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A Personal Capital customer

Two of the leading web-based investment platforms are Wealthfront and Personal Capital. The former targets a wide pool of investors with its low fees; the latter caters to those who still want a human touch in their investment guidance. Here are a few essential matters you need to know if you’re considering either of these online advisors. But before picking one, consult with a financial advisor whose insights into your goals and investing style plus knowledge of available options can ensure you make a good decision.

Overview of Wealthfront vs Personal Capital

Both platforms work to address similar needs but have approaches that attract different users. Wealthfront’s target audience is millennial investors, which means that costs are relatively low and portfolio options are easy to manage. Academic research-based software forms the backbone of their personalized portfolios and financial advisory programs.

Whereas Wealthfront focuses its attention on young investors, Personal Capital supports high-net-worth individuals. So, its fees are higher than those of Wealthfront, but that also allows access to human advisors and hands-on portfolio options. Both services support investing in U.S. stock options, retirement accounts like IRAs and trusts. 

Wealthfront vs. Personal Capital: Fees

When it comes to pricing, you’ll find that technology brings low rates into play. The more humans involved in the app you use, the higher the prices will be. That is why Wealthfront can offer lower fees than Personal Capital. Since its advisory system is automated, there’s less of a need to cover certain costs.

The difference starts at the minimum necessary investment for the two services. Wealthfront requires a minimum account size is $500. Their flat annual advisory fee is then 0.25% of the account’s balance. As for Personal Capital, the platform uses a sliding scale. The base amount to start investing is $100,000, which results in a 0.89% annual advisory fee. That fee percentage extends until your first $1 million.

The more you invest, the lower that advisory fee drops. The first $3 million incurs a 0.79% annual advisory fee, the next $2 million incur 0.69% and the following $5 million result in 0.59%. Once you invest over $10 million, you are billed at 0.49%.

Personal Capital claims that it doesn’t charge hidden fees, trailing fees or trade commission – only the annual management fee. Likewise, Wealthfront will not charge you account transfer fees, trading or commission fees or fees to open, withdraw or close your account.

Wealthfront vs. Personal Capital: Services and Features

Young female investorWealthfront and Personal Capital both have a similar scope of account types available to you. They offer IRA accounts, including traditional and Roth IRAs, 401(k)s, 529 college savings plans, trusts and taxable brokerage accounts. Personal Capital is set up with progressive investment in mind, so it offers more services depending on the investment tier you fall under. They have four tiers: the Investment Service tier for investments below $200,000; the Wealth Management tier for those who invest between $200,000 and $1 million; the Private Client tier if you’ve invested over $1 million; and finally, those who participate in the Private Equity Offering. The last group has to invest a minimum of $5 million and be with Personal Capital for at least six months.

You gain access the more you invest. The Investment Service tier provides access to the website’s free dashboard and an advisory team. Wealth Management clients receive a comprehensive financial plan that includes concerns like retirement. They also can receive a matched financial advisor and a customized portfolio. Beyond that, clients receive increased personalized services, specialists, reduced fees and opportunities to invest in higher profile funds. Personal Capital ensures that its features are directed towards a customized, skilled professional experience.

Wealthfront offers similar investment managing services, such as tax-loss harvesting, rebalancing and asset allocation. However, a significant effort goes towards addressing your personal risk factor. Their automated advisory system customizes portfolio options that minimize your risk while still maximizing your returns. The platform promotes that through their respective PassivePlus and Path features. PassivePlus focuses on investment strategies, while Path helps you create a financial plan for the future, such as retirement or college costs.

Wealthfront vs. Personal Capital: Online and Mobile Experience

Wealthfront and Personal Capital have desktop sites you can use, but both promote investing through their apps. You’ll find that Wealthfront boasts a slightly better score on the Apple store and the Google Play store, with a 4.6 and 4.9, respectively. Although, Personal Capital is just shy of those scores at 4.4 and 4.7.

The advisory sites share a goal in their mobile experience. They want to streamline how you manage your accounts by putting them in one accessible place. Essentially, they want to act as your one-stop shop for all your financial account needs. They both offer a thorough range of tools that cater to financial planning. Personal Capital’s app includes a free financial dashboard, budgeting features, investing and planning tools. Wealthfront offers its free Path feature with planning tools that promote the platform’s hands-off experience.

Who Should Use Wealthfront?

Thanks to its low costs, Wealthfront is an opportunity for novice investors to build up their investment sense. The app provides thorough digital guidance that keeps even the most cautious investor safe. The portfolio customization can also help users feel like they’re being treated like an individual. However, the lack of human advisors can impact how well that comes across. Overall, those who are new to investing, are in the lower investment tier or even people who just want to be smarter with their finances will find Wealthfront a useful tool. However, if you want to be a little more hands-on with your investing, for example, using fractional shares, you might need to look somewhere else.

Who Should Use Personal Capital?

Personal Capital directs most of its attention on an individualized experience for those who tend towards mid-level investments. The higher management costs may be too expensive for someone just breaking into investments. However, a number of their investment management tools come free, which may appeal to DIY investors. Since some are free, though, it may be wise to look elsewhere if you just want access to human financial advisors. Overall, Personal Capital offers a comprehensive investment management service that can help even savvy investors reevaluate their risk level and maximize returns.

The Bottom Line

Senior couple working on their investments

In the end, the right investment platform depends on your needs. New investors will find Wealthfront an affordable and personalized experience. However, those same risk protections might be too hands-off for an individual with experience. On top of that, the team of human advisors available at Personal Capital may make the higher-priced platform the winner for those who invest in a higher bracket. Either way, both are valuable options for different investment styles.

Tips for Investing

  • A platform can certainly help your investing practices, but nothing beats a carefully curated financial plan and investment strategy. Neither are hard to come by either with SmartAsset’s financial advisor match-up tool. With this feature, you can find local financial professionals who are ready to help you pull your long-term plans together. If you’re interested, get started now.
  • Whether you’re considering getting started with investing or you’re already a seasoned investor, an investment calculator can help you figure out how to meet your goals. It can show you how your initial investment, frequency of contributions and risk tolerance can all affect how your money grows.
  • While these platforms are great options, they might not tick all the boxes you need. Read up on our in-depth brokerage reviews, where we analyze both Betterment and Fidelity Go in detail.

Photo credit: ©iStock.com/monkeybusinessimages, ©iStock.com/fizkes, ©iStock.com/Geber86

Ashley Chorpenning Ashley Chorpenning is an experienced financial writer currently serving as an investment and insurance expert at SmartAsset. In addition to being a contributing writer at SmartAsset, she writes for solo entrepreneurs as well as for Fortune 500 companies. Ashley is a finance graduate of the University of Cincinnati. When she isn’t helping people understand their finances, you may find Ashley cage diving with great whites or on safari in South Africa.
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