Personal Capital Review: Is It Worth It?

Track Your Finances

Personal Capital is an all-in-one financial toolkit. It offers free money management tools, as well as financial advice - for a fee. We'll explain the pros and cons below.

• The paid part of Personal Capital boasts real human financial advisors to help design a personalized strategy for your needs. This makes it a stand-out from other robo-advisors.

• The free part of Personal Capital is a robust money management tool. You can link all your financial accounts to get a snapshot of your financial life all in one place, including net worth, spending analysis, retirement planning progress, and portfolio performance.

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Read on for full reviews of Personal Capital's free AND paid services to determine if they're right for you. In this article, we'll cover:

Free services:

• Free Money Management Tools
  
• Is it Worth It?

Paid services:

• Pros and Cons of the Fee-Based Service
  
• How Much Does Personal Capital Cost?
  
• Personal Capital's Investment Service
  
• Personal Capital Compared to Other Investment Services

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PERSONAL CAPITAL'S MONEY MANAGEMENT TOOLS

You can use Personal Capital for free to manage your financial life. You don't have to enroll in the investment service. Even if you only have a credit card and a bank account or two, this service is really useful.

Here are some of the free money management tools Personal Capital offers:

• See your cash flow: Personal Capital will track your deposits and spending based on your debit and credit card use and ATM cash withdrawals across all your accounts. It's hard and tedious to do this yourself, so with this, you can see just how much of your income you use each month.

• Track your spending habits: Do you know where your money goes each month? Personal Capital will gather all your transactions in one place, so you can see the exact amount you spend for each merchant and category. If you find that way too much of your income goes to restaurants, then perhaps it's time to eat more at home.
  Tip: Smart Ways to Save Money
  
  
  
• Learn your net worth: Your net worth is simply your assets minus your liabilities. Once you have linked all your accounts, Personal Capital will calculate your net worth. It'll also continue to automatically update it based on your ever-changing financial situation (such as investment gains or losses). You'll get a weekly update of your current net worth.

• Fee analyzer: This is the place where most people lose money without even realizing it. Most investment accounts charge fees, including trade and administrative fees, and banks may even charge you fees for checking and savings accounts.

  A bit like your own private financial detective, Personal Capital tracks fees and shows you where you might be wasting money. You can use this information to call your bank and see if they can reduce the fees or find a better account for your needs.

• Portfolio performance: The Investment Checkup tool helps you analyze whether your current strategy is meeting your financial goals. Based on your goals and risk tolerance, Personal Capital will advise you if you need to change your allocation (like more bonds and less stocks). It will give you suggestions on how to reduce risk while maintaining performance.

• Retirement planner: This is one of the most advanced retirement calculators out there. Based on all the accounts you have linked, it will automatically calculate projected income, investments, and Social Security distributions. You can also manually add in big financial events like buying a house, wedding, having a baby, and kids' college expenses. The program will take all this info and come up with a realistic look at what your retirement will look like.

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Is it Worth It?

In a word, YES. Personal Capital's free money management tools are some of the best in the industry. While others, such as Mint, offer tools similar to Personal Capital's net worth tracker and spending analysis tools, Personal Capital does it very well - and offers more free tools than that too.

Personal Capital's portfolio performance and fee analysis tools go above and beyond your day-to-day personal finance needs - and they're free.

Why is it worth it? Personal Capital's tools are easy to set up and to use, and they offer real, complete advice with robust tools. You can learn a lot just using their free services.

Pros and Cons of the Fee-Based Service

PROS:

• Easy setup
  
• No cost to join
  
• Robo-advisor, but with real human advisors included
• Advanced money management tools
  
• User-friendly mobile app

CONS:

• Higher fees than competitor robo-advisors
  
• $100,000 minimum; aimed at the affluent
  
• No budgeting software

HOW MUCH DOES PERSONAL CAPITAL COST?

Personal Capital's free money management tools are, well, free. But its fee-based advice is aimed towards very high net worth investors. The more you have to invest, the lower the fees. The minimum required for investment services is $100,000.

The annual fee structure for the fee-based service is:

• 0.89% for the first $1 million
  
• 0.79% for $1 million - $3 million
  
• 0.69% for $3 million - $5 million
  
• 0.59% for $5 million - $10 million
  
• 0.49% for over $10 million

These are all-inclusive management fees. This means there are no additional trade commission fees or any other hidden fees. The fees are higher than competitors (like Betterment), but you do get financial advisors to help design a strategy that's best for you.

Personal Capital also offers a set of completely free money management tools (which we'll get into later). Even if you don't want to enroll in the investment service, you can still use Personal Capital for free to manage your financial life. This does not require a $100,000 minimum, or any minimum.

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GETTING STARTED

Initial setup is pretty simple. Sign up for a Personal Capital account and link all your external financial accounts. This can include your banks, CDs, trading platforms, etc. Personal Capital is linked to over 12,000 financial institutions, so you should have no problem finding your accounts.

Once you are satisfied that you have linked everything, you can schedule a free consultation. The advisor will go over your current financial state, retirement goals, risk tolerance, and any big financial plans in the future. You'll get a personalized investment strategy based on your goals. If you choose to go ahead with it, you'll open an investment account and fund it.

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A WORD ABOUT SECURITY

Is it safe to link all your finances to a company that's only been around a short time? Personal Capital uses a 2-step authentication process and encryption similar to that used by other financial institutions. You'll have to authenticate each device you use via a text or phone call, which should give you some peace of mind if you have multiple devices.

But personal responsibility is also important - always make sure you sign out of any financial-oriented program you use.

PERSONAL CAPITAL'S ROBO-HYBRID INVESTMENT SERVICE

What sets Personal Capital apart from other robo-advisors is that you get full support from a team of financial advisors.

Most robo-advisors work off of a computer algorithm based on goals and risk tolerance that you input. Personal Capital adds a more human touch. It has a whole committee of advisors and researchers who manage your assets. They take the time to understand your current situation and goals to design a customized strategy.

The level of service you get depends on your balance. Here is what you get at different balance levels (keep in mind that the minimum required for financial advice is $100,000):

• Up to $200,000: You get access to a financial advisory team, a tax-efficient ETF portfolio, dynamic tactile weighting (asset allocation), 401k advice, 24/7 call-in access, and cash flow and spending insights

• $200,000 to $1 million: You get everything mentioned above plus 2 dedicated financial advisors, customizable stocks and ETFs, a full financial and retirement plan, college savings and 529 planning, tax loss harvesting, and financial decisions support

• Over $1 million: You get all of the above plus priority access to advisors, a customized investment portfolio with individual stocks and bonds, private banking services, private equity and hedge fund investment reviews, deferred compensation strategy advice, and estate attorney / CPA collaboration

How it works: During your free consultation, the advisors will come up with a personalized strategy for you. After that, the automated software will do the investing and maintenance of your portfolio. But you still have access to advisors anytime you want if your situation changes. They are there to help and will make any necessary adjustments. Advisors are available by phone, email, and video chat.

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PORTFOLIO MANAGEMENT

Personal Capital's goal is to yield the highest returns with the least risk. Some of the features it has include:

• Diversified portfolio: Like most robo-advisors, Personal Capital invests your assets in ETFs, because they tend to be cheap. Your portfolio is built to be globally diversified. It will typically include U.S. stocks and bonds, international stocks and bonds, and cash. A financial advisor works with you to identity the optimal investments for your goals.

• Disciplined rebalancing: Once you have an investment strategy, it may drift over time, since investments increase (or shrink) at different rates. For example, let's say you wanted 50% stocks, but after a period of time, your assets are now 60% stocks. When this happens, your portfolio may no longer be at the correct risk level for your goals. Personal Capital reviews your portfolio daily and automatically rebalances it whenever it identifies an issue.

• Optimal tax strategy: Personal Capital helps reduce your taxes with a strategy called Tax Loss Harvesting, which takes tax deductions on your losses to offset your capital gains. And it'll automatically place high-yield stocks into accounts with tax breaks (like IRAs). This is a powerful feature for people with multiple investment accounts. Note that this is only available for those with over $200,000 invested, though.

APP

The Personal Capital app is available for both Android and Apple devices. Like the computer software's easy-to-read platform, the app breaks down your assets, liabilities, investments, credit card debt, mortgages, and any other financial information in a mobile-friendly manner. You can also access your info via a date range (back to the prior year), read tips and research online, or contact your financial advisor.

The app is easy to use at a glance, and even changes colors (green for assets, red for liabilities) as you scroll to readily point out what you own and owe.

How It Compares

PERSONAL CAPITAL VS. BETTERMENT

Betterment is one of the most popular robo-advisors out there right now. It has a much lower fee structure than Personal Capital, so beginners may feel more comfortable with that. The annual fee for the basic service is just 0.25%. Plus, there is no account minimum, whereas Personal Capital's minimum is $100,000.

However, because of the low fee, Betterment is truly just a robo-advisor. The software invests for you based on your age, goals, and risk tolerance. Low net worth investors do not get any kind of real human financial advisor services. So you are basically completely trusting a computer to correctly design and allocate your investment strategy.

If you have a balance of $100,000 or more, you could choose to upgrade to the Plus service (0.40% fee) and you get one yearly call with an advisor. And if you have $250,000 or more, you can get the Premium service and get unlimited calls with financial experts. The annual fee is 0.50% at that level, which is still lower than Personal Capital's fee of 0.89% for the first million. But you will get more personalized service with Personal Capital.

Betterment does not have such advanced money management tools. We do like its SmartDeposit feature though, which automatically sends money to Betterment when your bank account exceeds a certain balance. This is an easy way to make sure you're investing your extra cash.

While Betterment does not have Personal Capital's money management tools, you can still use Personal Capital's tools for free.

PERSONAL CAPITAL VS. MINT

Another user-friendly financial assessment program is Intuit's Mint. This popular software is also free and operates similarly to Personal Capital's money management service. But unlike Personal Capital, Mint is aimed at more of a mass market and people who are just starting out, rather than high net worth investors. Mint is also a free service, so this comparison is against Personal Capital's free money management tools.

Mint focuses more on your everyday spending and budgeting than it does your future income. It might be a better choice for those who just want to see their financial life all in one place. There's no focus on investment strategy. Mint is simpler and doesn't flash a neon sign about what you're worth, like Personal Capital does (perhaps Mint is really for the less secure among us).

But Personal Capital has proven to be more dependable when it comes to interfacing with your accounts, syncing them, and calculating the data quicker. Both platforms are strong when it comes to giving you a clear view of your financial life, so it's certainly worth trying both out and seeing which one suits your needs best.

BOTTOM LINE

Personal Capital aims to be different by providing excellent wealth management tools, a robo-investment platform, and real human financial advisors.

You can use Personal Capital's money management tools at no cost. These are some of the most advanced tools on the market. It doesn't hurt to sign up for the free account to get a handle on your financial life.

But if you want to enroll in the investment service, the fees are much higher than other robo-advisors. You do get personalized service from financial advisors, which is supposed to justify the cost. But beginners with not too much to invest may still find it high. If you have a LOT to invest (as in millions), the fees get lower and it may be a good value for the level of service.