It’s my belief that Personal Capital is hands down the best free financial tools you can find online to help manage your finances and achieve a more secure retirement. I’ve tried everything from Excel, to Mint, a plethora of other financial apps, and nothing comes close to Personal Capital’s tools.
With Personal Capital, you can do the following things for free:
- Automatically track your net worth
- Analyze your investment portfolios for excessive fees
- Analyze your investment portfolios for proper asset allocation
- Track and manage your income and expenses
- Run various retirement planning calculations to ensure a better financial future
Personal Capital currently manages over $7.5 billion in managed client assets as of 4Q2018 and they track over $500 billion in assets for 1.6 million registered users for free. This amount is a testament to their money management capabilities and product offerings. Their competitive advantage is that they built their company from the ground up with technology at its core. As a result, they are much more flexible in tailoring offerings to meet consumer demand.
Further, Personal Capital raised $75M in funding by IGM Financial in 2016 followed by another $40M in 2017. Total funding raised is $215.3M as of 2H2018. Clearly, Personal Capital is here to stay for the long term.
EIGHT GREAT REASONS TO USE PERSONAL CAPITAL
1) Simplicity And Less Stress. Before Personal Capital, I had to log into eight different financial institutions to track over 30 different financial accounts ranging from brokerage accounts, money market accounts, CD accounts, checking accounts, IRA, and my 401K. My finances were a mess, and I’m sure your finances could use some organization as well. Now I can just log into Personal Capital to see how everything is doing in one place. It’s important to have a holistic view of your overall financial health so you know where to allocate resources.
2) Net Worth Overview. Gone are the days where you have to use an Excel spreadsheet to manually update every single asset and liability line item to calculate your net worth. Personal Capital updates your net worth automatically as soon as you log in because all your accounts are linked. They provide a pie chart of your assets as well as gives you a historical chart of your net worth progression. If you cannot find an account in their database, you can simply add it yourself. Personal Capital will also conveniently e-mail you a weekly snap shot of your latest net worth along with how the markets did, upcoming bills, latest insightful blog posts and accounts that need your attention. Below is a sample headline snapshot.
Personal Capital Tracks Your Net Worth Like A Hawk
3) Tracks Your Cash Flow. Budgeting is personal finance 101. By tracking your income and your spending like a hawk, you will be able to save a lot more money than if you simply tried to guess everything. Think about all the times you withdrew cash from the ATM machine and had no idea where all the money went a couple days later. Aggregating all your accounts allows you to see where all your money is going. In the example above, this entrepreneur brought in over $38,000 in income and spent only $3,096. Now that’s great cash flow!
4) Helps You Balance Risk. With so many accounts, it’s often hard to see exactly what’s going where. For example, so many people were too overweight stocks before the financial crash in 2009. With Personal Capital, you can easily see where the imbalances are in your net worth so you can make smart adjustments. Now that it’s a bull market, investors are probably too overweight equities and way underweight bonds once again. The Investment Checkup tool analyzes your portfolio’s holdings based on size, style, and sector. Personal Capital excels for those who have assets in the stock market. Personally, I like to maintain a 35%, 35%, 30% split between stocks, real estate, and CDs/bonds.
5) Helps Reduce Fees. One of my favorite tools Personal Capital provides is their Portfolio Fee Analyzer. I ran my 401K through their fee analyzer and discovered that I am paying over $1,750 a year in management fees. I had no idea that my Fidelity Large Cap Growth fund cost $1,200 a year due to a 0.74% expense ratio compared to sub 0.3% for my Vanguard Funds. As a result, I found a similar Large Cap index fund instead and am now saving $1,000 a year. Without Personal Capital, I would have spent over $87,000 in excessive fees over the next 20 years. Take a look at my example below. Portfolio fees are a serious problem which will rob you of your retirement wealth if you are not careful. Don’t let ignorance rob you of your financial well being.
6) Shows Your Portfolio’s Investment Efficiency. Based on your risk tolerance and investment objectives questionnaire, Personal Capital will give you an idea of where your current allocation is on the Efficient Frontier Curve. The Efficient Frontier Curve is the best returns for a certain level of risk. You want to be on the curve and not above or below.
7) Recommends Specific Dollar Amounts To Invest. Financial advice is useless if there is no actionable advice. Personal Capital will recommend the specific dollar amounts to invest or reinvest in each asset class to get you to an optimal asset allocation. In this example below, the investor is too heavily weighted in cash. In order to get to his recommended target allocation the investor needs to increase stock holdings by roughly $200,000 and bond holdings by roughly $100,000. The fun part is figuring out which index funds to invest in each category. All investment related charts and analysis can be found in the Investing tab.
8) The Best Retirement Planning Calculator Today. The award winning product team came up with what I think is the best retirement calculator on the market because it uses real data and Monte Carlo simulations to come up with the most realistic financial scenarios for your future. Other calculators simply ask you to guess input values to then come up with your financial future. The problem with this method is that we often underestimate how much we are saving and spending! You can input different life events such as a wedding or home purchase in your cash flow statement and recalculate your financial future to see how you’ll do. Everybody should give it a try.
OTHER GREAT FEATURES
Award Winning Technology – Lauded by MacWorld as the Best Financial app on the web.
Easy To Use – All you’ve got to do is sign up, press the “+” to link all your desired accounts, fill in the respective user names and passwords and everything will get downloaded on the Personal Capital dashboard. The more accounts you link, the more comprehensive picture you will receive of your finances. It only takes a couple minutes to sign up.
E-mail updates – Every week you’ll get an e-mail update of your net worth, the latest Personal Capital news, and a snapshot of the markets. You can also subscribe to Daily Capital, the Personal Capital blog to gain insights.
Tax Loss Harvesting – Personal Capital practices tax loss harvesting and tax location for their clients. Tax loss harvesting alone gains up to 1% in after tax return a year.
Smart Indexing – Smart Indexing aka Tactical Weighting is the practice of investing in equal weighted sectors or styles. In bull markets, one sector can grow to an outsized percentage, such as during the dot com bubble or the financial bubble. When the market corrected, people lost a lot of money. But if they practiced Smart Indexing, by constantly staying disciplined with equal weightings in the sectors, they would have outperformed.
LEVERAGE TECHNOLOGY FOR FREE
When you know where your money is going and where it’s being invested, you gain a tremendous amount of confidence in your financial well being. One of my biggest goals on Financial Samurai is to help everyone achieve financial independence sooner, rather than later. You may not be wealthy now, but just knowing you’ve got your finances in order and have a financial plan tremendously increases your chances of financial success.
Once you are financially secure, you free to do whatever you truly want. Get a handle on your finances by signing up with Personal Capital for free and aggregating all your accounts. The financial management tools are free and takes less than a minute to sign up. I spent the past 13 years meticulously tracking my own finances to achieve financial freedom. If I discovered Personal Capital earlier, I think I would have reached freedom even sooner!
Updated for 2019 and beyond.
Is there a way to mark transactions as “reviewed” in Personal Capital? I review transactions weekly to make sure that they are categorized correctly and also manually transfer them to YNAB which is my budgeting tool .
I use a custom tag on each transaction called “processed” in Mint that I can check off so that I don’t waste time looking at transactions that I’ve already reviewed & transferred the previous week.
I used to use dates ranges , but sometimes a transaction will be imported with a date before my last review. rare, but it happens. So date ranges don’t work.
How do you link Personal Capital to your Fundrise / Realty Mogul accounts, though? Is there anyway to do that?
I just link manually and update once a month or quarter.
I really really want to love Personal Capital but it straight up doesn’t work with USAA (where I have the majority of my accounts). I have tried for weeks but it will not sync correctly.
Has anyone with USAA figured out a solution?
I have a USAA credit card account and a USAA mutual fund account. Both link fine.
Do you think Personal Capital is better than Betterment or Wealthfront and why? The fees are higher, but it seems P.C. isn’t so “cookie cutter”?
Hi Jon,
It’s a different target demographic really. Betterment and Wealthfront are 100% algorithmic advisors i.e. there is no human to get advice from and speak to about retirement savings, college savings, tax planning, outlook on the market, etc. That, to me is valuable b/c I’ve gone through multiple up and DOWN cycles in the market.
Robo-advisors are thriving now because anybody can make money in a bull market. It’s what happens when things aren’t as rosy that makes having some human advice very helpful. The roboadvisor fees are very attractive though compared to alternatives. It’s not a bad way to diversify a portion of you investing assets.
Regards,
Sam
To date, would you recommend having both Personal Capital and Wealthfront at the same time since you promote them both?
Thanks, Sam.
Theresa
I would recommend Personal Capital for their free financial tools. They really have the best finance tracking software on mobile and laptop. There’s no downside since it’s free.
I like Wealthfront because it’s fee is lower at 0.25%, and it will build a custom portfolio for you. But you just won’t have anybody to speak to. They are building some tools to help you visualize your retirement and travel future too.
It all depends on how much hand holding/advice you need. Both are a good solution. Part of the problem is that so many people don’t know how or where to start. These two firms can help.
Sam
Just talked to PC Advisor… The good thing is that all you need is to give them $100,000 to manage in their account for 0.95% fee… Than, for all of your other accounts (your employer 401k, fidelity 529, any other account- they will set up your portfolio and tell you what funds to buy/ sell/ when etc for free.. Seems like a pretty good deal to me…
Totally agree with you that the brand needs a face. I believe it’s the missing link for many of these online advisors. Either a prominent money manager or someone from the academia world!
Stephanie
I just checked the 401k Fee Analyzer and my estimated annual fees are 0.48%, not bad!
Not bad at all! Pretty easy and cool tool huh? You can analyze each portfolio individually if you have multiple portfolios.
Hello FS
could you do a consult ? Recently retired after selling business..
BTW, Sam if you talk to them again (or when you do), the could make some improvements around their tagging of transactions to categories so the software learns my spending habits – i.e., can if i tag an amount as something specific (not initially intuitive) could the software remember that assignment (based on dollar amount, payer/payee, and date), and add budgeting functionality.
Spent a good amount of time working with their advisers and frankly I haven’t gotten much information from them that I couldn’t of gotten from blogs or fidelity.com anyhow. And I don’t know (particularly) much about personal finance, but I am semi-fluent. The advisors seem to know the same if not a bit less than I. Either that or they are instructed not to advise beyond reiterating the company’s overall investment approach to asset allocation. I’m thinking I could save half a point by just allocating my funds to equal weighted domestic/intl ETFs… with nearly identical results.
Sam I presume you do not use their service other than for tracking purposes…?
Hi Sam, Great article. Just some ideas for the next time you get together with the PC team. Since investing is so closely linked to budgeting and lowering living cost improves the amount we have to invest it would be great if PC could add some budgeting tools to the website. The classification of expenses helps but doesn’t let you run any budgetary graphs for the year or simulations over multiple years. The example of your switching to IC light bulbs and other energy savings could be run in models for budget planning. Then all of the improvements could roll into potential investment gains showing the impact of the extra invested money. Also when saving an expense to a new category in PC it doesnt recognize future expenses to the new category. If there are other budgeting tools that can be linked to PC let me know please. Thanks again for your tips.
Some good suggestions. Will pass them along Steve. The more interactive the better for sure. I love doing pro forma analysis on my investments.
Talk about a thorough review! I’m in the process of figuring out how I want to start investing outside of the 401(k) and mutual fund I currently have. Consider Personal Capital’s hat in the ring!
I’d just focus on maxing out your 401(k) as much as possible and then going through straight index funds of 80% equities, 20% bonds at your stage. Maybe even more aggressive in equities, but I’m personally playing things safe in my IRA.
Here’s a post on the recommended allocation of stocks and bonds by age.
https://www.financialsamurai.com/2013/01/28/the-proper-asset-allocation-of-stocks-and-bonds-by-age/
That’s so cool you got to meet the CEO and learn more about their business. The new features look really cool. I didn’t realize that Blackrock invested money in Personal Capital. Very cool. Time for me to log in and play around with the new tools now. Thanks for the insights and tips Sam!
It’s been a bit since I played with Personal Capital’s analysis tools. I think I’m going to have to swing back over there and play around a bit. Especially since I just passed a threshold for my account at Vanguard and the expense fees on my index funds are now lower. :)
I use it for analyzing purposes and think its great. I just rant the “investment check-up” and received this message: Due to a high level of unclassified assets, we cannot analyze your portfolio with reasonable accuracy. They cant seem to classify my bonds (muni and zero’s) and it falls under the “other” category. That seems silly. I guess because the “other” category is a nice chunk of my portfolio they cant run the check up.
I also took a few calls with them regarding them managing some money. Ultimately I decided not to move forward because they have a very limited track record. I agree, that having a CIO who has a long resume would be helpful. Their philosophy aligns with mine in that 1. they believe in low fees and therefore use almost all ETF index funds and 2. they believe in equal weight and not cap weighted buys, so they allocate money by adding to laggards or companies that market cap isn’t overly a larger % of the index (example not adding $ to apples % of the nasdaq but adding at an equal %) which results in buying low and selling high.
Besides the lack of history, the ETF’s I buy almost all have fees of .10-.50% and I enjoy managing my portfolio. These are the same ETF’s they will buy anyway, but you pay for the execution, advice, and discipline. Also no commissions. Not too bad for 1%. For passive folks this is a good deal.
Interesting that the system is having a tough time classifying your bonds and munis. That’s good feedback which I think they’ll appreciate. They got a feedback box on the dashboard.
It’s all about screening and running pro forma scenarios which I love as a DIY investor.
I’ve tried their site and it seems good for someone that’s very into stocks and bonds. But, as of just a little while ago, they didn’t really have much for tracking real estate assets, rent collections, mortgage balances, etc. So, it wasn’t of much use to me.
Maybe I’ll revisit them in a couple of years to see if they’ve beefed up that portion of their product.
It tracks mortgages, but yes, PC is more geared towards stock and bond investing.
Perhaps they’ll develop real estate investor tools and screens in the future.
I’ll suggest it as RE is a core part of many people’s net worths and retirement strategies.
I’ve mentioned it to them as well before I closed my account. They said they were working on it. I’m not holding my breath, though, especially since their business model is centered around stocks. There’s just no incentive for them to do it, unless they can monetize it. (They’d need to establish partnerships with lenders, turnkey vendors, etc… a lot of work to do there)
But, if they want to do something about it, I’d like to see the following:
* Property valuation updates (maybe an average of zillow and another site combined with some numbers from a CMA)
* Real-time pulls of mortgage balances
* Ability to identify bank line items as “rental income” to track gross rents
* The ability to mark bank line items as “investment” or “expense”. Right now, the online tool I use is horrible and “alerts” me with ridiculous messages like “Large expense detected this month!” and “You are over budget with expenses on your home!” Thanks, Captain Obvious.
* Linking of initial investments with above-mentioned items so that you can track ROI by property, all automatic after this initial linking is done.
Oh, and while I’m at it, I might as well wish for all the children in the world to join hands and sing a song for world peace.
Maybe I’ll build it myself after I retire. :)
A lot of what you requested is available in Mint.
The Personal Capital 401k fee analyzer is a fantastic tool. If you are a participant in a plan, dont be hesitant about letting your employer know about your findings. They often have the largest balance in the plan, so you’ll be helping them as well. Employers are required to benchmark their plan against alternatives annually anyway, so a fresh perspective may be good for everyone
Thanks for the read! I started using Personal Capital a few months ago and love it. I logged in today before reading this post and was elated to see the new tools they have made available. One thing I would suggest. As a 22 year old user, I feel that the road to financial hell is paved with re-occurring costs, and although I love Personal Capital, I would be more apt to pay for their services if they had a scheme besides the 1% of assets managed fee. I have never used a financial adviser, so I don’t know if this is a standard fee, but I do know that over my working career and life that fee would take easily a million dollars from my future net worth, and although one may argue that their services would add more than that, from my position I don’d really see that. Maybe if for a flat rate I could purchase time from one of their advisers, or if I could upgrade to “premium” whatever that would be for x dollars a month. I say this knowing that I may not even be the type of person they are trying to market too since my net worth only broke into 6 figures within the last year. Just a thought, this company is really exciting to me, again thanks for this and all other posts.
A flat rate structure is actually a better deal for those with bigger assets. What I would do at 22 is to simply track your portfolios, study the charts, play around with the assumptions and see what fits you best. Your risk tolerance will change over time so it’s best to stay on too of things.
Have fun! That’s what the PC tools allow. It’s fun to dream of all our riches if we make X return over Y many years. Motivating to keep on track.
This is a great article and Personal Capital is a great tool. PC’s approach is unique, timely and has the potential to play well to a new generation of investors.
I started using Personal Capital because Mint.com wasn’t performing up to par. That said, I was using the platform as an analysis tool and not looking for financial guidance. With tools like Mint.com we take for granted that while we are really putting an incredible amount of personal information forward we assume that no one is really scrutinizing our individual accounts. Not so with PC. PC employees will attempt to contact you multiple times. To be frank, for technology users today, it can be a little creepy to think that there really is a man behind the curtain on the app you downloaded and they are looking closely at your vital statistics. This is not to take away from PC, but I think it is a hurdle they will have to overcome in their attempt to gain momentum.
Another hurdle I think they may need to overcome is the one of personal touch. Regional offices may be the key to awareness and acceptance of this unique model. I am not a HNW individual. So, I am automatically suspicious that the JV is being assigned to my account. Couple that with the experience being impersonal and you have the groundwork for inherent distrust. Sam is spot on that a marketing push with a headline manager might be the momentum needed.
As an aside. I wonder if younger generations have grown to inherently distrust firms like Edward Jones, Morgan Stanley et al. post 2008. If this were true it might be beneficial for PC to look to brand themselves as a different animal.
Good point about Personal Capital not having the legacy baggage of the bigger Wall St. firms post financial crisis. PC can sculpt their brand the way they see fit. But it’s important to do so sooner, rather than later given the sea of well-funded competition. We talked about branding for about 30 minutes in the meeting.
I’m a huge fan of Personal Capital and use it currently (although only as a tracking tool). I think the company has great upside potential and look forward to seeing how they perform. Great article.
A rare chance to get up close and personal with a CEO, so definitely interesting.
Sounds like you had a great box of macaroons. Oh, was there more to this post than that?
I think Personal Capital has really brought a lot of desirable features to the table with the fee analyzer as well as being the investment version of Mint. Of course the money is to be made from the assets under management. As you have said branding and exposure is really what will grow those assets. Best of luck with the future affiliate relationship and possible private equity deal (naturally we’d all love to know the details of that).
As a writer, I thought it’d be fun to throw in the macaroons provided, in the post. I shot PC a Tweet saying I was on my way down and hope they provide cookies. Macaroons are close enough!
They won’t want my piddly private equity money. They’ve got the big boys jumping in already. I just like to approach companies with an investor’s mindset as well. Makes me think critically of different things.
I should clarify to say “private equity deals” so as to express the desire to read about any you might be involved in. You have tremendous connections, resources, and access out there on the west coast and could give an outstanding view of how these deals go down, and your viewpoints on why it is a great investment or not.
OP – I too would enjoy a write up of any current or past pe deals you have looked at and the resulting analysis there of. As it seems that most PE firms (and angels) bring either money or connections (and usually both) to the deal. In addition, I would be interested in hearing how one gets to that point where they could do PE or angel investments.
Hi Guys, the issue with private equity investments is that it’s private. Private companies don’t want to disclose their financials to the world and to competitors. Also, many of these deals are limited to only accredited investors, which I fear will ostracize and maybe anger people for the exclusion. A private deal analysis is much like a public company analysis, just with more assumptions.
Definition of accredited investors:
1) A natural person who has individual net worth, or joint net worth with the person’s spouse, that exceeds $1 million at the time of the purchase, excluding the value of the primary residence of such person;
2) A natural person with income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year;
Hey Sam,
Enjoyed the piece on Personal Capital. I have explored the possibility of becoming one of the advisors you speak of. Couple questions here:
1. Why wait if you’re Blackrock?
2. In your opinion how does Personal Capital compare to Betterment, Learnvest, etc.?
Cheers,
Julian
You’ll enjoy my upcoming post on financial advisors this week. Stay tuned!
1) Allocation of resources probably. PC is still very small, so BR may simply be waiting to see if they gain traction before taking a bigger stake. I’d say the $1 billion managed assets mark is when Blackrock and other big wealth management companies will start taking more notice. Then of course it’s getting existing shareholders to sell. If they think PC can grow to multi-billions managed assets, then selling too soon is suboptimal.
2) PC allows more DIY opportunities given its tools. A lot of finance is about spending the time to understand things on your own and discovering your risk tolerance. I’ve not used Learnvest and others before.
Hi Sam,
You mention that PC is small. Not surprising as they are around only since 2012 I believe. Even though their fees are lower I am researching their stability as a business as I have another 20 years to go to retirement and want to make sure whoever I invest with will be around. Morgan Stanley has been around since 1930’s with a proven track record, what’s the best way to assess the longevity of PC and the risk involved in moving my retirement accounts to PC?
PC just celebrated its 11-year anniversary and now manage $11 billion AUM and track $500billion with their free app. I would sign up for their free app first and see if you like their tools. Then get a free consult.
Thanks for the great info! I’m headed over to do the 401(k) Fee Analyzer now…