Master Your Finances with Personal Capital | CreditShout

Master Your Finances with Personal Capital

By Kevin / October 19, 2015
Master Your Finances with Personal Capital

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It seems like there are dozens of online money management services and software options available today. Every one of them promises to help you better manage your money and maximize your investments. Personal Capital offers something unique in an already crowded landscape that will allow you to master your personal finances.

Personal capital combines free tools that help you analyze all aspects of your finances. And you can opt to combine those tools with their personalized financial advisory services.

  • Keep track of your budget and analyze your cash flow
  • Stay on top of your investment returns
  • Know your asset allocations
  • Take advantage of automated financial advisor software
  • Get a dedicated financial advisor

Personal Capital let me combine the budget and financial tools offered by service like Mint.com and the robo-advisory services of Betterment all in one place. So now I only need to look at one app (on whatever device I am using at the moment) to check in on my personal financial situation. Let's see how the various tools can help you optimize your finances.

What is Personal Capital?

Personal Capital really offers two services in one:

  • A free financial dashboard and account aggregator; and
  • A paid advisory service for your investments. 

Let's take a look at each separately.

Free Financial Tools

A free Personal Capital account allows you to aggregate all of your financial accounts in one place to give you a clear overview of your finances. And, honestly, these financial tools were my favorite part of working with Personal Capital

optimize your personal finances with Personal Capital

So, while Personal Capital is primarily an investing service, by including your investment, mortgage, credit card, bank, retirement, and even peer-to-peer lending accounts, along budgeting tools, you will get a complete picture of your personal finances.

Key features you will enjoy using Personal Capital to optimize your finances are:

  • Account Aggregation. Your financial accounts are automatically aggregated into income and expenses so you can see your cash flow at a glance.
  • Budgeting. While Personal Capital mostly focuses on retirement planning and investments, they have recently introduced a budgeting tool that tracks your weekly, monthly, and yearly income and spending. You can access this feature on the mobile Personal Capital app.
  • Retirement Planner. This tool helps you track your retirement goals and make sure you're on track. This is a fairly new feature of Personal Capital and it's one of the best retirement planning tools out there.
  • Fee Analyzer. Do you know how much your retirement plan is costing you in fees? This tool helps you find hidden broker fees that may be costing you thousands.
  • Asset Allocation. Find out if you are too heavy or light in major equity categories while exploring your complete portfolio visually.
  • Investment Checkup. Get recommendations for your asset allocation based on your risk profile.
  • Upcoming Bills. See bills that are coming up and due dates. You can set bills as paid.
  • Net Worth. The Net Worth dashboard gives you a summary of where you stand by putting your investments, cash flow, and balances in one place. Zillow is integrated to give you an estimated property value.
  • Email notifications. Reminders and updates will be directed to your inbox so nothing gets lost in the shuffle of your busy life.
  • Access. Access your information anywhere, including on the go using a web browser or on their Android or iOS application.

I think the Retirement Planner tool is a real hidden gem. There are plenty of retirement planners and calculators out there, both paid and free, that allow you to change scenarios to see how well you're prepared for retirement. Personal Capital makes this automatic because your accounts are already aggregated. And I love that you get a forecast of how likely it is that your investment portfolio will support your retirement goals.

Financial Advisory Services

Along with its free financial tools, Personal Capital can manage your investment portfolio with paid advisory services.

​You will need a minimum of $25,000 in investable assets to qualify for Personal Capital's advisory services. And you can see their fee schedule to figure out your annual costs. I found their fees to be slightly lower than the industry norm.

Fee Schedule

personal capital analysis

Personal Capital already manages nearly $2 billion in assets, but it does it a bit differently than other services. Personal Capital combines an automated financial advisory system (often referred to as "robo" services) with live advisors available by chat, email, phone, and web conference when you need them.​

Personal Capital uses exchange-traded funds (ETFs) to offer lower fees. ETFs work like mutual funds but they can be traded like stocks and have a lower expense ratio. PC will also invest your money in a diversified sample of over 60 individual stocks for tax optimization.

Personal Capital supports most types of investment accounts, including IRAs, Roth IRAs, trusts, joint accounts, and taxable accounts.

Features of Personal Capital's financial advisory services are:

  • Smart portfolio management and Smart Indexing. This is Personal Capital's unique take on creating a data driven and and diversified investment approach.
  • Advisors available when you need them via chat, email, phone, and web conference. You will have 2 licensed advisors assigned to your account to manage and optimize your investments.
  • Custom investing strategies.
  • Tax optimization. Personal Capital uses strategies like tax loss harvesting and reallocating assets to tax-deferred accounts for higher yields.
  • All-in management fee means no commissions, transaction fees, or hidden charges

Personal Capital's Investment Strategy

Obviously, to better understand Personal Capital's maxim of "Smart Indexing" you need to look under the hood at their investment strategy.

It all begins by putting your accounts together to develop a personalized strategy to meet your goals. Your investment plan will consider your data and projected cash flows. And this plan will adhere to the principles of Modern Portfolio Theory.

Personal Capital's investment strategy includes:

  • Low cost ETFs to index your investments with tax efficiency and minimal cost drag.
  • A diversified global approach for higher returns with minimal risk.
  • Daily monitoring of your portfolio with smart rebalancing to reduce risk.
  • Reduced taxes by using tax efficient investment vehicles, tax allocation (if you have an IRA or taxable account), and tax loss harvesting. This can increase your return by up to 1%.
Personal Capital Review

Personal Capital invests in ETFs and individual securities through Smart Indexing, whereas most robo-advisors almost exclusively invest in ETFs to mimic and index like the S&P 500. The individual securities can be sold or targeted as needed.

The fact that Personal Capital offers clients two dedicated advisors also sets them apart. Your advisors can answer any of your financial questions whether you need help planning for retirement or you want to refinance a mortgage.

Personal Capital's service isn't perfect. They currently do not manage 529 plans or 401(k) accounts.

And, while fees are competitive compared to brokerage firms and management fees charged by most financial advisors, they are slightly higher than those charged by pure robo-advisors. 

Personal Capital vs. Wela

Wela and Personal Capital are similar financial advisory services. Both provide financial advice for free along with financial tools. Both only charge a fee to users who choose paid financial advisory services. With a free Wela account, you get aggregation of all your financial accounts in one place, 403b and 401k allocation, tools to help you save for college or buy a home, debt reduction advice, and the ability to track financial goals.

Wela launched in 2014 to give young or new investors the guidance they need for success. Wela offers a hybrid approach similar to Personal Capital with an automated advisor as well as a real advisor who will work with you to manage your money.

Like Personal Capital, Wela charges an annual fee based on the assets it manages. For example, the fee for an account between $0 and $250,000 is 1.0%. The more assets Wela manages, the lower the fee. Personal Capital has a lower fee schedule than Wela: the fee is 0.89% on the first $1 million managed. For clients who invest more, the fee can be as low as 0.49% per year.

Personal Capital targets clients with more assets: you need a minimum of $100,000 to open an account and thy target clients with $250,000 to $2 million in liquid assets. This market is generally under-served by Wall Street as these clients have enough net worth to have complex financial situations, but they were previously not profitable enough to be targeted by Wall Street firms.

After trying out both services, I preferred to free tools offered Personal Capital. And that made the biggest difference for me.

Personal Capital vs. Mint

Personal Capital's free budgeting tools are similar to those offered by Mint. You really can't go wrong with either if you're only looking just to track your spending, manage your bill payments, or perform a cash flow analysis.

Personal Capital shines in terms of investing. While its investment advisory services are only available with a paid account, Personal Capital offers free investment tools to track your returns and asset allocation not available with Mint.

And I really appreciated all my personal financial tools being available in one place with Personal Capital.

The Bottom Line

Personal Capital offers a comprehensive range of free financial tools. And, on that front,  and it outshines competitors by giving you a complete and clear picture of your finances. Most people can benefit from its free services. 

On top of that it offers paid financial advisory services that combine an automatic investment strategy with a personalized touch. If you need help allocating your investments to manage risks and rewards (and don't want to pay a lot in fees), Personal Capital may be a good fit for you.

The editorial content on this page is not provided by any of the companies mentioned and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are the author's alone. Additionally, the opinions of the commenters are not necessarily the opinions of this site

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