Personal Capital offers one of the best investment apps I’ve reviewed though I recommend against the advisory service
This is our second review of investment apps and online advisory services following our Betterment review last week. Personal Capital is two tools in one, a free personal finance tool and an advisory service.
The free personal finance tool allows you to link up all your financial accounts to see everything from one screen and really gives you a great perspective on your investments, budgeting and retirement planning.
As with other investment apps, Personal Capital also offers a fee-based advisory service that charges a percentage on the assets you hold in the account. The service is completely voluntary and separate from the free financial tool. Personal Capital fees for the advisory service are higher than other investment apps advisory but offer a dedicated advisor for each account.
While the advisory fees are higher than I’m willing to pay, the free personal finance tool is second-to-none among investment apps.
How Investment Apps like Personal Capital Work
Investment apps and online personal finance tools have become popular for the huge segment of the population that has enough assets to get complicated but not enough to get the time-of-day from wealth advisors. These are typically people with between $25,000 and $1 million in net worth. Commissions on this level of assets are not usually enough for many advisors to care and fees from a fee-based advisor start to add up quickly.
Using technology and taking the process online, investment apps have been able to provide the same financial planning services for a much lower cost to a neglected portion of the population.
Personal Capital was founded in 2009 and quickly built a name for itself as one of the best investment apps for personal finance and retirement planning. More than one million people have linked up their financial accounts to manage over $245 billion in assets on the investment app.
I keep saying investment app but the free financial aggregator service is more of a personal finance management tool. Founder and CEO Bill Harris is the former CEO of Intuit and PayPal and a lot of the tools on Personal Capital seem similar to Quicken bookkeeping functions. Harris brought a lot of Intuit employees with him and Personal Capital is definitely shows it in its technological advantage over other investment apps.
For my Personal Capital review, I linked 10 financial accounts including savings, checking, credit cards, and investment accounts on a couple of different platforms. Personal Capital links with just about every financial account you can think of to give you a whole picture of your personal finances.
Linking to your accounts and bills takes a couple of minutes each. Getting together all the paperwork with account numbers took the longest time. Once you’re done linking, you’ve got instant access to a range of features including:
- Your Budget and Upcoming Bills – Personal Capital will track your weekly, monthly and annual income and spending to create your budget. No more missing big expenses that throw your budget off.
- Spending by Account and Category – This makes it a lot easier to see where your money is going and where you can cut back a little for saving.
- Net Worth, Portfolio Allocations and Balances – Personal Capital is one of the best investment apps I’ve tested and really helps track your nest egg.
- Investment Returns and Fees – By tracking my investments for a year, I was able to see that one investment platform was charging much more in fees than I had realized.
- Retirement Planner– Personal Capital will help you figure our your retirement number and how to meet your target.
- Investment Checkup – We’ll look at this in more detail next since it’s one of the most popular features on the investment app.
Personal Capital’s cash flow feature is one of the best among investment apps with lots of filters to see your spending by category and total outflow. The account information from each of your linked accounts is updated daily so you’re always looking at current information.
From the graphics here, you’ll see one of the features I like most about Personal Capital. The layout is very well separated and colorful. I’ve reviewed other investment apps and personal finance tools where the screen just looked like a jumble of numbers. Personal Capital lays everything out clearly and doesn’t try to fit too much on one screen.
Investment Checkup Tool on Personal Capital
One of my favorite tools on Personal Capital was the Investment Checkup. After answering some questions around your tolerance for risk in investments, retirement and income, the tool analyzes your investments and recommends changes.
With the investment checkup, you see different risks in your portfolio as well as the fees and different costs as a whole. Personal Capital explains the historical returns and risks with its recommended portfolio and how it differs from your current investments.
Since you keep your investments and other financial accounts on their separate platforms, you don’t have to make any of the changes recommended by Personal Capital. I found many to be very helpful though I didn’t implement a few of the minor changes.
Personal Capital Review: Advisory Service
Personal Capital goes beyond other investment apps with its financial advisory service for those with accounts of $25,000 or more. Linking your accounts and tracking your personal finances is completely free. The advisory service charges an annual fee based on your total investments.
Personal Capital Advisory Fees:
- < $1 Million = 0.89% Annually
- $1 Million to $3 Million = 0.79% Annually
- $3 Million to $5 Million = 0.69% Annually
- $5 Million to $10 Million = 0.59% Annually
- > $10 Million = 0.49% Annually
Personal Capital is a registered investment advisor (RIA) and is registered with the Securities & Exchange Commission (SEC) to manage assets. Each account gets a dedicated advisor though advisors may handle up to 200 clients.
Personal Capital advisors generally invest your money in low-cost index funds and ETFs. The service can manage taxable and retirement accounts as well as employee-related retirement accounts. Advisors rebalance portfolios at least annually for tax-loss harvesting so you save on the tax bill associated with your investments.
Personal Capital Fees vs Other Investment Apps
Fees for Personal Capital are lower than most traditional financial advisors and fairly low compared to some other investment apps advisory services. You pay no commissions on trades, only annual fee on your assets. The fees associated with any index funds or ETFs will be in addition to those you pay Personal Capital, which is fairly standard among investment apps advisory services.
I love the free personal finance tool from Personal Capital though the advisory service fees seem a little high compared to other investment apps advisory programs. Fees at Betterment are just 0.15% for accounts of $100,000 or more and fees on Wealthfront are just a little above that.
Betterment may not provide some of the free features found on Personal Capital but advisory services are also available to those with under $25,000 in assets. I can’t speak to the quality of advisory at Personal Capital for clients with more than $5 million in assets but this segment might be better served at a larger asset manager.
Is Personal Capital Safe?
All your account information is completely safe and isn’t stored in text on the site. There’s a two-step process for registering each computer or device with which you plan on accessing your account to make sure only you will have access.
Since your accounts are only linked on Personal Capital and not managed from the platform, you can’t make any deposits or withdrawals from the investment app. Personal Capital is only a tool for looking at the bigger picture in your finances and keeping yourself on track. This means the site hasn’t been a target of hackers because it wouldn’t help them get much information or any of your assets.
What I Liked about Personal Capital
The free service on Personal Capital is among the best I’ve seen among investment apps and a definite for seeing the detail in your complete financial picture. Among the best features on the app:
- Email Reminders: Customizable email alerts that will tell you changes in net worth and upcoming bills.
- Complete financial tool: Personal Capital gives you a complete picture like I haven’t seen on other investment apps. From cash flow to the retirement planner and the investment checkup, you see your finances from every angle.
- Technology: The fact that techies created Personal Capital shows and you can use it on any computer, tablet or smart phone. The apps work on iPhone or Android and are seamless with the desktop version.
Personal Capital Complaints
The only complaint I had about Personal Capital was the advisory service fee which seems quite a bit higher than other investment apps advisory programs. I didn’t try out the advisory service so I can’t speak to the quality of planning but I’m not sure it would be noticeably different from the service on Betterment or just doing it yourself. The minimum of $25,000 in assets is also higher than some other providers.
Personal Capital Review Summary
I didn’t have time to cover some great features on Personal Capital like the 401k Analyzer and the Retirement Planner that really put it ahead of other investment apps. Besides some of the Personal Capital features I reviewed, make sure you check out the Retirement Planner and the different scenarios it lets you test out to plan your spending and goals.
The free financial tool on Personal Capital is second to none among the best investment apps. Linking your financial accounts is fast and completely safe. Once linked, the site gives you every way to look at your finances and investments. The advisory fees are higher than for other online advisories but this is a completely separate service and you don’t need to opt-in. Overall, I would highly recommend you give Personal Capital a try to see the bigger picture in your finances.