Empower Personal Capital is a Silicon Valley digital wealth management company that launched in September, 2011 by former Intuit and PayPal CEO Bill Harris. If you are wondering, should I use a wealth management company like Personal Capital, I think the answer is yes.
I have been using Empower Personal Capital's free wealth management tools since 2012. Partly due to better financial management, I've seen my net worth increase by more than 5X since. I liked Personal Capital so much I became a part-time consultant and shareholder from 2013-2015.
Empower's goal is to give everyday people more control over their finances by using their technology for free while modernizing personal wealth management advice over the Internet. If you don't know where to start investing, Personal Capital will help you invest in a cost-effective manner.
With employees to pay, offices in Redwood City, San Francisco, and Denver to support, and technology to continuously build, revenue must flow in to counteract the cash burn.
Empower Personal Capital recently reached a terrific milestone of managing over $20 billion in assets as of 2023. They track over $1 trillion in assets from 2 million registered users of their free financial tools. Their growth rate looks to be accelerating as the become the leading digital wealth manager today.
Let's look at whether using a wealth management company like Empower to invest your money is worth it.
Target Users For Empower Personal Capital
If you're considering using Empower to manage your money, it's a good idea to get an idea of who uses Empower today. A wealth management company's main goal is to help you build wealth. Let's look at the target users for Personal Capital.
- Anybody who wants to get a better grasp of their entire financial situation.
- Anybody who has multiple money accounts across multiple institutions aiming to simplify.
- Hands-on types who take a proactive role in managing their finances (budgeting, net worth tracking, etc).
- Individuals who do a lot of investments in the stock market, bond market, and alternatives.
- People who want to do some pro forma analysis on their retirement prospects using their free Retirement Planning Calculator.
- Individuals who are seeking financial advice from registered professionals.
A wealth management company helps address all of these things. The busier you are, the more you should consider using Personal Capital.
Users With Complicated Net Worths
The average Empower Personal Capital user has around 15 separate money accounts when they register. Some of these accounts include checking, savings, CD, mortgage, credit card, overdraft protection, and investment accounts.
When you've got a complicated net worth, it's hard to get a bird's eye view of your finances to know where you can optimize. Personal Capital securely provides users with all their information in one place.
I've been thinking about signing up for an online wealth management company for a long time because I have over 35 financial accounts across five banks (USAA, CIT Bank, Citibank, BoA, First Republic) and two online trading platforms (E*trade and Fidelity).
The reason why I have money with five banks is because the FDIC limit per individual account is $250,000. I didn't want to risk losing hundreds of thousands of dollars just in case a particular bank went under during the financial crisis. Besides, it's very easy to move money to higher interest savings and CD accounts.
Around 15 of my accounts are optimized to provide the best passive income returns possible. However, that still leaves 10 accounts where I have to mentally track or log into separate institutions to keep on top of my money. For example, I've got seven high interest CDs expiring across four banks over the next four years.
Easier To Track Finances With Empower Personal Capital
It'd be nice if I could track them all in one place because the plan is to deploy CD money to alternative investments with higher returns. If you do not tell your bank you plan to invest your CD money elsewhere, they will automatically lock you in for another term!
With Empower, users can consolidate their mortgages, follow their credit card spending, get a historical analysis of their overall spending habits, track their net worth, and optimize their overall finances more intelligently. It is one of the best wealth management companies with the best free tools.
Empower also shows your current stock allocation to allow you to make easier rebalancing decisions. Being able to combine my 401(k) assets and online brokerage assets into one snapshot helps with investment decisions.
Another fantastic feature Empower has is its Portfolio Fee Analyzer tool. After running my 401k through the tool, I discovered I was paying $1,700 a year in fees I had no idea I was paying.
As a result, I got out of poorly run actively managed funds like the Fidelity Tech Fund, and bought similar Vanguard funds with 80% less cost.
I would have ended up paying well over $50,000 in fees by the time I was 60. I'm pretty positive that you are paying more in unknown fees as well once you run your investments through their tool.
So How Does A Wealth Management Company Make Money?
Everything I've discussed so far is free for users, including their iPad and iPhone apps which basically mimics everything a desktop user can do on the go. Empower makes money by targeting mass affluent users who have more than $100,000 aggregated in their accounts for its paid financial advisory services.
Traditional wealth management companies such as Goldman, Bank Of America Merrill, and Citibank with physical offices around the world charge around 1-2% of assets under management for financial advisors to actively manage their client's money.
For a management fee of 0.49% – 0.89%, Personal Capital connects users to registered investment advisors, who then provide personalized wealth management advice online. The idea is to leverage the Internet to lower wealth management fees and capture multi-billion dollars worth of client assets in the process.
Empower Personal Capital Management Fee
Here is the fee structure if you so choose to undertake financial advice. It's completely optional. You do not have to become a paying client.
- First Million: 0.89%
For clients who invest $1 million or more:
- First $3 Million: 0.79%
- Next $2 Million: 0.69%
- Next $5 Million: 0.59%
- Over $10 Million: 0.49%
- Fees are up to date as of 2021
Obviously not every user on Empower will want a paid financial advisor service and that's fine. You don't need to accept if they call and ask.
Try Empower Personal Capital For Free First
The software is already built, so whether one person signs up for free or a million users sign up to get professional advice, the marginal costs are minimal. What they hope is for clients to grow their capital to the point where they would like financial advisory service.
Personal Capital provides free wealth management by enabling you to manage your wealth yourself.
If you talk to any of the private wealth management companies, they generally have a minimum threshold of $1 million in assets before they are willing to take you on.
Citi private bank has a $3 million minimum and Goldman Sachs has a $5 million minimum for comparison. With Personal Capital, their target threshold at $100,000 is much lower given their lower operating costs, thereby bringing access to the mass affluent community.
Fantastic Free Wealth Management Tool
With 35 accounts to track, Empower helps me manage money easier. Finances are chaotic, and Personal Capital's free financial dashboard helps make sense of it all.
They are headquartered right here in the San Francisco Bay Area and I've personally interviewed the CEO, CFO, COO, and CTO multiple times to understand their business, and make sure they are doing great work.
More reasons to use Personal Capital's free tool
1) 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. Empower 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.
2) 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!
During difficult times, cash flow is more important than net worth. Make sure you track your cash flow carefully.
3) 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. Having the proper risk exposure that matches your risk tolerance is critical.
With Empower, you can easily see where the imbalances are in your net worth so you can make smart adjustments. Now that it's a bull market, 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. Empower 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.
You will likely have different investments for different interests. Empower can help you organize all your different investments in one place.
4) Shows Your Portfolio's Investment Efficiency.
Based on your risk tolerance and investment objectives questionnaire, Empower 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.
5) 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. 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.
6) The Best Retirement Planning Calculator Today.
The award winning product team came up with what I think is 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.
Everybody should give it a try. They also came out with their new Retirement Simulator product in June 2020 to account for all the global pandemic worries.
Related: How To Be A DIY Investor And Save Lots Of Money
Leverage Technology To Grow Wealthier
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. Using a wealth management company like Personal Capital is a great idea if you don't know where to start or are feeling overwhelmed about your finances.
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 Personal Capital for free and aggregating all your accounts. The financial management tools are free and takes less than a minute to sign up.
I spent years meticulously tracking my own finances to achieve financial freedom. If I discovered Personal Capital earlier, I think I would have reached freedom even sooner!
For more nuanced personal finance content, join 100,000+ others and sign up for the free Financial Samurai newsletter. Financial Samurai is one of the largest independently-owned personal finance sites that started in 2009. Everything is written based off firsthand experience.
42 thoughts on “Should I Use A Wealth Management Company Like Empower Personal Capital?”
Dear Financial Samurai,
Are you currently signed up and pay for Personal Capital Wealth Management advisor service?
I did with 75% of my investable assets for 0.79% fees.
I’m ready to retire now and asking myself if should continue to pay ~$20k yearly fees.
Can you please lists best ways to utilize PC advisor services once major financial goals are planned?
Currently I’m not because I have had good success managing my own finances. I used to work in Equities from 2009 – 2012 so I’m very familiar with investing. Further, I also have a lot more time than the average person since I retired early in 2012.
If you’re ready to retire now, you can read this post about asset allocation by age. $20K year in fees is a lot.
Hello, thank you for your article. I am new to investing and currently have money invested at Charles Schwab and a roth IRA. I have just spoken to one of the financial advisors at Personal Capital and he is calling me back next week to go over my account/investments. I am curious what your thoughts are on using PC’s advisors vs somewhere like Charles Schwab. Thank you!
As a newbie investor, there’s no rush to start investing. What you need to do is first get a handle of your finances and understand where all your money is allocated. Signing up for Personal Capital so you can get a holistic view of your finances for free is a good first step.
After you are comfortable, you can get a free financial consultation with them and see if you like their recommendations. I wrote about my experience here.
Finally, if you are comfortable, and understand all the fees, objectives, etc, then you can go ahead. The key is to establish a regular monthly savings/investing cadence for as long as possible.
Thanks for identifying some target users of wealth management firms, like those who want a better grasp of their financial situation and people with multiple money accounts across multiple institutions. I can see how both of those things would be hard to manage on your own. When you’re hiring someone to manage your money I feel like trust would be the most important aspect, so I would most likely be looking into testimonials from past customers and referrals from people I trust to help me choose a firm.
I have used Mint and Personal Capital. Of these two, I prefer personal capital. With mint, some of my bank account and credit card balances stopped updating over time, which was inconvenient. I haven’t had this problem with personal capital.
Been with PC for 8+ months. 100K+ nonqualified & 2 roths = steady gains and market fluctuations are mere hiccups; seriously, we don’t even concern ourselves with such drivel. Bill has built a winning team and Craig’s investment team and their strategies are solid. One note – when you give them the reins they manage your portfolio; don’t be thinking you’ll call and buy a couple of shares of this or that – not gonna happen. If you want to dabble and risk then you’ll need an account with E-trade or similar – PC’s business case is strategic and purposeful. Will post this on other boards as well – checked the web to see where the feedback was. Seems many are “curious and wondering” well enough of that – you are missing opportunities.
Thanks for sharing your thoughts. I like PC so much that I decided to consult with them starting Jan, 2014.
Please read this post if anybody cares about getting a free financial consultation and how it works. Spent 6-7 hours putting it together.
I took the plunge with Personal Capital a few months ago and don’t regret it. I even interviewed their CEO Bill Harris about his company’s philosophy and services and came away impressed (which is hard to do with personal finance resources).
Would you consider doing a follow up article about the website functionality and mobile app performance? I’d enjoy your perspective and I’m sure it would be a great supplement to the write-up I did on Personal Capital over at Value of Simple. Check it out if you think it would be helpful in researching another post on them:
Sam – maybe you can consider writing an article about identity theft protection at some point. With all your info now aggregated in one place, it’s an even greater risk.
Identity Guard (what I use), LifeLock, etc…
Might be a good idea. I’ve seen LifeLock all over the place. Thanks.
Thanks for sharing. I signed up for Personal Capital due to their Amazon gift card promotion. I took a closer look today thanks to your post and really like what I see!
I’m a big user of financial aggregator sites like Yodlee, SigFig/Wikinvest, CakeFinance, and Mint. Personal Capital combines the transaction management capabilities of Yodlee with a clean UI and the portfolio management and analysis capabilities of Wikinvest/SigFig/Cake. The Android app is a big plus too! I’m interested to see how the personal advisor service will turn out, I just received an introduction from mine :)
I think Personal Capital also uses Yodlee like Mint… If only there were a way to import my years of transaction history from Yodlee…
A key point for me and potential many others in my situation is that this hopefully starts a trend to attract younger individuals with less than a $1 million dollars into caring about their money and savings.
I know that if you take my mortgage out of the equation then I have more savings than debt, but if you add in the mortgage then I am $200k in the hole. What I interesting in finding is a tool that will allow me to visually display my balances and offer a pay when needed option.
Personal Capital is definitely a channel to bring wealth management to the masses. It’s all about disrupting the status quo and using technology to reach more people.
At the end of the day, how many people, young or old have $1 million dollars in savings and investments? Not many! Hence, PC has to broaden the rich if they want to grow and be successful. Nobody needs the big bucks to properly manage their money anymore thanks to PC. You should give it a shot as it only takes about a minute to register and then depending on how many accounts you have to link.
@Shilpan Definitely. It’s a marketshare grab right now. Could be huge, and a business that can last forever theoretically.
@Mike I guess money under the mattress can always work, although PC doesn’t have a category for that!
Some simplification is always good. Plus it’s good to make sure that you have a few ways to be able to really make sure that you are able focus on trying to at least keep some of your money in the event that something goes sour.
Love this!! Really brings it all together..your bank accounts, credit cards, bills, 401ks, IRAs and mortagage. I really send lots of time towards the year end tweaking my plan for the future and this makes it really easy. Also like the 401K option where it calculations your annual costs trending across time. Really will need to streamline my funds aroudn 40 to minimize costs.
Great to hear you are enjoying the PC platform! Once you get it up and running, it’s as if your contacts or glasses suddenly become as clean as the day you first got them.
I was intrigued when I saw Joe’s review at RB40, and now I think I have to try it out. I have had issues with Mint as mentioned above and really don’t use it at all right now. It is a real time suck to have to log into every account manually. I love simple.
I love simple too. Just takes the initial effort to set things up. But once you’re done, it’s a time saver. Helpful to see everything in one place.
Signed up today, and I’m very impressed by the interface and the dashboards. Being able to visually see the different accounts and allocations both on a broad and detailed level is very helpful. I’m definitely interested in seeing the data after using it a while and changing my allocations as necessary.
Only issues I have seen are that I cannot connect to my Betterment account (something that I was trying out for fun) or one of my 401K accounts through JP Morgan. There seems to be a bug with the JP Morgan connection, which I E-mailed PC about so hopefully it will be resolved in the near future.
Good stuff Jon. Let me know if PC resolves your issue. I’d be curious to know in a couple months how Betterment compares with PC. Thanks Jon.
Got a note back from Personal Capital today with step-by-step instructions on adding in my JP Morgan 401K account. Apparently they had a bug where things were mis-labeled so I had to select a different option.
They do not have any ETA on whether they will have connectivity to Betterment available in the near future. Since they are somewhat considered competitors, I don’t find that surprising.
Got it. Good to know they are responsive on the JPM 401K account. Kinda makes sense on the Betterment connectivity, as they are somewhat competitors. Thanks for reporting back.
Wanted to follow up on this topic because Personal Capital has added Betterment connectivity. They even E-mailed me to let me know about it last weekend, since I had opened a help ticket in December when I joined. Definitely good customer service.
Great to hear Jon! They are indeed quite responsive, which is something I really appreciate. In wealth management, it’s all about customer service.
This is one of the best uses of technology. The costs are low and you can gain immediate results. I see this as something for the young entrepreneurs of silicon valley because really rich people want more human interaction. This type of company is relying on less interaction so they can keep the costs low.
The Internet has really been able to lower costs and make things more efficient with almost everything: mortgage refinancing, dating, search, etc. I’m happy to just have responsive e-mail conversation rather than phone, skype, or in person. I just need to make sure a company is operating properly and looking out for its customer’s best interests.
Maybe I am old school, but I just see this technology as supporting the traditional resources. I prefer face to face conversations and human interaction versus using technology. I like the idea of supplementing the traditional choices, but I still prefer the traditional ones.
I checked out their website. It’s really cool and definitely looks like Silicon Valley material. I also use multiple banks and actually don’t know when my CDs are expiring. Yikes! I like the idea of having everything in one place. Makes things much simpler.
Not knowing when my seven CD accounts are coming due is seriously one of the biggest reasons why I’ve signed up. The last thing I want is for a mega CD yielding 4.15% to get locked in for another 7 years at 2%! The bank should let me know, but I want an extra alarm clock if you will!
I just signed up with Personal Capital this summer and love it! Completely helps me manage my finances better because I can see where everything is going. I found a lot of leaks in my finances, which I’ve since plugged.
Thanks to Personal Capital, I made a decision to asset allocate more money into stocks this summer as I saw that I was way too overweight savings and CDs. It’s free and very helpful. I totally recommend it!
Great to hear Brett! I’m planning on reducing my CD net worth portion as well. Rates are just way too low for my liking.
Sounds interesting. Like others, I currently use Mint. They’re great for the day to day tracking of spending and budgeting but I think they really lack on the investments front. I’ll have to give Personal Capital a shot and see how they compare.
Personal Capital is definitely good for those with multiple investments in different asset classes.
This sounds alot like Mint. I used to use Mint years ago but then stopped using it because Mint could not follow transactions through my different accounts properly and would sometimes add double entries which would force me to do manual clean up and became very frustrating. Sam have you had any issues with Personal Capital correctly reporting transactions or has it been smooth sailing? Im curious if you have manually verified what Personal Capital reports as well.
So far, so good. I’ve taken a look and things look fine. It’s really helped me with organizing all my accounts in one spot. I don’t have experience with Mint.
I like Personal Capital A LOT more than Mint. I had some problem linking a few accounts in the beginning, but they worked on them and eventually I was able to add all my accounts.
Great to hear Joe! I never tried Mint b/c they really did some funky dealings with the online community that turned me off.
Such as? I’d love to hear about this, because I currently use Mint.
This sounds interesting. I’m currently using Mint to keep track up everything. It doesn’t follow up on all of my accounts, so I still have to keep tabs, and do some manual work. These type of tools are definitely time savers, no doubt.
Anytime you can do anything to simplify – I say go for it! If using a company like Personal Capital gives you peace of mind, why not? Personally, I stick to good old-fashioned software programs like Quicken to track and manage all of my accounts. But then again, my portfolio isn’t nearly as complicated as yours. In time, I may consider using such a service.