Personal Capital is a wealth management platform that operates in two parts. The first is a set of free financial analysis tools to assist with everything from budgeting to retirement planning. The second is paid wealth management services, offering a range of alternatives from predefined portfolios to customized portfolios and personalized service.

Tracking your finances with Personal Capital: A Review

Personal Capital’s free financial management tools are often compared to Mint.com. This comparison doesn’t give a complete story. The free range of tools available on Personal Capital provide the same basic budgeting and cash flow that Mint.com does, but Personal Capital provides much more as well.

The dashboard on Personal Capital is first rate. At a glance you can check the balances of all your accounts, your net worth, your monthly cash flow, investment performance and even how you are doing with your retirement savings.

The presentation of data is displayed in easy to read graphs of various layouts. The clean and simple graphs make getting an accurate picture of your financial situation quick and painless.

The best feature is how simple and painless this is to achieve. All your accounts are linked via the internet using your logins and passwords.  Gone are the days of having to login to multiple sites and get account balances and then trying to assemble it into something that makes sense.

How to set up a Personal Capital account

The setup of an account with Personal Capital is remarkably easy. No fees, credit cards, or any other hidden costs involved. Just put in your email and confirm. Then add your accounts by selecting the financial institutions you want to link and using your login and password for each.

Depending on how you have your various banking, credit, and brokerage accounts set up, you will need to do the secondary confirmation to link them. All this is handled on the Personal Capital site. No having to go login in another screen.

Accounts may take a few minutes to populate, but the Personal Capital platform integrated everything we tested flawlessly. In short order you will be testing all the free tools and reporting the platform offers.

Free Services from Personal Capital

There are three sets of free software available on the site: banking, investing, and financial planning.

Free banking tools: Personal Capital Budgeting

The banking tools allow you to track spending and cash flow. They allow you track accurately where you are spending money and where you are making money. This is all done with information pulled from your accounts.

The reporting features allow you to drill down into sources of income or expenses. Changes to your spending habits can also be seen over time. This allows you to recognize when you might have problem ahead.

Free investing tools

Never has it been easier to monitor all your investments in one place. Aggregate allocation and performance of all your investment accounts is available, as well as individual accounts. The platform will even connect to non-traditional brokerage accounts like Lending Club and various other crowdfunding platforms.

One of the more interesting features is the tracking of your investments in a “You Index.”  This feature allows you to see how your investments do against the S&P 500. This is a welcome feature for do it yourself investors who want a benchmark to compare with.

Free financial planning tools

Personal Capital offers free financial planning tools as well. These include a retirement planner, an investment checkup and a retirement fee analyzer. The investment checkup and retirement fee analyzer are particularly interesting.

The investment checkup examines your specific investment allocations and provides recommended rebalancing. The recommended allocations are based on how you answered your profile questions. Additionally, it also provides you with information to help you understand the recommendations.

Fees are an often-underappreciated part of investing. Paying high fees by investing in high fee mutual funds or even fees charged by your 401k administrator will have significant impact on your future returns. The free retirement fee analyzer will inspect your accounts for any fees. Using the data, suggestions will be made to improve your returns.

Who’s Personal Capital best suited for?

All these free tools are very appealing to the do it yourself investor. New investors or individuals struggling to get out of debt will love the free features as well. But what if you are an investor who needs or wants help? Well, Personal Capital has a solution for you as well.

Personal Capital Wealth Management

Personal Capital offers a tiered approach to wealth management advising. This approach gives you access to various levels of financial advice depending on the amount of investable assets you own. The fee is fixed at 0.89% of assets under management for accounts of up to $1M. As your account gets larger, so does the amount of assistance provided.

Up to $200K in investable assets

For people with up to $200k available to invest, Personal Capital offers an “investment service.” Services include 24/7 access to a financial advisory team, help with budgeting, 401k advice, and premade portfolio strategies.

Investors falling in this level might want to consider a robo advisor. The fees will be less and the portfolio strategies similar, but you will likely lose the personalized assistance.

$200K – $1M in investable assets

The next level in the tiered approach applies to investors with up to $1 million in investable assets. This is called “wealth management.” This level of service includes: two dedicated advisors, customizable stock portfolios, tax harvesting, as well as help with financial decisions like buying a home. Basically, this level of support is full financial and retirement planning.

The 0.89% fee of assets under management is a relative bargain at this level compared with the 1% or higher that most financial advisors would charge.

Over $1M in investable assets

At this level, the support is what you would expect for a high net worth individual. The fee is relatively inexpensive at this point for the level of service provided.

Investors with over $1 million will receive priority access to certified financial planners and advisors. Some of the services include private equity and hedge fund review, collaboration with estate attorneys and CPA’s, and private banking services.

Pro’s and Con’s of Using Personal Capital

The strengths of the platform are much stronger than the few weaknesses. Most of the downfalls are just nitpicking areas that could be improved. The one true “con” is the lack of a budgeting option.

Pros:

  • Set up is incredibly easy.
  • Free software is first class, fully functional and available for use without ads
  • All your accounts can be viewed in one location, no more chasing down multiple websites and transferring numbers to a spreadsheet.
  • Beautiful dashboards that allow you to get a snapshot of all your finances at a glance.
  • Connects and interacts with virtually every financial institution and brokerage, both traditional and non-traditional.
  • Wealth management fees are less than compared with traditional financial advisors.  This is especially true for individuals with over $200K to invest.

Cons:

  • There is no budgeting tool.  You can track spending and cash flow but can’t set up an actual budget.
  • The management fees are higher than competing robo fund fees.  Robo funds or robo advisors may be a better alternative for investors who don’t want the individual touch.
  • The free investment analyzer doesn’t offer a way to customize investment allocations.  The predetermined allocations are your only comparison options.

Alternatives to Personal Capital

Personal Capital offers both free financial software and wealth management. Because of this, it is difficult to find a replacement for the entire platform with a single competitor.

The alternatives can be broken into two types – budgeting/money management tools and investing tools. Let’s look at both separately.

Money management alternatives:

The lack of a budgeting function within Personal Capital is where it is most vulnerable to competitors. If you need more robust budgeting and spending tracking, consider using YNAB or Mint.com. Both are stronger on the budgeting and spending side of personal finance. Additionally, the Trim app is a great tool for finding the

Investing alternatives:

Investors who love the dashboards and reporting, but don’t need the individualized touch of a human financial advisor, might consider using a robo advisor like M1Finance, Wealthsimple, or Betterment. These are all quality robo advisors that offer management services at lower rates than Personal Capital.

Final Thoughts

Personal Capital offers free tools that are better than what most paid financial services provide. Do-it-yourself investors and beginners will appreciate what the platform can offer. The paid services may fit the needs of some investors. Every investor’s situation is unique, and you are encouraged to perform your own due diligence before selecting a financial advisor.

 

Jesse Blair retired from the corporate world at the age of 42 to live off his investments, spend time with his daughter, and focus on self-improvement. You can follow Jesse’s investment experiences at TheIncomeAdventure.com.