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Personal Capital Review – Free Online Financial & Portfolio Management

by Ryan Guina

Investing can be tricky. I’m not referring to advanced investment strategies, binary trading, and things like derivatives, which virtually no one understands. Investing can be tricky even if your investment portfolio holds nothing more than a sampling of index funds, bonds, and handful of individual stocks. Taken by themselves, each of these investments is easy to understand. But it can be difficult to understand how everything fits together.

Unless you have access to professional investment tools or are willing to spend a monthly fee for some of the premium consumer tools, you are probably kept in the dark on how your investments fit together. But PersonalCapital.com is changing that. Personal Capital is a financial startup similar to Mint.com, a well known, free money management tool. But Personal Capital is much more powerful than Mint.com – especially for investors. And the best thing? It’s free to use. I recently opened a Personal Capital account, and I’m happy to share its features with you today, including the problems it solves,

Why Managing Your Investment Portfolio is so Difficult

Personal Capital Dashboard

The biggest problem I have with investing is understanding how my investments fit together. It’s important to balance your investment portfolio once a year, or whenever you have a major life change. But that can be a time consuming process when your investments are scattered across several accounts. The average worker changes jobs 10 times by the age of 42. That leaves the opportunity for multiple 401k plans or other employer sponsored retirement plans, multiple IRAs, taxable stocks and bonds, brokerage accounts, and other investments. Seeing all of these investments in one place can be difficult. More importantly, there is often overlap between some of the index or mutual funds you own. Here are some of the typical problems experienced by investors like you and me:

  • Many different investment accounts (IRA, 401k, brokerage accounts)
  • Difficulty of understanding how multiple mutual funds affect portfolio balance
  • Difficulty of seeing all financial accounts in one place (investments, and cash accounts)

Thankfully, there is a solution to all of these problems – and it’s free.

Personal Capital – Free Portfolio Management Software

Personal Capital – Free Portfolio Management SoftwarePersonal Capital is the best free money management tool I’ve seen. Let’s take a quick overview, and then I will dive into more details on some of the features.

  • Cash Manager. See all your income and expenses in one place.
  • View all financial accounts in one place. Quickly and easily sync your banking and investment accounts and receive automatic updates of your holdings. You can also track your credit cards, spending mortgages, and other loans.
  • Track fees and expense ratios. Mutual funds have different fees and expense ratios, making it difficult to calculate how much you are paying for each investment. This is a huge benefit for people with 401ks.
  • Detailed asset allocation. See how all of your investments work together (this feature was previously only found in expensive paid software programs)
  • Asset allocation alerts. Set your preferred asset allocation and receive alerts when your holdings fall outside your desired balance.
  • Mobile apps. Personal Capital currently offers apps for the iPhone and iPad. The Android is likely soon to follow.
  • And more.

Personal Capital Cash Manager

Personal Capital Cash Manager

Track your income and expenses in one place.

The Personal Capital Cash Manager is great as a budgeting tool and to help you visualize how much you have coming in and going out each month. You can give descriptions to each transaction, and the system will remember them the ext time they are entered – saving you time, and helping you accurately track your savings money in and out.

View All Your Investments & Accounts in One Place

The Cash Manager described above is similar to many other budgeting tools, but Personal Capital shines where many other software programs fall short. Most of the financial tools out there are geared toward budgeting, and while they allow you to track your investments, they don’t always offer much insight to their performance, fees, asset allocation, and similar details. And those details are essential for investors.The screenshot below is the Dashboard, which gives users the ability to see a bird’s eye view of their spending, investments, recent investment performance, net worth, and more. (Note: These screenshots are from a test account, not mine!).

Personal Capital Dashboard

View all your investment details in one place: asset allocation, performance, and more

Personal Capital allows you to sync your investment accounts and view their performance in real time values.

Monitor Investment Costs and Expense Ratios

Each mutual fund has an associated management fee. This is unavoidable and helps cover the cost of running the fund. But not all expense ratios are created equally. In most cases, you want to minimize the fees you pay as much as possible. Personal Capital helps you see exactly how much you are paying in fees across the board, helping you make an informed decision about the investments you are holding. Their 401k Fee Analyzer is very valuable for people who have a 401k plan, as many 401k plans are difficult to optimize due to limited investment options, and fees which aren’t always easy to understand. This tool help you maximize your returns by reorganizing your investments into funds which have similar holdings and performance, but lower expense ratios.

Detailed Asset Allocation Reports

Understanding the total asset allocation of my investment portfolio is one of the biggest problems I’ve had while managing my investments. I have multiple retirement accounts (IRAs, solo 401k, Thrift Savings Plan), my wife has retirement accounts, and we have some taxable investments in the form of some mutual funds and individual stocks. Each of the funds in our accounts is made up of multiple stocks, bonds, and other funds. While we try to keep things optimized, there will inevitably be some overlap in our holdings. Using Personal Capital was an eye opener for me, and I’ve already taken some action based on how my investment portfolio was previously allocated.

Personal Capital Investment Checkup

This is an example asset allocation of a 40 year old with an “aggressive” risk tolerance.

The above asset allocation example shows a portfolio that needs some attention based on the user’s age, holdings, and risk tolerance.

Asset Allocation Alerts

When you create your Personal Capital account, you fill out your age, investment timeline, and investing style (very conservative, conservative, moderate, aggressive, and very aggressive). The asset allocation tool within Personal Capital assigns you an asset allocation based on these inputs. You aren’t able to modify this, which is fine for most investors, but could be seen as a limiting factor for some more advanced investors. You can set up daily or weekly alerts and you will receive an update if your asset allocation falls outside of the preferred allocation recommendations.

Additional Benefits and Tools

Here are some more benefits for Personal Capital users:

  • Portfolio Performance
  • Asset Allocation
  • Mobile Apps
  • Investment Checkup
  • 401k Fee Analyzer
  • Mutual Fund Fee Calculator
  • Universal Checkbook – like online bill pay, but directly from your Personal Capital account
  • Real-time updates
  • Educational Videos for creating an investment strategy
  • Personal Capital 401k plan – they run a 401k plan for small businesses.
  • Security – they utilize military grade algorithms and require you to register each computer you use. (I even had to register again when I used a different browser on the same computer).

How is it Free?

Personal Capital is a free tool, but they do have a business plan in place. They are listed as a Registered Investment Advisor (RIA), which means they are able to offer financial advice. To qualify for these services, you must have at least $100,000 in assets, and you would have to pay a fee to use this service. Two important notes here:

  1. This is a non-obtrusive feature. If you have over $100,000 in assets a financial manager will reach out to you, but that is as far as they go. They don’t hound you or constantly upsell you on services. If you want to use the service, it is there for you. Otherwise you won’t hear about it again. That’s a great feature you won’t find with many other free services.
  2. Objective advice. Being an RIA means they have a fiduciary duty to give you the best financial advice for your situation, not the advice which nets them a bigger commission. One of my biggest gripes about the financial planning industry is that brokers don’t always have a fiduciary duty to their clients. Some of them are more concerned about their interests instead of their clients. That is not the case with Personal Capital (from their site):

Objective Advice. The sorry truth is that bankers and brokers are motivated to help themselves, not you. They are salespeople paid to push products, earning commissions and kickbacks when they do. In stark contrast, Personal Capital is an investment advisor. We accept a fiduciary obligation to act in your best interest, and our advice must be aimed at making money for you, not for us.

That is music to my ears, and makes me comfortable recommending this service to my friends and family.

Investment Management Fees

Again, using Personal Capital’s wealth management feature is completely optional, and there is no hard sell to do so. If you wish to use their services, you will have to pay an annual fee based on the amount of your holdings, which is a common compensation model. As always, you will want to shop around to find the right choice for your investment style. Here are the annual fees Personal Capital charges for their investment services:

  • $0 – $250,000 annual fee = 0.95%
  • $251,000 – $500,000 annual fee = 0.90%
  • $500,001 – $1,000,000 annual fee = 0.85%
  • $1,000,000 – $5,000,000 annual fee = 0.80%
  • Greater than $5,000,000 annual fee = 0.75%

Personal Capital vs. Mint

Mint.com is the most popular online money management tool, and several people have asked me how the two services compare. They are similar in that they both give users the ability to track their income, expenses, investments, and net worth. However, Mint.com is more geared toward budgeting and managing spending. Personal Capital also does has cash management features, but also gives investors much more insight into their investment portfolio. Here are some more differences:

  • Mint.com: Primarily focused on budgeting and tracking spending.
  • Mint.com: Not much insight into investments, including asset allocation, expense ratios, and alerts
  • Mint.com: lots of upsells for different financial products and services.
  • Personal Capital: Investor focused;  tools are geared toward tracking investments and balancing your portfolio.
  • Personal Capital:Receive alerts when your portfolio falls out of balance.
  • Personal Capital: Ability to hire a financial planner to help you with your investments.
  • Personal Capital: Track your investments and net worth in real time.

How to Open a Personal Capital Account

Personal Capital free asset allocation reportOpening an account is free and easy. Simply go to their website, and open a Personal Capital account. It is free and secure (they use military level security, according to their site). When you open your account, you will be prompted to enter an email address (no name is required; your account is only tied to an email address).

After opening your account, you will need to link a banking or investment account, and you will begin to see your data in the dashboard. You can link multiple accounts including banking, investments, mortgages, credit cards, loans, and more. Then you will need to fill in some basic personal information, including your age, and your risk tolerance. After that, Personal Capital does the rest.

Notes about linking accounts to Personal Capital: I only had trouble linking one account: I wasn’t able to link my TradeKing account, as they didn’t have an automated way to link that account. I can add the assets manually. Some of the other accounts required additional authentication. For example, ING Direct requires a code to allow third party sources to access your account. You can find this in your ING Direct dashboard. Finally, another company I bank with requires account holders to enter answers to security questions when they access the account from a new computer. So I would need to enter each of the security questions when to update the account.

My Verdict – Coolest Investment Tool on the Market

I’m a self-admitted financial geek. I read and write about personal finance on a daily basis, and I try out as many tools as I can. I my opinion, this is the biggest game changer in the financial industry since Mint.com launched. And that is high praise. As I mentioned earlier, this is a tool I am comfortable recommending to family and friends, and I think it can change how many people manage their investments. I’m all-in on Personal Capital.

Visit the Personal Capital website to learn more or to open an account.

Have you used Personal Capital? What are your thoughts?


Published or updated June 21, 2013.
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{ 5 comments… read them below or add one }

1 Manette @ Barbara Friedberg Personal Finance

There are many portfolio management tools available in the market that it is already confusing which among them will be most advantageous to us. I can see how diversified Personal Capital is; hence, I would like to try it and see for myself how it differs from other portfolio management tools. Thanks for sharing!

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2 Ryan Guina

I highly recommend this tool. I’ve spoken with several financial planners and they said it was comparable to tools they spend hundreds of dollars a year on. A tool like this is great for DIY investors and people who know enough to stay out of trouble, but don’t want to spend hundreds of dollars a year on more advanced tools. To be clear, it isn’t advanced as some of the other tools, but I think it will be more than enough for the average investor, and even good for many more advanced investors. The biggest downside I’ve seen is the lack of customization for asset allocation, and the inability to link some financial accounts (but the data can be manually entered). Overall, it’s a great tool, and the price makes it even better!

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3 Christine

I would LOVE to use something like this, however, I’m concerned about giving any 3rd party that much information. If you could explain why I shouldn’t be, I’m ready to be convinced.

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4 Ryan Guina

Christine, based on everything I’ve read, their security is top notch. Their CEO is Bill Harris, who is the former CEO PayPal and Intuit, which owns Quicken, Mint.com, and TurboTax. He has also founded several financial technology and security companies. Here is the Personal Capital security page. Overall, their security appears to be bank level or stronger. I don’t have any reservations about using their service.

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5 brad

just fyi, both vanguard and fidelity offer very similar tools, if your assets exceed a certain level. vanguard will give you a free portfolio analysis, personalized by phone, if you top a certain level, every year. no upselling.

vanguard’s website will consolidate all of your assets onto one page for easy viewing. as well. same for fidelity..

i have my accounts full listed at both. they are very similar. but i might try personal capital as well, for comparison.

the higher your assets, the more cool tools and freebies you start getting at vanguard and fidelity. ive had a fidelity account since the early 80s, with a free credit/debit card. full history. free billpay etc.

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