We’re all suckers for flashy graphics and cool technology.
And once in a while, a service like Personal Capital comes along to remind us why eye candy and tech-powered simplicity is a groovy combo.
And speaking of suckers…
I’m a sucker for comprehensive reviews of personal finance tools. I did this with Manilla.com, Quicken and Mint.com through Start Investing with $100, and I’ll keep reviewing tools to be money wise because they’re so darn helpful.
Today, I’m taking Personal Capital for a spin. But before we get started, I recommend listening to Personal Capital’s CEO, Mr. Bill Harris, explain its benefits in his recent Smart and Simple Matters interview.
With that housekeeping done, it’s time for the good stuff. This review is perfect for people who:
- Are comfortable with online aggregators or have already used a service like Mint or ynab.com
- Have a somewhat to totally complicated financial life
- Are highly visual and like complex data simplified
- Would rather have a human manage their money than an algorithm (e.g., Wealthfront or Betterment)
- Focus on long-term financial health
Use the jump links to navigate to different sections of this Personal Capital (referral link) full review and decide if their services are right for you.
(This is also a great time to download the tools that I and countless others use to simplify, organize, and be money wise).
- Free Sign Up… in 49 Seconds?
- The Dashboard: Holy Colors and Interactive, Batman!
- Accounts and Transactions
- Taking It to the Bank
- Investing: Now We’re Talking (and Acting)
- How Personal Capital Makes Money
- What’s the Catch?
- Is Personal Capital Worth It?
Personal Capital Free Sign Up… in 49 Seconds?
The bottom of Personal Capital’s home page says:
Making sense of your money takes only 49 seconds. Click here to sign up for our free money management software.
Well, that’s a specific and a bold claim!
Turns out the claim is true as my sign up process took 47 seconds.
After confirming my user ID, password, and phone number – which a Personal Capital Registered Investment Advisor (RIA) will use to call you if you link accounts worth over $100,000 – I was done.
Now it was time to get crackin’ on the first thing people normally do after signing up: linking financial accounts.
Get Cracking: Initial Use
Personal Capital aggregates your financial accounts with credit card companies, banks, or investment companies similar to other aggregators like Mint, Manilla, Yodlee, or Quicken.
Here’s what their account linking process actually looks like:
1. Click on the “+” icon in the My Accounts section of the page.
2. Enter the financial company name or their website address.
Note: consider adding your home value, investments you can’t automatically add, or your car/jewelry/art collection value for a more complete financial picture.
3. Enter your log on information and click “Continue.”
Note: additional security information like your challenge questions or secondary verification items may be necessary.
4. (Optional) Click on the pencil icon in the My Accounts section and then edit any details of the imported account.
In this example, I changed the Account Name field (which displays in many places) from the prepopulated text to something meaningful.
Profile Settings You Care About
Hover over your email address at the top of the page and click “Profile” in the drop-down to explore your settings.
I’d encourage you to check the “Weekly” box in the Profile Alerts to get a weekly email from Personal Capital about your financial activity and investment performance.
Nifty stuff is available like the change to your account balances and net worth, bills coming due, linked accounts that need attention, and more.
And now for the bread-and-butter of Personal Capital, starting with the dashboard.
The Dashboard: Holy Colors and Interactive, Batman!
The first thing I noticed with the Personal Capital dashboard is how visually striking it was. Once I got past being dazzled with a snapshot of my net worth, cash flow, portfolio balances, and portfolio allocation, I noticed another theme: cursor hover effects and general interactivity.
(Don’t tell anyone, but at one point I just started hovering over everything… just to see what would happen).
Accounts and Transactions
There’s a lot to like in the transaction section. For example, I dig the fast transaction searching and sorting by date, financial account, category, tags, or dollar amount.
What I don’t dig is their prepopulated transaction categories which you can’t manually change. And the tags aren’t very useful because you can only assign them based on four prepopulated values (Business, Medical, Reimbursable, and Tax Related).
Bill Harris told me that this simplicity is intentional though. So prepare to be disappointed if you’re looking for Mint or Quicken-style transaction micro-management.
Taking It to the Bank
As a former Mint user and longtime Quicken power user, Personal Capital’s Banking section falls short.
To their credit, tracking or reporting cash flow and bills isn’t Personal Capital’s focus. It’s just a value-added service so you can get your minimum needs met without using another aggregator.
But where Personal Capital really excels is at investing (which you’ll see in a moment).
Investing: Now We’re Talking (and Acting)
I signed up for a Personal Capital account primarily to see if the reviews I read about their investing tools were accurate.
The short answer is: yep!
The long answer is: it depends.
The first thing you see is the rolling performance of your linked investments – The “You Index” – versus the S&P 500 Index.
You can tweak this visual in many cool ways like:
- Clicking the tabs for “Dow,” “NASDAQ,” and “10-Yr (U.S. Treasury) Bond” to change the benchmark.
- Clicking the “All Accounts” drop-down to change which linked accounts are analyzed.
- Changing the date range to see your investment performance over different time frames.
I wanted to understand more about this “You Index” thing though. According to Personal Capital:
The ‘You Index’ is the performance of all of your current stock, ETF, and mutual fund holdings for which we are able to retrieve a current price on a public market, extrapolated backward. It does not include your cash, money market funds, individual bonds, options, or other alternative [investments].
Basically, it’s an incomplete (but still valuable) performance reference point.
If you scroll down to your actual holdings, you can sort by number of shares, price, value, and a few other things. Unfortunately, I’m bummed that I can’t delete columns I don’t care about or add columns of more meaningful metrics to me.
But as I played around with the Allocation tab, I found very colorful asset allocation information.
The awesome thing is that I can drill down on each asset class for more detail.
For example, I’ll see the breakdown between developed countries like the U.S. and emerging market countries like Vietnam if I click on “Intl Stocks.”
I can drill further if I click on “Developed” to see the breakdown of developed county assets across my various mutual funds.
Minor beef: Personal Capital classifies real estate assets like a Real Estate Investment Trust as an “Alternative” investment. Gold and commodities as alternative investments? Sure. But real estate? That’s standard stuff in my opinion.
Doctor: Are My Investments Healthy?
I’ve never seen a tool like the Investment Checkup one in all my years of using personal finance systems.
The utility is contextual though as Personal Capital identified good things and bad things about my investments, along with highlighting legitimate concerns.
Pro tip: Personal Capital won’t have a full picture to make actionable recommendations unless you link all your financial accounts and/or manually manage them. Kudos to them though for acknowledging this limitation when you click the “Add Account” button.
Only some of my financial accounts are linked and I can see why they called out certain “risks” that are actually non-issues with the full picture.
Yet as I ran through their analysis, they told me that my asset allocation is “Mostly Unbalanced” based on my target allocation. I assume they automatically set my target allocation based on my age, retirement window, and risk tolerance… but I’m not sure.
What surprised me most was that I was flagged for having more than 25% of my portfolio in mutual funds.
The note tells me that mutual funds often have high fees, large embedded costs, and are highly tax inefficient (all true). But all my mutual funds are low-cost index funds that are inherently tax efficient.
Note to the programmers: analyze my investments deeper to know your warning isn’t valid for me. Speaking of analyzing…
401(k) Fee Analyzer: What’s Lurking in Your Plan
I haven’t had a 401(k) since I gave up the “good life” for a great life. But my wife Melinda has one, so I linked hers to play with Personal Capital’s 401(k) Fee Analyzer.
I know that the threat from excessive 401(k) management fees and fees within your investments is real. But Personal Capital should present information that leads to me knowing what action(s) I might take to reduce my excessive fee risk.
How Personal Capital Makes Money
So you signed up for free and now wonder:
How do these guys make money?
Personal Capital’s main income stream is from having their RIAs manage your assets on a sliding scale.
The fee structure is transparent and competitive with most RIAs (who charge 1% or more of assets every year). But I was contacted by one of their RIAs three times by phone and once by email without opting-in to their RIA service.
That bothered me.
An alternative to the Personal Capital human touch and a different fee structure are impersonal services like Betterment.
The trade-off is that Betterment won’t help me manage my deeply emotional relationship with money like a Personal Capital RIA will.
One thing’s for sure though. You and your friends can make money from Personal Capital through referrals.
They give you $10 and your friend $10 when signing up through your referral link (yep, that’s my referral link) and linking two financial accounts.
What’s the Catch?
I don’t see any major catches with Personal Capital.
They seem to have their bases covered with data security, support, and disclaimers about partners and third party software (although you have to dig to find everything).
Is Personal Capital Worth It?
I can see Personal Capital’s non-RIA services being useful for anyone, even people outside their age 35-65 sweet spot or without $100,000 in assets.
However, a great New York Times blog post comment is worth paraphrasing. The commenter said:
Personal Capital offers a streamlined, web-based service instead of an in-person full-service experience… but there is little difference in the fee structure. If I can get the same service in-person for 1%, I’m not sure a slight fee discount would make it worth my while. Also, many people I know have a big chunk of their money tied up in 401(k)s and/or homes – things we can’t turn over to an asset manager [like Personal Capital]. [I want] someone whose focus is meshing all of the parts together vs. just managing the non-401(k) part.
Despite this valid comment, I would recommend Personal Capital if you fall into any of these categories:
- You aren’t satisfied with Mint.com or other similar services’ investing functions
- You appreciate transparency and not being bombarded with upsells
- You like pretty things
- You want to stay at home and still get professional wealth management help (since RIAs are available via phone, video chat, and email)
- You value robust data security and privacy
- You’re a big picture thinker with an appetite for (optional) specifics
- You use mobile apps a lot (since their Apple or Android apps are pretty good)
My bottom line: Personal Capital is the most visual and interactive personal finance tool I’ve ever used. I’m a black and white “put it in a spreadsheet” kind of guy, but even I was dazzled by how pretty and functional the experience was.
Even without speaking directly to Personal Capital’s CEO, the $50 million they’ve raised in funding means they’re determined to constantly improve an already solid service.
I say sign up now and give them a try.
Now it’s your turn to review this Personal Capital run down.
How was this review helpful? Do you have experience with another product or service that could be compared to Personal Capital? Leave a comment and share your insight!