As I’ve discussed in my Mint.com review, I think Mint is great for budgeting, but poor when used for investment planning. It appears Mint is targeting people just starting out with their finances (Generation Y and Z). As I mentioned, I wished for a web 2.0 app that focused more on investing: retirement, asset allocation, and taxes. I recently discovered Personal Capital, and it appears to have answered most of my wishes.
Personal Capital History
Bill Harris is the founder of Personal Capital. In case you don’t know, Harris is the former CEO of Intuit and PayPal. Personal Capital is powered from another company he’s co-founded called MyVest. Bill and company raised $28 million in venture capital for Personal Capital. Many of the employees are former Intuit employees, including the product manager I spoke with. Oddly enough, many parts of the web app has a Quicken like feel.
Personal Capital is targeting aspring wealthy people whose net worth is from $100,000 to $2 million in liquid assets. This is a market that is underserved by Wall Street. High enough in net worth to have complex finances, but not profitable enough for Wall Street to target. This is where companies like Personal Capital and Betterment are targeting, and it is, in my opinion, the future of financial management.
Typically the high-end brokerage houses target individuals in the ultra high net worth category, and individuals below that threshold typically have to fend for themselves. This is where Personal Capital with technology can offer the personalized service at a much lower price point than previously possible.
To give Personal Capital a test spin, I added a few accounts: bank accounts, credit cards and mortgage. Just like Mint, the process is easy and quick.
Personal Capital vs. Mint
- More focus on investing and retirement, rather than just budgeting.
- Less upselling of products and services. Mint recommends many products and services.
- A really neat interactive allocation graph that can break down your investments with ease.
- Today’s market movers within your portfolio, and your performance compared to the major indexes.
- Performance of your investments. Unlike Mint, Personal Capital currently cannot compare to the major indexes over time (but is a planned feature).
- Security is more robust with Personal Capital.
Features
- Universal Checkbook – Deposit checks via their mobile app. Take a picture of your check and the funds are deposited.
- 401(k) Fee Analyzer – Find out how much your retirement plan is costing you.
- Tax Optimization – Are your investments fully optimized for taxes? Though currently Personal Capital does not understand the difference between taxed deferred accounts and taxable accounts (another planned feature).
- Investment Checkup – Are you meeting your retirement goal? It is simplistic compared to other planners, but a good starting point.
- Asset Allocation Target – Are you overweight or underweight in any of the major equity categories? This currently lacks customization with adjusting allocations and is currently hard coded to their formula (additional future feature).
- Fund Costs – How much in taxes and expenses does it cost you with each fund you own? Currently it does not understand taxable, and tax deferred accounts.
- Stock Option Tracker – Track the value of stock options and exercising from the company you work at.
The Good
- Encompasses all your finances. While I liked Betterment’s service, it doesn’t include the big picture. Personal Capital, on the other hand, gives you access to all your finances in one location.
- Gives you a broad overview of your investment portfolio. Many investors are forced to have accounts with multiple brokers. Personal Capital imports them all into one central location where you can view your asset allocation and tax mix.
- Similar to Morningstar’s X-ray tool (which they get their data from), Personal Capital offers a great way to drill down into asset allocation and tax optimization.
- Apple iPad app – Features are similar to the desktop edition and can be used on the go. There is no iPhone or Android app, yet (though planned).
- Deposit and fund Transfers between any accounts you hold. A great feature and unique to Personal Capital. They recently introduced the ability to transfer funds from one account to another (can be unrelated) all from within Personal Capital app. Allows you to transfer funds between accounts effortlessly.
The Bad
- Has enough features to be useful and is a good product, but currently lacks some features to make an exceptional service. In discussing the issues with the product manager he stated they are constantly adding new features. I suspect some of the current deficiencies will be resolved in future product life cycles.
- Tax cost feature isn’t aware of accounts that are tax deferred.
- Asset Allocation is not modifiable – Personal Capital determines your asset allocation for you (which is good for many), but not if you want to vary from their recommended allocation. I inquired about this, and it was stated to be a planned feature in a future version.
- Incorrect Allocation of Investment – For at least one account I imported it incorrectly categorized my investment. There is no way to adjust this with Personal Capital. I imported my Lending Club account, and it categorized my notes as cash. I contacted customer service, who hasn’t yet determined the asset class Lending Club investments should be categorized. I consider it in the bond category, but they don’t. So in the their asset allocation it currently shows up in the wrong grouping.
Security
The security is similar to Mint.com, but overall much better. Personal Capital requires you to register each computer you use. They will send you either an E-mail or text message via your cell phone. 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 they have this feature. I believe most financial institutions should implement this feature to thwart cyber attacks.
Once your computer is registered, you will not need to go through this process again. Like many banking sites, they also have a security image that you pick out from a list, preventing scrapped versions of their site from hackers. All of these, in my opinion, are needed with Mint.
Wealth Management
Their web site, of course, is free to use (following the freemium model), so you have no obligation to use their fee-based services. Their annual fees for their investment services are as follows:
- $0 – $250,000 costs 0.95%
- $251,000 – $500,000 costs 0.90%
- $500,001 – $1,000,000 costs 0.85%
- $1,000,000 – $5,000,000 costs 0.80%
- Greater than $5,000,000 costs 0.75%
This is 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. It’s been stated 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 aware 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. In addition, individual securities are much more tax efficient (if it were in a taxable account). 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.
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.
Summary
Personal Capital service is free to sign up, and you are at no obligation to use their premium services. So from my experience, I like what I see so far. Though Personal Capital’s service isn’t perfect yet, I believe future versions of their service will be extremely powerful and will tap into an often ignored market.
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. For me, it’s not because I don’t trust their service, it’s because of the lack of flexibility and I enjoy researching and managing our finances. If I did use their service, it would be for a small subset of our portfolio. I could see for others Personal Capital is a godsend because they have no idea how to properly allocate their investments for retirement.
Fellow readers try the service out. I’m curious what others think of their service. Please make your comments below.
I have both Personal Capital and Mint and I use Personal Capital. I think it is a big upgrade because it is much easier to see everything in front of you on one screen as compared to Mint. I am looking forward to the changes that may or may not come.
Personal Capital has no way to upload transactions from a spreadsheet. So if it is not January Feborary or March, and you start with this product, forget about using it for the whole year. Banks only offer 3 months of transactions. If you knew this and did monthly downloads from your banks, it will not help you with Personal Capital.
I did 8 email with their tech support to verify there is nothing they can/will do to get earlier transactions loaded. Even if you have your transactions in .XLS .CSV or .QFX files – Personal Capital can not help you get the transactions into their database.
T,
I agree if you have any legacy application (Mint included, but I’m thinking more like Quicken) you cannot import it into Personal Capital. This isn’t only an issue with Personal Capital though. All of the web 2.0 personal finance apps have this limitation.
While what you request as a feature is not impossible, it wouldn’t be easy to implement and time consuming to implement as well.
I suspect these services will eventually get around to implementing such a feature, but I can assure you it’s way down on the priority list. having the ability to compare.
Most of these services are read only anyways and really meant for syncing all of your data into one location so you can get a collective analysis.
Investor Junkie,
Question, if you change the description or category of a transaction on Personal Capital or Mint.com does it change it on that specific bank’s website too? Just doing my research before I decide which to utilize. Thanks, love the website. Cannot seem to get off of it.
Alex
Hi Alex,
No all data on Personal Capital or Mint.com is only on those platforms. No data is sent back to the financial institution. The only exception is Personal Capital has the ability do transfer funds between accounts and deposit checks electronically. Though this is done via the bank transfer system (EFT) and doesn’t communicate directly with the bank.
For the life of me I could not figure out which to use, Mint.com or PersonalCapital.com, so I created an account with both.
Mint.com was extremely easy to use, however, alerts pop up like crazy, so I immediately changed my settings. Another issue was that I had to answer security questions over and over again for specific banks, which is kind of annoying. Overall, good website.
PersonalCapital.com got me excited because of the professional vibe I got from Investor Junkie’s video review, however, many problems occurred. Upon creating my account I searched for the banks I utilize, only one was available for use. Also, it was missing a 401k company I currently use too. For me there is no point to Personal Capital if I cannot have all my accounts in one. Kind of disappointed.
For both: I noticed this for both, maybe there is a way and I am just missing it. Why don’t they utilize widgets? I think it would be nice to see what you want, minimize what you do not and be able to move the charts around. I think this would be great for both websites to look into.
Alex
Hi Alex,
I would contact Personal Capital to see if support for your banks are on the way. Both use their own systems to sync up with the banks so it’s no surprise the bank support is different.
Though I agree if the service does not support your bank, it becomes somewhat useless. Since there are so many banks, credit unions and financial institutions there’s no way for us to personally to test them all. I’ve only tested the major institutions that we personally have, which all worked very well.
We have an account in a small local credit union, and still does not have support via either service.
Mint does have a desktop app available for OS X here:
https://itunes.apple.com/us/app/mint-quickview/id533491939?mt=12
Both also have mobile apps which are quite good. Though I agree both aren’t perfect and need improvements. My primary method to manage our finances is still via Quicken, which I’m still finishing up the review of the 2013 version. Quicken also has a mobile app for it as well.
I’m new to any kind of financial tracking. After inheriting between $1M to $2M (not all immediately, some in laddered CDs, 3 properties, a delayed trust, inheritance IRA, etc), I began some “cautious” investing. By “cautious”, I mean according to my thinking but others might disagree.
For example, I have no financial advisors though I consulted one with which I was very impressed but they require $250k min. There is a friend of the family insurance agent who is simply holding the inheritance IRA in about 6-7 American Funds. To hedge, I’ve personally bought 10% precious metals. And I’ve got another 10% for personal investing (5% in speculative stock, 5% day trading) and 5% in a spending acct).
I’m in the position where I need “All of the Above”… tracking, budgeting, investing, etc, etc. I’m a fast learner but I need to find out what would be the optimal application or combination of applications to track it all and give me that commander’s “birdseye view” I want. I’ve read this review and the Mint.Com review and both, while pretty capable, seem to have their shortcomings. Is there anything else you can recommend for someone in my situation? I intend to do a lot of traveling and would like to be as moble as possible with my Android-based phone.
Or, in my situation, would you just recommend I pay a professional. If so, what kind of professional can handle all of the above and what do they generally charge?
Thanks for your reviews and your help,
E Investor
Hi E Investor,
Try the latest version of Quicken 2013, which I just reviewed.
http://investorjunkie.com/17267/quicken-2013-review/
It has Android support as well.
Hi E Investor,
A little disclaimer first: I subscribe to personalcapital financial adviser service and am happy that I made the move. I did not know about them until I was reading an article in wsj.
Let me put myself in your shoes first and if I were you, I would give personalcapital a shot. Their minimum investment to get their adviser’s attention is 100k which is below 250k compared to the adviser you met (I would bet my money that your adviser’s fee are higher than personalcapital). A fee of approximately 1% makes it 1k a year to manage 100k – this to me is by far the cheapest compared to other financial adviser’s fee, no surprises. IF YOU HAVE THE NEED TO MEET YOUR FINANCIAL ADVISER IN PERSON THEN DO NOT DEAL WITH PERSONALCAPITAL (PC) UNLESS YOU LIVE AROUND PC OR INTEND TO FLY OUT THERE.
I have met many financial adviser’s and they all have impressed me and are good people. When you meet with traditional adviser they impress first and then talk about fee structure (I hate surprises, I don’t mind someone charging me for something even if it is high and I don’t expect any free service but I need to know that upfront rather than later and I expect them to grow my portfolio – period). PC talked about their fee structure first (go check out their website) and then impressed me why they were better than traditional financial adviser’s. PC is meant for people who have some savings/inheritance or are on track to prove that some savings are made consistently over the years but not as huge as high net worth individuals.
PC will solve your investing and tracking problem. Budgeting on the other hand is a behavioral problem – remember computer systems (PC, mint, others) will not solve the problem they just track and tell you where you are spending, if you don’t have budgeting issue then PC will track this as well. So what if you had to use multiple systems that pulls information from your accounts and give you two separate bird’s eye view. It would still be a winning situation for you to know where the money is coming from and where it is going.
Now tracking all on an Android phone. I don’t know this but PC has an iphone app and I am sure they are not dumb to not have an android app in the future (if it not already in the works and I don’t know about it).
S,
An Android app has been released.
https://play.google.com/store/apps/details?id=com.personalcapital.pcapandroid
You mentioned that PC’s security is better than Mint’s, and from what you wrote it sounds like that is at least true from a log-in standpoint- but what about on the back-end?
My bigger concern is that hackers are targeting these sites systematically to gain access to everyone’s data. LinkedIn was famously hacked last year, resulting in thousands of accounts being divulged. What are Mint and PC doing to protect themselves from this kind of situation? And how do they stack up to each-other in that respect? I think that would be a more telling indication of relative security.
Hi Chris,
I am referring to the backend as well. Most desktop computers are compromised because of visiting a web page that attacks a known security flaw, or open services on the computer itself. Both are mainly because the software isn’t updated, or properly secured. From my IT experience, unfortunately this is all too common.
Though your question is still valid. At least my vantage point – security is their biggest business risk (for adoption and if it were to occur could hurt future business). So I would think they understand this issue and put security at the top of their list. Do keep in mind Mint is owned by Intuit, who already has years of experience with security (Turbotax, online bill paying via Quicken, etc.). I guess it comes down, what vendors can you trust with your data?
I have been testing/playing with PC, Mint & Sig fig. As expected, they all have issues. I have a Principle account that PC & SigFig would not connect with, Mint did. In contacting customer support, sigfig was the quicker to repsond initially, but 2 weeks later, PC has finally fixed the issue and SigFig has not.
My biggest concern right now with PC is the allocation method(s) noted in the main article. They have allocated many of my funds to “unclassified”, when they are clearly mixed funds with their allocation makeups readily available. The fact PC blows this completely is bad enough, but not having you the ability to at least adjust the allocations manually is a minor disaster. They boast about their feature of comparing your allocation to one of their models, and giving you regular updates and advise on how to re-allocate your portfolio. Which would be wonderful if they were even close to what your allocation mix really is.
You can put all your eggs in this one basket and have a single point to check holdings, performance, spending, etc. But true portfolio tracking/management with an incorrect allocation mix is futile.
Just my $.02, which according to PC, is all I have allocated to bonds :-/
Can you explain this comment: “.. 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…”
Index funds are the least expensive funds there are! Many index ETFs cost less than 10 basis points. How is that a “high annual fee”? What are you comparing it to?
The average cost of a mutual fund is over one precent. Yes there are cheaper mutual funds and ETFs available. Though there are costly indexed based mutual funds as well.
In addition, with a mutual fund you do not get any investment guidance.
Also owning individual stocks you have much less of a tax issue than with mutual funds which you cannot control the buying/selling of the underling assets which then cause you to pay taxes. Owning ETFs and individual stocks is much more tax efficient (assuming it’s in a taxable account).
Agreed that ETFs are more tax efficient. But don’t forget that most people invest inside of tax-deferred (401K/IRA) or tax-free (Roth) accounts to begin with, so capital gains are usually not an issue. Owning individual stocks is extremely risky (even if you own a bunch of them), plus the transaction fees add up quickly. All of the evidence favors of buying and holding well diversified, no-load, low-cost index funds.
With Personal Capital, the individual stock transactions are already included in the management fees. Previous studies show to mirror an index approx. only 30-50 stocks are needed, so I’m not sure if I understand your risky statement.
Personal Capital can rollover your existing 401(k) and they do offer 401(k) service for companies who are wanting to use them directly.
If you are one to “do-it-yourself”, then Personal Capital’s advisor service might not be the right fit for you. Though you are in no obligation to use it if you use their web site.
Owning 30-50 individual stocks is risky because you’re putting 2%-3% of your money into each individual company. All you need is a few Enrons, WorldComs, or Kodaks in the mix to feel the pain. Not to mention the commissions on purchasing (and rebalancing) 30-50 stocks.
I view the study you mention from the opposite perspective, as if it had been worded as follows: “Instead of having to hold 30-50 individual stocks, you can mirror the same performance by purchasing a single index fund.” So I’m still not sure why anyone would invest the time, effort, expense, and guesswork to purchase 30-50 individual stocks when you can just buy an index fund and get the same performance in one fell swoop.
If you want to make some bets on individual companies around the edges, that’s fine. All I’m saying is that you’d be well-advised to use an index fund as your core holding.
PG, you are aware a S&P 500 fund is not equal weighting of each stock right?
See Vanguard’s VOO for an example:
http://portfolios.morningstar.com/fund/holdings?t=VOO®ion=USA&culture=en-us
So per your description of owning individual stocks an AAPL or XOM failure could dramatically hurt a S&P portfolio as well. So don’t think just because you own a index fund, you are completely safe from risk either.
What makes sense is to make sure you are well diversified, via index funds or via other means. A financial advisor like Personal Capital should be able to assist, if not them then using tools like Morningstar’s X-Ray service you should do the similar guidance yourself.
I’ve used Morningstar’s X-ray service and found it to be very insightful, although it did make some dubious recommendations, such as telling me I was underweighted in Technology, which indicates to me that the market as a whole is underweighted in Technology since I own the entire market.
I am aware that a pure S&P 500 index fund is cap-weighted. That’s why I would not hold an S&P 500 index fund as my sole equity holding (in fact, I only own one S&P 500 fund through my 401K, which accounts for less than 6% of my portfolio). On that note, I also wouldn’t recommend investing more than 10% of a portfolio in any single fund. A broad-based “total market” fund should be the core equity holding (e.g. SCHB, VTI, etc.), with other satellite holdings rounding out the equities. I also wouldn’t put more than 50% of a portfolio in equities, with no more than 20% of that in foreign funds. The rest should go into bonds (with a healthy dose of long-term T-bonds), physical gold bullion, and short-term T-bills. Sort of a modified Permanent Portfolio, if you will.
Thus far in my life, I track everything via Excel. I do not invest in the stock market although I do have some 401k savings that took a hit from the recession. My main investment strategy revolves around residential real estate. So far I’ve done well and currently own 2 homes, one is rented and that rental income pays for both mortgages. I’ve bought the second as FHA, plan to live in it for 2 yrs and then do it again, rent it out and buy another. Does PC have the ability to track or provide analysis on this sort of investment? If so, to what degree? And do I have to pay for that portion of the software? Also, can PC do everything Mint can do including the budget, tracking bank transactions, etc – just better? Does it make sense to just use one of them OR should a person use Mint for budget/bank transactions/bill pymt tracking and then use PC for investment-related “stuff”? Thanks.
Hi Lora,
Currently no online application does what you looking for. Overall Personal Capital can do better what Mint.com offers. Though budgeting within Mint.com is better. Though there is absolutely no reason why you shouldn’t signup for both services.
PG,
All mutual funds carry expense ratio annually. If you want to buy and hold, buying baskets of stocks would have least expense overtime. If you want to trade relative frequently(or high number of stocks), try FlioInvesting; One fixed anual fee with almost unlimited trading. If you need advice/assistance, PC sounds ok. Asset allocation does not prevent you to own the whole market with individual stocks/bonds.
Junkie suite
Have you tried Fidelity’s Full View? How does it compare?
Does Personal Capital successfully separate cash from securities in imported 401k’s? I think Fidelity lumps all in to one category or the other.
Fidelity Full View uses Yodlee to connect to the other accounts. While Yodlee itself is ok, I personally find Fidelity’s interface to Yodlee somewhat clunky and confusing. Though if you like using Fidelity as your central location for your finances, it’s OK for that purpose. As I’ve mentioned previously, there’s nothing preventing you from using multiple services.