As I’ve discussed in my Mint review, I think Mint is great as a budgeting tool but inadequate for investment planning. Mint is targeting people who are just starting out with their finances. As I mentioned previously, I wished for service that focused more on the investing side of personal finance; retirement, asset allocation, and taxes. Personal Capital is two services, the free to use portfolio aggregator, and their paid advisory service.
I discovered Personal Capital over three years ago, and it appears to have answered most of my wishes. Personal Capital has been awarded CNBC’s Disruptor 50 for the second year in a row.
Personal Capital History
Bill Harris is the founder of Personal Capital and has a long history in the personal finance app space. In case you don’t know, Harris is the former CEO of Intuit and PayPal. Also, Personal Capital’s portfolio recommendations are powered from another five-year-old company he co-founded. MyVest has raised $52.3 million in venture capital.
From my research, many of the Personal Capital employees are former Intuit employees – including the product manager I interviewed for this review. Oddly enough, many parts their service has a “Quicken like” feel.
Currently, over 700,000 users are now using Personal Capital and have in excess of $120 billion assets being tracked on the platform. Personal Capital is a Registered Investment Adviser (RIA) with the SEC, and recently passed the $1 billion dollar mark in accounts under management.
Personal Capital is targeting aspiring wealthy people whose net worth is from $100,000 to $2 million in liquid assets. A market that is traditionally under-served by Wall Street.
High enough in net worth to have complicated finances, but previously not profitable enough for Wall Street to target. This is where companies like Personal Capital, Wealthfront, FutureAdvisor, and Betterment are targeting. In my opinion, this is the future of financial management.
The high-end advisors only target individuals in the ultra high net worth category. Individuals below that threshold typically have to fend for themselves. With Personal Capital, the technology can offer the personalized service at a much lower price point than previously possible.
Testing Personal Capital
To give Personal Capital a complete test, I created a free account. I then added over fifteen accounts: bank accounts, credit cards, mortgage and investment accounts (which I especially focused on). For the review, I used accounts that contained: taxable investments, IRA, 401(k), 403(b) and alternative investments such as peer-to-peer lending service Lending Club.
Just like Mint, the process is quick and easy. I had no issue syncing up the same accounts in Personal Capital.
Personal Capital’s free service is focused (not surprisingly) with investing and retirement planning.
- Budgeting – Follow weekly, monthly, and yearly income and spending habits with their Cash Flow tool.
- Retirement Planner (New) – Find out if you are on target for retirement. Currently this feature is only available on the web site and not via their mobile apps.
- 401(k) Fee Analyzer – This useful feature tells you how much your retirement plan is costing you. For many, the amount lost to fees is surprising.
- Investment Checkup – This tool has been recently improved. Get high-level recommendations to your investment asset allocation. By determining your risk profile, Personal Capital will recommend an asset allocation that right for you.
- Mutual Fund Analyzer – How much are your mutual funds costing you? Find out with their report.
- Asset Allocation Target – Are you overweight or underweight in any of the major equity categories?
- Email Notifications – Get daily and/or weekly notifcations about your accounts.
- Mobile App – The Personal Capital App is available for Apple iOS devices (iPhone and iPad) and Google’s Android operating system.
- Apple Watch app – As if using their iPhone app isn’t enough, Personal Capital was one of the first services to add Apple Watch app functionality.
Personal Capital recently announced a new budgeting feature. This makes their service is more in-line with Mint.
This feature allows you to set either a weekly, monthly, and yearly spending target and then track your spending toward your goals. If you don’t set a particular goal, Personal Capital’s algorithms will automatically set one based on your historical cash flow patterns.
Personal Capital’s Retirement Planner
Thanks to Personal Capital’s latest feature, the Retirement Planner, you can finally find the answer to the question about whether or not you have enough saved for retirement, with a good degree of confidence.
This free feature allows you to access spending goals, income events, and project portfolio value. Then the Retirement Planner pulls all this together and projects what kind of shape you’re in for retirement.
There aren’t many good retirement planning tools out there, even though Betterment has one that requires you to enter your information manually. The big difference with Personal Capital’s Retirement Planner is that it makes this process automatic, so you don’t have to enter your assets and accounts manually.
For this to work properly, you have to already use Personal Capital (which is free!) and have your accounts linked to the service.
Personal Capital vs. Mint
- More Reliable Synchronization – Mint.com uses their own in-house system to sync with the financial institutions. At times, Mint has been unreliable where synchronization stops working. Personal Capital uses Yodlee to perform the syncing, which has been a much more stable service from our testing.
- Customer Service – This is a sticking point with many Mint.com users — no customer service. Every time I’ve contacted Personal Capital, I’ve gotten a quick response (less than 24 hours) to my questions.
- Investment Focus – More focus on investing and retirement planning with Personal Capital, rather than just budgeting.
- Ad Free Service – Besides offering their advisory service (see below) there’s much less up-selling of products and services. Mint continually recommends third-party products and services to you.
- Better Reporting – The interactive investment graphs in Personal Capital break down your investments with ease.
- Security – With their two factor authentication, security is more robust with Personal Capital. Their iPhone app support fingerprint security for login.
- Budgeting – Both services can budget and help plan monthly outflow.
- Retirement Planning – Mint.com does not offer a retirement planning overview, projected portfolio value, or any other investment-related features. This makes Personal Capital really stand out.
- Holistic View Of Your Personal Finances – Encompasses all of your finances in one easy to use service. While I use Betterment’s service for investing, it doesn’t include the big picture. Personal Capital, on the other hand, gives you access to all your finances in one location. Personal Capital calls it a “360° View of Your Financial Life.”
- Integrated Investment Portfolio – With retirement accounts with one broker and taxable investments with another, it’s hard to have a complete picture of your asset allocation. Personal Capital imports them all into one central location.
- Great Reporting – Similar to Morningstar’s X-ray tool, Personal Capital offers a great way to drill down into asset allocation and performance.
- Apple iPhone, iPad, Apple Watch, and Android apps – The app’s features are similar to the desktop edition and can be used on the go.
- The You Index™ – It’s a performance metric of all of your current stock, ETF and mutual fund holdings extrapolated backward. It does not include your cash, money market funds, individual bonds, options or other alternatives. Basically showing how your stock portfolio is performing over time.
- Powerful Investment Checkup – It’s a decent starting point and should be adequate for most individuals. Though it doesn’t give concrete and actionable items, and I suspect, the reason is to upsell you on their advisor service.
- Easy To Use – Account setup is brain-dead simple. Their user-interface, navigation and reporting is well laid-out.
- Asset Allocation is Not Customizable – Personal Capital has predetermined asset allocation models. This is adequate for most, but not if you want to vary from their recommended allocations.
- Incorrect Allocation of Investments – In my tests, some investments were not categorized for one reason or another. You unfortunately cannot manually change an unknown or incorrect to it’s correct investment sector.
- No Full Out Budgeting Tool – You can monitor cash-flow, but you cannot create estimated weekly, monthly and yearly income and spending goals to compare against. Though as I’ve stated in the past, I’m not a fan of actively budgeting and believe it’s usefulness is overblown.
Is Personal Capital Safe?
The security is similar to Mint’s service, but overall much better. Unlike Mint, Personal Capital requires you to register each computer you use. To authorize the device you are using, Personal Capital will send you either an Email or phone call to verify.
So their registration process is poor-man’s version of two-factor authentication. There’s nothing wrong with this, and in fact I applaud that Personal Capital has this feature. I wish this level of security was available with all financial institutions like banks.
Once your computer is registered, you will not need to go through this process again. All of these features, in my opinion, are needed with Mint but isn’t available.
On iPhones that support the fingerprint scanner, login to Personal Capital’s app is via a swipe of your finger. It’s not foolproof of course, but a nice touch.
The account information you enter via the service isn’t stored and stored as a one-way encryption. You cannot perform any withdrawals or transfers from within Personal Capital. All information via their service is read only. Lastly, unless you specifically enter your account information within comment fields (which you shouldn’t do), your account information is not displayed either.
Personal Capital’s Wealth Management
Their website, of course, is free to use (following the freemium model). You are under no obligation to use their fee-based advisor service. Personal Capital Advisors help manage your financial portfolio. Their annual fees for investment services are as follows:
Personal Capital recently introduced a new fee schedule and is lower than previous. For individuals with less than $1 Million the annual fee is now 0.89%. Previously the fee started at 0.95%.
- $1 Million or Less – 0.89% Annual Fee
- $1 Million to $3 Million – 0.79% Annual Fee
- Next $2 Million – 0.69% Annual Fee
- Next $5 Million – 0.59% Annual Fee
- $10 Million or More – 0.49% Annual Fee
Personal Capital is obviously trying to go after higher net-worth individuals and squarely compete against the high-fee financial advisors.
The fees are much lower than traditional financial advisor fees. Wealth management, trade costs and custody are included — you do not pay trade commissions.
Every account gets a dedicated advisor, even if you don’t use their wealth management service. It’s been reported each advisor within the firm handles approximately 200 clients.
The asset allocation with them get interesting though. Personal Capital uses baskets of individual securities and ETFs to create a model portfolio. Personal Capital is well aware that annual fees can decrease the performance of your investment for the long haul. The logic is using index funds with their high annual fees adds on top of Personal Capital’s management fee. Therefore, using index funds decreases your annual return.
By investing in individual securities your portfolio is more tax efficient as well (if your investments are in a taxable accounts). So while their basket of funds won’t mirror an index fund exactly, it will come very close, and should be lower in fees and taxes. In addition with individual securities, Personal Capital can better manage the taxes you pay via a process called tax loss harvesting.
They also offer “Personal Funds” which target a specific investment objective, but unlike a mutual fund, you own the individual securities rather than a mutual fund.
Personal Capital service is free to sign up. You have no obligation to use their wealth management services. Personal Capital’s investing section is currently the best online service to monitor your portfolio. It does right with investing that Mint does not. This is why Personal Capital is on our list of recommended investment tools.
I liked Personal Capital so much I have replaced using Quicken for managing my finances.
Their investment checkup tool is very useful for high level recommendations. For me personally, I’m not sure I would use the wealth management service. Though there is a valid argument why someone would want to use their service instead of doing it themselves. I actually enjoy researching and managing our investments.
I could see for others, Personal Capital is a godsend because they have no idea how to properly allocate their investments. If this describes you, then you should consider their lower than average cost financial advisory service.
Readers: Have you used Personal Capital? Please make your comments below.