Personal Capital offers wealth management services that blend the automation of a robo-advisor with the personalized advice of a human advisor. They use proprietary technology and lower trading costs to maximize your investment experience and also offer a number of helpful tools to anyone for free.
With $10 billion in assets under management, Personal Capital is available nationwide and has 21,00 clients in addition to 2 million overall users. However, you won’t automatically qualify to invest with this hybrid robo-advisor. Keep reading to see who can invest and whether the value of the service truly holds up to the price.
How It Works
Personal Capital utilizes six high-liquid investment classes to invest in both tax-advantaged and taxable accounts: U.S. stocks, international stocks, U.S. bonds, international bonds, alternatives, and cash. If you want to upgrade from the free services and pay to have your portfolio managed by Personal Capital, you can choose from three levels of service based on how much you plan to invest.
Investment Service
This plan manages up to $200,000 in investment assets, with a $100,000 account minimum.
In addition to a substantial suite of free educational tools available to anyone, you can also access your detailed account through the online dashboard.
Additionally, you’re able to call on the financial advisory team at any time if you have a question or need advice on your portfolio, including after hours or on the weekends.
The investment service is somewhat limiting and only offer ETFs for your portfolio at this level. You do, however, get access to Personal Capital’s Smart Weighting service, which ensures your allocations are distributed evenly across sectors rather than strictly mirroring a specific index. You also get cash flow and spending insights as well as 401(k) advice.
Wealth Management
To qualify for this level, you need to invest between $200,000 and $1 million in assets with Personal Capital. In addition to receiving all of the previous benefits at the Investment Service level, you’ll also have your account assigned to two dedicated financial advisors.
Another bonus is that you can customize your portfolio with both individual stocks and ETFs. In addition to a general investment account, you can also receive planning advice for 529 plans and other college savings questions at this level.
At this point, both tax-loss harvesting and tax location benefits are activated as well. Finally, Wealth Management clients with Personal Capital get ongoing advice on financial decisions such as insurance, mortgages, stock options, and compensation.
Private Client
The most exclusive level with Personal Capital is the Private Client account, which requires more than $1 million in investment assets in order to qualify. This service really acts like a customizable family office for your holistic financial planning needs.
Of course, you get to take advantage of all the benefits associated with the two preceding levels. However, you also get access to a CFP, advisors, and the company’s investment committee. The portfolio offerings for private clients are the most diverse, allowing you to mix ETFs, individual stocks, and individual bonds.
This level also comes with family tiered billing and a reduced fee structure, lessening your overall fees the more you invest with Personal Capital. They also partner with BNY Mellon to provide private banking services to simplify the products and services you need to manage your finances.
Personal Capital can also help you craft an estate, tax and legacy portfolio, create donor-advised funds, and perform a private equity and hedge fund review. They’ll also help you choose whether or not to take advantage of a deferred compensation strategy and can give you access to private equity investments.
To truly help you manage your overall wealth management details, Personal Capital also collaborates with your estate attorney and CPA.
Personal Capital Cash
New to the lineup is the Personal Capital Cash account. This isn’t an investment account; instead, it’s a savings account with no fee and no minimum balance required. The main hook is that it comes with a competitive 2.05% APY.
Enjoy unlimited transactions each month and the security of knowing your funds are FDIC-insured up to $250,000. Use the online calculator to see how much you can earn in interest each year compared to a much lower national savings rate average.
Pricing Model
Management Fees
0.89% (first $1 million)
0.79% (first $3 million)
0.69% ($3 million to $5 million)
0.59% ($5 million to $10 million)
0.49% (over $10 million)
Account Minimum
$100,000
Personal Capital offers a number of different tiers based on the amount of assets in your portfolio. The average weighted expense ratio for ETFs is 0.08%.
Additional Features
All Personal Capital accounts feature dynamic portfolio allocation, which sets your allocations based on your assets and goals in real-time. By linking all of your bank accounts to the retirement planner feature, you can budget your everyday expenses and update your retirement estimates all in one dashboard. It essentially combines a personal finance app with your investment planning tools.
Another interesting feature is the availability of socially responsible investing. This service filters investable companies based on their environmental, social, and governance impact. Personal Capital partnered with Sustainlytics to create the methodology that ranks and selects the companies in this investment strategy.
While not unique to Personal Capital, their Smart Weighting feature limits your exposure to any one specific sector. This tactic ensures diversification and protects your assets during a market decline. You’ll find this at other robo-advisors, but it’s still nice knowing it’s included in the Personal Capital suite as well.
If you enter the Wealth Management level of service (with at least $200,000 in managed assets), you’ll automatically receive tax optimization strategies, which are executed in two ways. The first is by placing your assets in tax-advantaged accounts when possible. The second is through tax-loss harvesting, which offsets your realized capital gains in order to minimize your tax obligation each year.
Advantages
Personal Capital provides a ton of their online tools for free to anyone. These include:
- Retirement planner
- Investment checkup
- Budgeting and cash flow
- Fee analyzer
- Education planner
Even if you choose not to invest with Personal Capital (or don’t quite meet the minimum investment threshold), you can still take advantage of their helpful tools.
When you do invest with Personal Capital, you can choose from both tax-advantaged and taxable accounts. Your options to choose from include non-retirement accounts, IRAs (including Roth, traditional, SEP, and rollovers), trusts, and cash accounts.
Disadvantages
Personal Capital’s fees are higher than many other robo-advisors available, but you do get a high level of personal service on top of multiple resources and planning tools. Another downside is that while you can use many of these tools for free, you do have to invest a hefty minimum to actually get Personal Capital to manage your portfolio for you. The $100,000 minimum balance is one of the largest thresholds among robo-advisors today.
Additionally, while Personal Capital offers advice on 529 plans and 401(k) accounts, they don’t currently manage them on your behalf. You’ll need to keep those in a different brokerage account. On the plus side, you can at least link those external accounts so you can see your entire financial picture directly on your Personal Capital dashboard.
Finally, unlike some other robo-advisors, you won’t typically find a promotion when you open your Personal Capital account so don’t expect the first few months to be managed for free.
Who It’s Best For
The ideal client for Personal Capital is an investor with a higher net worth. The upper two account levels are where Personal Capital really starts to shine, so if you have $200,000 or more to invest, consider this online platform.
While you still have the higher fee to swallow, you may feel like it’s warranted because of the extra perks you receive in addition to the robo-advisor investment services. Personal Capital is really designed for people who like a lot of hands-on tools and personal support from advisors. And if you have specific needs for estate planning and other family office services, you can incorporate those details into your Personal Capital account — assuming you invest enough.
If you’re not ready to invest the cash or are looking for a no-frills robo-advisor with the lowest fee possible, then you’re probably wise to move on and continue your search.
The Bottom Line
Personal Capital provides a high level of service with savvy tech tools in addition to a wealth of human capital at your disposal. Clients get all the perks of a robo-advisor but also tons of tools and resources to manage all of your money, not just your investment accounts.
While priced on the higher side with a substantial $100,000 minimum investment, Personal Capital’s advisory services aren’t made for everyone. But anyone can still access several free tools to help elevate your overall financial planning abilities.
