Personal Capital Review: Is Bill Harris’ Software The Future of Money Management?

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Personal Capital’s wealth management platform aims to create a next-generation, highly integrated financial planning website rivaling and perhaps surpassing the more well known ones such as Mint and Wealthfront. Launched in 2011 by former PayPal CEO and finance veteran Bill Harris, the company has grown into a legitimate competitor, managing more than $500 million in assets for some 2,000 clients.

NerdWallet here provides an overview of the company’s offerings and breaks down the pros and cons. Our takeaway: it’s like “Mint.com on steroids,” and Personal Capital is a great option for an investor with assets looking to ramp up their investing know-how by getting professional advice online.

Interested investors can learn more and sign up for Personal Capital here.

Overview: What Personal Capital offers

Personal Capital offers an integrated investment platform with multiple options and levels of involvement, from free analysis software to financial advisor services (for those with more than $100,000 in investable assets). It provides account linking so you can monitor your finances all in one place, giving you live updates on all of your transactions. This helps you track everyday spending, plus your monthly debts and your income, to give you a better understanding of your overall financial picture.

However, where Personal Capital stands out is in its several free tools and integrated dashboard features, where users can:

  • Monitor asset allocation and track portfolio performance against major indices
  • Identify potential portfolio risks
  • Calculate their mutual fund fees over time
  • Understand how 401(k) fees may affect their retirement goals
  • Check a mutual fund fee calculator, which tells them how much fees could eat into investment gains over time
  • Use award-winning mobile and iPad apps to manage their money from anywhere

And there’s no cost, unless you later want to purchase premium advisory services.

NerdWallet spoke with Harris to get a sense of why he started Personal Capital:

“I’ve spent twenty-plus years in the business, building pieces of financial technology to improve the financial lives of consumers. Personal Capital is my opportunity to bring the entire puzzle together. Our technology enhances the personal financial experience, and it is necessary to also have personal attention from an objective financial advisor to provide a human touch so they can build and maintain a strategy that works for them.”

Personal Capital has tried to combine the best of both worlds when it comes to merging online money management with personalized, case-by-case guidance.

Personal Capital vs. Mint vs. Wealthfront

While similar to Mint in that its integrated dashboard allows users to link all of their accounts to see their entire financial picture, Personal Capital goes a step further to help investors navigate their personal financial data to make more informed decisions. Mint is well known for helping people learn how to save, budget and track their consumption, but it is less robust when it comes to providing useful investing advice. Personal Capital, however, comes with free tools like a 401(k) fee analyzer, which tells you if you are paying too much in fees, plus tools to help you track your net worth and manage your investments.

There are online advisors out there like Wealthfront, FutureAdvisor, Betterment and Jemstep, but these sites forgo the financial advisor in favor of technology and algorithms.

Advantages and benefits of Personal Capital:

  • It offers top-tier and highly personalized service at a fraction of the cost of most big banks’ financial advisors.
  • It provides many of the benefits to investors at a much lower price than you would typically see at a high-end broker—it’s OK if you don’t have millions to spare. In fact, the median net worth of a Personal Capital client is roughly $457,000.
  • Personal Capital says its advisors have decades of experience managing billions of dollars for individuals and large institutions. Personal Capital is not a broker, so it doesn’t push products; instead, the company works as a Registered Investment Advisor (RIA) with the SEC.
  • Even if you do not yet have $100,000, its free software and dashboard are available for users of all levels of investment expertise to monitor their progress.
  • Personal Capital adds a personalized element, rather than relying entirely upon a predetermined equation to tell people how to invest.
  • It’s free and easy to try. Setup takes only minutes, and there’s no obligation to continue or to purchase advisory services.

Downsides of Personal Capital:

  • To get one-on-one guidance from an advisor in crafting a personalized strategy, investors must be willing to commit $100,000 in investable assets, at which point there is one all-inclusive fee.
  • Many of the investment planning tools offered by Personal Capital are available elsewhere for free.

Is this the future of financial management?

Since 2011, Personal Capital has grown at a tremendous pace: the company currently manages more than $500 million in assets for roughly 2,000 clients, and is growing 10% month over month. At this pace, Personal Capital could surpass widely used apps like Mint in popularity.

Note: Personal Capital is not a broker; rather it is a Registered Investment Advisor (RIA) with the SEC, and offers users with at least $100,000 in investable assets the opportunity to work with personal financial advisors.

  • debra

    your saying I have accounts that I’m have.what do I need to do to find this information? no idea they exist

  • DR

    “Many of the types of investment planning tools offered by Personal Capital are also available elsewhere for free” — who offers these services? Please let me know. Thanks!

  • Its Only Money

    Been
    with PC for 8+ months. 100K+ nonqualified & 2 roths = steady gains and
    market fluctuations are mere hiccups; seriously, we don’t even concern
    ourselves with such drivel. Bill has built a winning team and Craig’s investment
    team and their strategies are solid. One note – when you give them the reins
    they manage your portfolio; don’t be thinking you’ll call and buy a couple of
    shares of this or that – not gonna happen. If you want to dabble and risk then
    you’ll need an account with E-trade or similar – PC’s business case is
    strategic and purposeful. Will post this
    on other boards as well – checked the web to see where the feedback was. Seems many are “curious and wondering” well
    enough of that – you are missing opportunities.

  • Sam

    Is it a good idea to let Personal Capital manage one’s portfolio? A better idea than traditional brokers?

    • Tom Wilhelm

      Background:

      I’m currently debating whether to hand over the reins to them. Traditionally, I’ve been EXTREMELY anti-investment manager, as I think the notion of “beating the market” is a farce and that the fees they charge simply don’t merit the returns possible. Personal Capital is literally the first portfolio manager I’ve even considered working with…

      Here’s my take:

      First, their approach is most DEFINITELY better than traditional brokers. For anyone other than high net worth individuals (millions in assets) with sophisticated investment and tax avoidance needs, traditional broker fees are generally going to cause them to underperform the results you’d get by creating your own diversified portfolio using very low fee index funds and ETFs. Like I said, most of the financial services industry is a rent-seeking scam.

      Personal Capital’s business model is much more aligned with my beliefs and is based on developing a truly diversified portfolio (I was surprised how unbalanced even S&P500 funds can be, with high exposure to tech, health care, and financial sectors), then managing risk with frequent rebalancing and tax reduction strategies. They claim that their model will increase returns (~1.5% in my case) while reducing risk exposure. Their fee structure is on a sliding scale based on assets managed and is slightly lower than the industry average for independent financial planners (and MUCH lower than the traditional broker/salesman/huckster model). There are NO fees for the trades they perform on your behalf, etc. Your money is held on your behalf by a 3rd party, who is paid by PC as well, with no additional fees to you.

      To date, I’ve had 2 one hour long conversations with an adviser, at no cost. He came up with a personalized strategy (and pitch for why it is better than my current low fee/Vanguard based approach). The analysis I received was deep, highly informative and a big added value for me, even if I don’t choose to use their service.

      If I do take the plunge, I’ll try to remember to respond here with how things are going…

      • Thomas

        Did you end up taking the plunge? How is it working out? I am at the same crossroads right now.

        • Tom Wilhelm

          I did end up taking the plunge. At least I’ve started plunging. I started the process about 2 month ago, but have just been slammed with work and family stuff. Dealing with bureaucratic paperwork has never been high on my list of favorite things, but in this case I’m not just stalling. Life is like this sometimes.

          Consider your reminder motivation. Thanks!

  • Marie @ PF Pro

    I’ve been using Mint ever since, I was a little wary of giving PC all my info but since I haven’t had any problems with Mint over the past couple years, I figured I’d give it a shot. So far I’m loving it.

  • Maxime Rieman

    If you’d like some more info on SigFig and how it compares, you can see our review here:
    http://www.nerdwallet.com/blog/investing/sigfig-review/