I write this Personal Capital review as a user. I’ve tested Personal Capital for several years, and I hope this review will help readers better understand the service.
Personal Capital Background
More than 1,300,000 users are now using Personal Capital, and the company is now tracking more than $310 billion in assets on the free online platform. In addition to the excellent free tool, Personal Capital is a Registered Investment Adviser (RIA) with the SEC, and manages nearly $4 Billion dollars for clients.
Bill Harris is the founder of Personal Capital (and the former CEO of Intuit and PayPal). Bill and company raised $28 million in venture capital for Personal Capital at launch. Most employees have a background in finance and many hold the CFP® (Certified Financial Planner) designation.
Here is a brief introduction by the CEO:
Personal Capital is best described as an “account aggregator.” It exists to help you track and understand your financial situation. After connecting your various financial accounts, including your mortgage, credit cards, bank accounts, investment accounts, and whatever else you may have, the free service will summarize your situation and offer basic personal finance guidance.
Personal Capital is similar to Mint’s online budgeting service, but much more comprehensive. Personal Capital still allows users to track basic budgeting and spending, while providing substantially better functionality for tracking investments. Personal Capital also offers more help in the financial planning realm, including guidance on asset allocation, tax planning, and retirement planning.
How Personal Capital Works
After opening a free account, you must link your financial accounts to the online interface. This involves authorizing each account that you have from within Personal Capital. I found this to be extremely easy and efficient on the desktop version of the program. You simply click a small plus arrow, specify the type of account, and fill in the online credentials.
After linking accounts with Personal Capital, they remain linked until you unlink them or change any of the account information (change password, login info, etc.). Each day, your account information is automatically updated.
The site then aggregates all the information into a bright and colorful series of charts and graphs to help you make sense of your savings and investments, and to help you better understand your financial portfolio.
The online interface provides information about your:
Projected Investment Fees
Clicking on any of these allows you to zoom in for more information.
For example, if you click income, you can see all of your sources of income. If you click spending, you can see what categories were involved, and where you spent the money. It’s all very useful and intuitive.
Tracking Income and Expenses
Personal Capital offers a very good interface to track all of your account balances and cash flows, and the features continue to improve. I now prefer the Personal Capital interface to Mint’s online interface.
You can track your spending down to the penny. Every credit card transaction. Every debit swipe. Every automated payment. They can all be viewed in your account dashboard in real time.
You can get also analyze each purchase, and categorize spending by date, merchant, and category.
Personal Capital also allows you to stay on track of bills and payments. You can view previous payments made and upcoming bills that are due, as well as the minimum payment required and the total balance outstanding.
Much like the spending feature, you can also track and analyze your income sources in your Personal Capital dashboard. If you have multiple bank accounts, you can see the deposit information for each account, as well as the aggregate total income.
These different features all blend seamlessly for an excellent user experience.
Retirement Planning and Investment Checkup Tools
Personal Capital recently released their retirement planning tool, which allows you to know exactly where you stand relative to your retirement goals. Now you can build, manage, and forecast your retirement savings in one convenient location. The tool pulls in your actual financial data from the accounts you’ve linked to Personal Capital and lets you add your personal information and expected life events. The tool can help assess the following information for you:
Your Retirement Readiness – Using your actual financial data from the accounts you’ve linked to the Personal Capital Dashboard, you’ll see how prepared you are for retirement based on your ideal target retirement date.
Big Expenses – Planning for college? Buying a new home? Getting married? Adopting a child? Input these events into Retirement Planner, and the tool will evaluate if you can afford these large expenses and still stay on track for retirement.
Income Events – Retirement Planner automatically calculates your monthly income and projected Social Security distributions. You can easily add in other sources of income such as rental income, pensions, inheritances or other windfalls.
The “Investment Checkup” feature is also worth mentioning. You must complete a basic risk profiling questionnaire, along with a few other basic questions about your investment goals. Upon completion, Personal Capital presents a graph showing their recommended portfolio and asset allocation.
The tool explains the risk and return characteristics associated with such a portfolio. You can compare the recommended portfolio to your current investments to see the differences in asset allocation, performance, and overall risk. In addition, Personal Capital includes a fee analyzer that will list the fees that you currently pay on your investments. This feature is supposed to calculate hidden fees that are often overlooked, as well as management fees and expenses.
Personal Capital Fees
The services I’ve just described are completely free, but Personal Capital does offer an optional asset management service.
Personal Capital is a registered investment advisor providing the free service to attract more affluent site users – particularly those with investable assets of at least $100,000. If a user has $100,000 or more, Personal Capital offers professional financial advice and the ability to work with a financial advisor (typically well trained with credentials). Personal Capital makes money by taking a percentage of the assets under management, or AUM.
The annual fees for their investment services are as follows:
$0 – $1,000,000: 0.89% of account balance
For clients that invest $1 Million or more:
First $3 Million: 0.79% of account balance
Next $2 Million: 0.69% of account balance
Next $5 Million: 0.59% of account balance
Over $10 Million: 0.49% of account balance
Please remember that these fees don’t include any underlying investment expenses, such as ETF expenses. If Personal Capital invests all or part of your money in passive ETFs, you will pay another 0.10-0.20% on top of their investment management fees for the ETF expenses.
There is no obligation to pay for this service, and there are quality alternatives on the market. For example, Betterment or Wealthfrontwill manage your assets for 0.25% annually.
Personal Capital Security
The security is very good overall, with numerous protections in place to protect your financial accounts.
Personal Capital requires you to register each electronic device that you use. They will send you an email or call your cell phone to register each device. After registering a device, there is another layer of security that is used when linking financial accounts to your Personal Capital account. You must sign in and verify the original online account in addition to your Personal Capital login. Data is encrypted with AES-256 with multi-layer key management, including rotating user-specific keys and salts.
There are also strict internal access controls. The account information you enter within Personal Capital isn’t stored in plain text, and no individual at Personal Capital has access to your credentials. Your bank and brokerage credentials are encrypted and stored at Yodlee (a financial technology veteran), not in Personal Capital’s database. All information is encrypted as read-only, which prevents anyone from accessing your full accounts and initiating any withdrawals or transfers from within Personal Capital’s service.
Personal Capital operates under SEC (Securities and Exchange Commission) jurisdiction and is audited for compliance with SEC cybersecurity regulations. Furthermore, Personal Capital’s website encryption is rated “A” by the independent Qualys SSL Labs (a stronger rating than most major banks or brokerages).
Comprehensive Service – Personal Capital allows you to merge all of your financial information into one attractive online interface. This allows you to track your spending, saving, and investment holdings in one place.
Friendly Reminders – Personal Capital includes an automated email feature that summarizes weekly changes in your net worth. You can choose to receive other alerts and bill payments reminders as well.
Valuable Tools – At no additional cost, Personal Capital provides numerous tools to help you make better financial decisions. These tools can help reduce your taxable income, improve your asset allocation, lower your investment fees, and track your investment performance over time.
Technology – The interface is very intuitive and Personal Capital can be used on a computer, tablet, or smartphone. All apps integrate seamlessly, making it easy to check or track accounts on the go.
Ease of Use – Getting started and syncing accounts is incredibly easy with Personal Capital. In addition, the graphs and charts provide valuable financial information that is easy to read and understand.
Investment Management Fees – Their investment management service isn’t horribly priced, but it’s higher than other online competitors. The fees are comparable to local financial advisors, but all Personal Capital correspondence is handled remotely.
Bugs and Glitches – Early on, Personal Capital had some technical issues on the site that made the user experience a little bit irritating. However, over the last 2-3 years, they have improved the interface and usability. Since ironing out the early bugs, I have not witnessed technical issues when linking or managing my accounts. Some users still report issues when linking certain financial accounts, but this is becoming increasingly rare with each update.
Personal Capital Review Summary
I love the free services provided by Personal Capital. There is nothing else on the market that offers comparable value for the low price of $0.00.
I don’t pay for their investment advice, but I know many readers are happy with the service. The AUM fees are comparable to many financial advisors, so I’ll leave that decision up to you.