Personal Capital vs. Betterment

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Personal Capital and Betterment are two popular online investment management firms. Personal Capital offers a free personal finance dashboard that allows you to track all of your money and analyze your investments. It also offers a paid investment management service that is a hybrid of a robo advisor and human financial advisor. Betterment is best known as the first major robo advisor, but it does offer a human aspect as well.

Either could be a good choice for your investments; however, each has its own pricing model and strengths. Read on to find out if Betterment or Personal Capital is a better fit for your unique investment needs.

HighlightsPersonal CapitalBetterment
Rating9.5/109/10
Minimum to Open Account$100,000$0
401(k) Assistance
Two-Factor Auth.
Advice OptionsAutomated, Human AssistedAutomated, Human Assisted
Socially Responsible Investing

About Personal Capital

Personal Capital

Personal Capital was founded in 2009. It uses a combination of human advisors and a technology-driven investment platform. It charges less than most traditional advisors. Personal Capital advisors work with you to put your funds into one of a handful of pre-designed ETF portfolios. It has $9 billion in assets under management.

The personal finance dashboard is free to all users regardless of whether or not they pay for Personal Capital's investment management service. You'll need at least $100,000 in assets to qualify for Personal Capital's lowest investment product tier, which is the service we are evaluating here. But even if you don't have that much, the free tools are worth checking out.

About Betterment

Betterment

Betterment was founded in 2008 and is considered the first major robo advisor. But that doesn't mean a robot picks stocks for you. Based on a series of questions about your investment timeline and goals, your funds are sent into a pre-built portfolio of exchange traded funds (ETFs) that most closely matches your needs. It holds $16 billion in assets under management.

And because a computer is so heavily involved, it comes with extra perks like tax loss harvesting. You can open a basic account with no minimum balance. A premium account, which includes access to a human financial planner, charges a higher fee and requires at least $100,000 in your account. You can open an account with a $0 balance to check things out without ever getting charged a fee.


How Are They the Same?

  • Accounts Offered: Both robo advisors offer taxable individual and joint accounts, as well as traditional IRA, Roth IRA and rollover IRA and trust accounts.
  • 401(k) Assistance: Both services can help you with your employer-sponsored 401(k) plan.
  • Tax Loss Harvesting: Both apps offer tax loss harvesting features that can save you money on any losses you may have incurred.
  • Portfolio Rebalancing: Both Betterment and Personal Capital offer automatic portfolio rebalancing to maintain your ideal asset allocation.
  • Socially Responsible Investing: Both services offer socially conscious investment options.

How Are They Different?

Personal Capital is unique in several ways. Most noteworthy is the free access to digital financial analysis tools. When I signed up, I used the fund analysis tools to identify mutual funds that charged more than I wanted to pay. After a few trades, I saved $300 per year in fees and it didn't cost me anything. I highly recommend signing up even if you don't plan to use the paid financial advising service.

If you have at least $100,000 in assets, you qualify for the professional investment management service. With a Personal Capital account, you'll work with a financial advisor team who will guide your funds into a portfolio that matches your needs. You can call anytime for help or guidance and get access to more services as your portfolio reaches the $200,000 and $1 million tiers.

Betterment is open to anyone regardless of how much you have to invest, but you don't automatically get access to a human advisor. However, with Betterment's onboarding process and smart portfolio management system, you don't need one. And you don't need to know much about investing to get a well-built, low-cost portfolio at Betterment.

In the signup process, you'll answer some basic questions about your goals, such as retirement, paying for college or buying a home. Based on the information you supply, Betterment will suggest a percentage of stocks and bonds (which you can change if you'd like) and divide up your assets into low-cost ETFs. All accounts include automated tax loss harvesting. If you pay more, you can get access to a human advisor that works similarly to Personal Capital's lowest tier.


Minimum Deposit

Betterment allows you to start with no minimum. You could invest just $1 if you want. You need a $100,000 balance for the Premium service to unlock human financial advice, however.

At Personal Capital, there isn't a minimum to use the free tools, but the paid service (which we are evaluating here) requires a $100,000 minimum. It has a $200,000 minimum and $1 million minimum for additional premium services.

winner — You can get started with Betterment with no minimum deposit.

Annual Fees

Personal Capital charges based on your total assets managed by the service. For accounts with $100,000 to $1 million, you'll pay a 0.89% annual fee. That goes down to 0.79% for accounts from $1 million to $3 million. It charges 0.69% up to $5 million, 0.59% up to $10 million, and 0.49% for accounts with $10 million or more.

Betterment charges 0.25% annually for its Digital plan, which includes the self-service robo-advisor product. A Premium account costs 0.40% and includes unlimited access to a certified financial planner (CFP) and a financial plan for all of your assets, even those outside of Betterment.

winner — Betterment charges lower asset management fees than Personal Capital.

Standout Features

Features Unique to Betterment

At Betterment, standout features include automatic tax loss harvesting and access to curated portfolios from Goldman Sachs, BlackRock and Betterment itself. You can also personally tweak your portfolio if you don't like everything Betterment picked for you.

You can also open an account with $0. This is true for Personal Capital as well, but Personal Capital customers require $100,000 to use its wealth management service.

Finally, Betterment also offers a Cash Reserve account that pays a 2.25% APY as of 9/26/22. This account is similar to a high-yield savings account and lets you earn significantly more interest than a basic savings or checking account. Cash also gets up to $1 million in FDIC insurance. There's also a Betterment Checking account that doesn't charge monthly fees, ATM or foreign transaction fees, and lets you earn cash-back rewards.

Features Unique to Personal Capital

At Personal Capital, the standout feature is the free financial analysis tools for your entire financial life, as well as access to a human advisor with all paid plans.

Some other unique Personal Capital features include:

  • A financial dashboard that helps you create budgets and monitor the cash flows of multiple financial accounts you connect.
  • A net worth tracker that you can use to outline your assets versus liability and overall net worth.
  • Retirement planning tools that help you forecast different scenarios to plan ahead.
  • A cash flow analysis tool that helps you plan your budgets with greater accuracy.
winner — Both Betterment and Personal Capital offer outstanding features.

Main Portfolio Investments

With Betterment, you largely invest in a portfolio of low-cost ETFs that match your investing goals and risk tolerance. More conservative portfolios also include bond investments to help provide fixed-income and lower risk. Many of the companies within the ETFs you invest in are U.S. value stocks or large-cap stocks, but there are international companies as well.

Personal Capital's starting wealth management plan is very similar. However, higher Personal Capital tiers offer more investing options than Betterment. For example, customers can start investing in real estate through various REITs, individual stocks, and commodities. And clients with $5 million or more invested can even invest in private equity.

winner — Personal Capital has more investing variety and tailored portfolios, especially for higher-tier clients.

Socially Responsible Portfolios

With consumers becoming more interested in knowing what their money is supporting, socially responsible investing has become more popular. 

Betterment offers a standard Broad Impact portfolio which chooses ETFs based on specific environment, social and governance criteria.

In addition, Betterment offers two portfolios focused on either environmental or social issues. The Climate portfolio focuses on mitigating climate change by focusing on companies that reduce their carbon footprint, among other things, The Social Impact portfolio expands the Broad Impact portfolio by also including stocks of companies focused on diversity in the U.S.

Personal Capital also offers an SRI stock and ETF investing option, but only for portfolios worth $200,000 or more. The portfolio excludes investments in the energy sector, tobacco, gambling, small firearms or adult entertainment industry. Instead, it focuses on companies with a higher environment, social and governance score than other companies and takes into account factors like human rights, resource use and business ethics.

winner — Betterment has more portfolio options and its no account minimums make it more accessible to the everyday investor.

Customer Service

Personal Capital offers 24/7 customer service for all paid customers. Financial advisors may have more limited hours, but if you need basic help you can get it anytime, any day. When logged in, you can email your advisor for help.

Betterment customer service is open during daytime hours including weekends. Email addresses are publicly available.

winner — Personal Capital wins for its 24/7 care.

Security

Both Personal Capital and Betterment use extremely strong security to keep your money and account information safe. Betterment is a member of SIPC and all accounts are SIPC insured. Personal Capital accounts are held by Pershing Advisor Solutions, a Bank of New York Mellon company. Pershing Advisor Solutions is a member of the SIPC and account funds are insured.

winner — Both Betterment and Personal Capital offer outstanding security.

Personal Capital vs. Betterment – What's The Best Choice?

No robo advisor is perfect for everyone, but Personal Capital and Betterment are each great for a wide number of people.

Personal Capital is best for people who want to invest at least $100,000 and are willing to pay a bit more in fees for access to a team of personal financial advisors. If you have a qualifying net worth and want more personal attention and handholding with your investment decisions, Personal Capital is the better choice.

Betterment is better for anyone else. The low cost, easy-to-use investment systems help you get professional-quality results without having to work with a person unless you want to. Because the onboarding process is so easy, you can rest easy that you are invested well even if you don't work with a person or know much about investing.


The Bottom Line

For most people, Betterment is the winner. Whether you don't qualify for Personal Capital's advising service due to your balance or simply want to save on fees, Betterment comes out ahead.

Unlike most comparisons, this one comes with a big “however.” The free investment management tools at Personal Capital are quite good. Even if you don't want to pay for the service, you will probably get some good information about your portfolio by plugging it into Personal Capital. I recommend this to just about any investor looking for more insights about their money.

But when it comes to comparing just the investment services head to head, Betterment comes out on top.

Eric Rosenberg

Eric Rosenberg is a finance, travel and technology writer in Ventura, California. He is a former bank manager and corporate finance and accounting professional who left his day job in 2016 to take his online side hustle full time. He has in-depth experience writing about banking, credit cards, investing and other financial topics and is an avid travel hacker. When away from the keyboard, Eric enjoys exploring the world, flying small airplanes, discovering new craft beers and spending time with his wife and little girls.

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2 Comments

  1. I am a bit confused that you give Personal Capital a higher rating but at the end you say that “when it comes to comparing just the investment services head to head, Betterment comes out on top”. Why is that?

    1. Hi Nevis, thanks for your comment! The rating we provide is for the rating of the company overall and not in comparison to the other product. In this article, Eric was comparing the two. However on its own, Personal Capital is rated slightly higher than Betterment due to its individual features. I hope this clarifies!

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