Personal Capital is one of the largest robo-advisors based on total assets under management. Like other robo-advisors, it offers online and automated portfolio management. It also gives you access to human advisors in case you have questions or simply feel more comfortable discussing certain decisions. Personal Capital has a high minimum payment and targets investors with a high net worth, but it also offers many free tools that investors of any level can use to monitor their financial health.
Clients with large sums to invest; Investors who want access to human advisors; DIY investors
High minimum costs; Higher management fees than other robo-advisors; Expensive for an investing beginner
Pricing: How Much Does Personal Capital Cost?
|Option Name||Management Fee||Minimum Balance||Features|
|Investment Service||0.89%||$100,000||Access to free online tools and team of financial advisors, tax-loss harvesting|
|Wealth Management||0.89%||$200,000||Two dedicated financial advisors, full retirement planning, customizable stocks and ETFs|
|Private Client||0.89% for first $1 million invested||$1 million||Priority access to advisors, estate, tax and legacy portfolio construction|
There is no minimum to create an account. In fact, there are a lot of free financial planning and investment tools that anyone with an account can use.
If you want to use the company’s advising services, however, you will need to invest a minimum of $100,000. Personal Capital has a tiered system that charges different management fees depending on how much you have in your account. The more you have, the lower your fee is.
Anyone with $1 million or less invested will pay a management fee of 0.89%. Once you surpass $1 million invested, your fee goes down to 0.79%. You pay that fee for your first $3 million. Then you pay 0.69% for the next $2 million invested and a 0.59% for the next $5 million. Finally the next $10 million has the lowest available fee of 0.49%.
These prices seem high when you compare them to other robo-advisors. However, few robo-advisors offer you the mix of automated and human advising that Personal Capital offers. Even the highest fee of 0.89% is significantly lower than the management fees charged by a traditional financial advisor.
Personal Capital's Investing Strategy
How does Personal Capital actually invest your money? Like most robo-advisors, Personal Capital uses modern portfolio theory. Modern portfolio theory works on the idea that you can maximize returns and minimize risk by investing in a diversified portfolio, across multiple asset classes. The company uses six asset classes to diversify your investments and it will also rebalance your portfolio frequently to ensure you stay on track for your specific financial goals. All investments are done with ETFs. Individual stocks are not used in portfolios.
The current account available include: individual and joint non-retirement accounts, traditional IRA, Roth IRA, SEP-IRA, rollovers IRA and trusts. Personal Capital does not offer 529b or 401(k) but it will advise you on both.
- Individual and joint non-retirement accounts
- Roth IRA
- Rollover IRA
Personal Capital’s biggest feature is… humans! Many robo-advisors offer entirely online services with no access to human financial advisors. Personal Capital offers a nice blend of online advisor services with human advisors. The minimum payment to invest is high at $100,000 but all investors have access to a team of human advisors. Investors with at least $200,000 are assigned two dedicated human advisors. All advisors are available via email, phone and video chat.
All accounts use tax-loss harvesting, which is a common portfolio management practice. The purpose of tax-loss harvesting is to minimize your tax payments by offsetting the gains in your account by selling some funds at a loss.
The DIY investor will like the free financial tools offered to account holders. It costs nothing to open an account and there is a free mobile app, even if you don’t invest through Personal Capital. You can link your other accounts to Personal Capital to receive analysis on your budget, retirement savings and advice for balancing your portfolio.
Who Personal Capital Is For
The minimum required investment is $100,000. This eliminates many investors. However, you can create an account and use its financial planning tools for free. This puts Personal Capital in a unique position among robo-advisors because it will attract investors who are on opposite ends of the spectrum. One side is the investor with a high net worth - people who are potentially looking to manage millions of dollars. On the other end of the spectrum is the DIY or low net worth investors who want to take advantage of the company's free financial tools without actually using its costly advising services.
If you have over $200,000, this robo-advisor may be a great choice. Your accounts are automatically managed, which means you can sit back and let Personal Capital do all the heavy lifting. At the same time, you get access to human financial advisors when you have a question or when you just want to talk to about your money.
Accounts of all levels have access to the company's team of advisors. Accounts with over $200,000 in assets are assigned two dedicated financial advisors. All advisors can be contacted by email, phone or video chat. This is a great perk for people who prefer discussing their investments with people at least some of the time. Those who plan to invest less than $200,000 can find other robo-advisors that charge lower fees for balances in that range.
So you'll get a lot of bang for your buck if you are an investor with at least $200,000 and you want the benefits of both a robo-advisor and a human advisor. However, Personal Capital will also appeal to the DIY investor. Creating an account is free, as is the mobile app. With an account you have access to a number of free financial tools that could help you to manage a portfolio on your own. All you need to do is link your other accounts to your Personal Capital account.
Then you can get a breakdown of all your expenses into spending categories like groceries, restaurants, clothing, loans and taxes. More than just budgeting, you can get analysis of your portfolio to find out how much you should increase or reduce each asset class in order to match Personal Capital’s recommended targets. You can also evaluate and forecast your retirement savings to know what you need to do in order to meet your goals. You won’t have access to human advisors with a free account, but the tools will be enough for serious DIY investors.
- Tax-Loss Harvesting
- Automatic Rebalancing
- Human Advisors
- Direct Indexing
- Fractional Shares
How Personal Capital Works
Opening an account is free. You can also download and use the mobile app. If you are looking to use the free financial tools, this account is all you will need.
If you want to invest through Personal Capital, you will need at least $100,000 in order to open a paid account. Your management fee will depend on how much you invest. See the Pricing section above to learn more about management fees. When you open a paid account, you will have multiple retirement and non-retirement account types to choose from.
Once you create an account, whether free or paid, you will have access to your dashboard. The dashboard lets you track things like your spending, saving, net worth, portfolio balances and the movement of ETFs within your portfolio. Link your other bank and investment accounts with Personal Capital and you can also track them through the dashboard. The company promotes the idea of having all your financial information in one place.
What’s the Catch?
Personal Capital charges higher management fees than the average robo-advisor. Its fees are significantly lower than fees from traditional advisors, but there are cheaper robo options. The trade-off will be that robo-advisors with lower management fees do not offer as much – or in some cases, any - accessibility to human advisors.
Personal Capital’s minimum of is out of reach for many of people. If you can afford the minimum but don’t have at least $200,000, you will be able to find cheaper options with similar features.
Competition: How Personal Capital Stacks Up?
Personal Capital is targeted to high-net-worth investors. Those with over $1 million to invest will benefit from the lowest fees and the most additional services. Investors with less than $200,000 could certainly find other financial advisors who offer lower management fees for similar services. Investors with less than $1 million but more than $200,000 get a lot for the price but will still pay above-average management fees. People looking to spend as little as possible on fees may want to look at other robo-advisors.
A big reason that Personal Capital has relatively high fees is because it has to pay human advisors. Many robo-advisors make the trade-off of charging lower management fees but not providing access to human advisors.
If you are not concerned with having people to talk to, Wealthfront offers a management fee of 0.25% to all investors. It has a minimum of just $500 so it is within reach for more people. Wealthfront also offers tax-loss harvesting to all investors like Personal Capital. One difference is that Wealthfront offers direct indexing to accounts with at least $100,000. This is a more advanced form of tax-loss harvesting that looks at the movement of individual stocks, not just a fund as a whole, in order to decrease your tax bill further. Accounts with at least $500,000 have access to an improved form of smart beta, an investment strategy that considers multiple factors when choosing the best stocks to buy for your portfolio.
If access to human advisors is one of your primary concerns, Betterment now offers part-time access to advisors. The Betterment Premium plan provides unlimited phone consultations with financial experts. This plan has a minimum balance of $100,000 and the management fee is 0.40%. This fees is significantly lower than the Personal Capital fees with the same minimum payment. The difference is that Personal Capital offers an unlimited number of consultations and offers more ways to contact advisors.
Another similar robo-advisor is Vanguard Personal Advisor Services. Vanguard is well-known as one of the largest mutual fund managers but it also offers advisor services for a minimum of $50,000. Investors have access to a team of human advisors and get a dedicated advisor when they pass the $500,000 threshold. Vanguard management fees start at 0.30% and go down to just 0.20% if you have more than $5 million invested or 0.10% if you have more than $10 million. However, Vanguard Personal Advisor Services doesn’t have tools as comprehensive as Personal Capital’s. Vanguard has more limited tax-loss harvesting and charges fees to purchase ETFs, unlike all the robo-advisors mentioned above.
As with most, robo-advisors, DIY investors could save money by creating and monitoring their own portfolios instead of using a paid service. Unlike many other robo-advisors, Personal Capital allows you access to its financial tracking and planning software even if you don’t invest with it.
Bottom Line: Should You Use Personal Capital
Personal Capital offers a lot of bang for your buck if you are a high-net-worth investor who wants the advantages of both human and robo-advisors. DIY investors will also benefit from its free mobile app and its stable of financial planning tools. People who are investing around the minimum ($100,000 - $200,000) will find other robo-advisors that offer similar features with lower fees.