner, rather than later.
You may not be wealthy now, but just knowing you’ve got your finances in order and have a financial plan tremendously increases your chances of financial success.
Once you are financially secure, you free to do whatever you truly want. Get a handle on your finances by signing up with Empower for free and aggregating all your accounts. The financial management tools are free and takes less than a minute to sign up.
I spent 13 years meticulously tracking my own finances to achieve financial freedom at age 34. If I discovered Empower earlier, I think I would have reached freedom even sooner!
I hope you enjoyed this Empower review. I’ve spent the past nine years using Empower’s free tools and analyzing their new offerings over time.
Empower Review 2023 is a Financial Samurai original post. Everything written on Financial Samurai since 2009 is based on firsthand experience.
I have used Empower for a few years and is a useful tool. My only complaint is. They don’t track dividends from Fundrise.
Financial Samurai says
There are many private funds and private investments one needs to manually input. But that’s not bad given Empower tracks the majority.
Going in to manually update once in a while is good b/c it forces you to check up on your net worth and make sure your net worth allocation is correct and your cash is being properly utilized.
Really impressed with the financial software that i have used for the last couple of years. It presents an unbiased look at your overall financial picture that gives me a “warm and fuzzy”. No financial counselor trying to pitch schemes that you cant determine if it’s in your best interest or theirs. I did attempt to do the mgmt part but got a little leary when i found out they control most every aspect and only inform you when they make moves. At the end of the day, i like having more control.
Thanks for the review Sam! I am in the process of trying out the free stuff and I scheduled a “Free Portfolio Review With An Advisor”. I noticed that you haven’t talked much about that part of their offerings.
What do you think about their paid account management? Do you think they are likely to save a customer enough in fees and get enough better returns to justify the fee?
Financial Samurai says
No problem. It’s worth going through the free portfolio review with an advisor. I did one before and thought it to be an elucidating experience. I didn’t go ahead with the money management part b/c I enjoy managing my money myself.
I’ve been paying Personal Capital to manage my portfolio for about 3 years now. As far I can tell the “Smart Indexing aka Tactical Weighting” sounded like a good tweak to the investment strategy but in practice is very rarely used. I recently got my first email that they were trimming back on the Energy sector.