I signed up with Personal Capital a couple of months ago to see what the hoopla was all about. I’ve seen it touted about in the personal finance space for at least a year now. But I generally don’t use a lot of tools outside of what my brokerage, Scottrade, offers. I find it not that complicated or time consuming to manage a dividend growth portfolio, even as one as large as mine in terms of total securities owned.
However, I did some research into Personal Capital before I signed up to see if there might be any benefit there.
Turns out it’s completely free to sign up and use their services. And the services they offer appeared to be fairly robust across the board. I like free. And I like robust. So I figured I’d give them a whirl.
Well, I’ve used them long enough to give a fair review of their services. And I can report that, as a free investment management tool, it’s a pretty solid service.
Introduction
When you first sign up, Personal Capital, like other financial aggregators, will ask you to input all of your accounts so that it can display all of them in one location. So, when I signed up, I added my brokerage account, bank account, credit card accounts, and student loan account. You can manually add in items that may affect your net worth, like a car or home, as the service will track and display your net worth for you on your main dashboard.
Security concerns are valid, but PC states it uses security standards that are equal to or better than what’s used at top-tier financial sites. And no single employee at the company has access to any user’s credentials.
The main dashboard is your main screen. It has value as it has the ability to show your entire financial life in one spot. I find that pretty attractive. And it gives you a quick snapshot of your entire net worth. My net worth is pretty easy to track since I don’t have a lot of assets outside of my investments, nor do I have many liabilities.
Portfolio Management
However, I think where the company shines, and where you DIY investors out there will probably find the most value, is in the portfolio management tools.
You’ll notice four main tabs at the top of your navigation screen inside of your account: Accounts, Banking, Investing, and Advisor. Most of my experience is with using the Investing tab, and that’s where the focus of my review is going to lie.
For those interested, the Accounts tab is where you can go back to the main dashboard and access your net worth, as well as access any transactions that were sourced electronically. The Banking tab is where you can access your income and spending, and budget accordingly. The Advisor tab is where you can set up a consultation and relationship with a Personal Capital financial advisor.
Once you click the Investing tab, you’ll land on the main dashboard for that area of the site, which will show all of your holdings, as well as a tool that’s designed to track your portfolio against a number of benchmarks. I don’t really find this tool particularly useful, as it doesn’t seem to be particularly accurate. It just attempts to take price changes of stocks you hold and extrapolate them backwards.
The main numbers you’ll see are whatever price changes your portfolio registered for the last trading day, as well as what a number of other benchmarks registered. Obviously, day-to-day comparisons aren’t really all that valuable or insightful. It’s an interesting graphic, nonetheless.
Asset Allocation
Going over to Allocation will show you how you have your stocks allocated as it pertains to asset classes including cash, international bonds, US bonds, international stocks, US stocks, and alternatives. Your REITs will likely fall under alternatives.
The US Sectors subsection will show you how you have your US stocks allocated across the major sectors of the economy. I don’t personally aim for tight numbers here. I can tell you, however, that, over the long term, I’d prefer to have at least 25% of the portfolio allocated to consumer defensive and consumer cyclical stocks. The other sectors are negotiable in regards to exposure, overall. If I had to think of a “perfect” allocation, I’d probably like to see 30% of the portfolio allocated to consumer defensive and cyclical, 15% to healthcare, 15% to industrials, 10% to energy, 10% to financials, 10% to REITs, 5% to telecommunications, 2.5% to basic materials, and 2.5% to technology. I’m actually not that far away from this model, though I am overallocated to energy right now.
So I think it’s worthwhile to sign up for the service so as to have a central place to view all of these allocations. My brokerage offers a similar tool, so I don’t find a ton of value in this. But I think Personal Capital is by far more beautiful in its presentation and visuals. And that seems like it’s more than worth the price of admission to me.
Budgeting And Cash Flow Management
However, Personal Capital offers a lot more. For one, they offer budgeting services whereby all of your accounts that are linked to the site run through the cash flow aggregator which tells you exactly where your money is coming from and where it’s also going. I’m a huge fan of budgeting, though I find their service in this department lacking in comparison to my old standby, Mint. I personally find Mint easier to use insofar as budgeting cash flow. But I see nothing wrong with using both sites for differing services, as Mint offers basically nothing that’s robust for managing investments. And they’re both free for my intents and purposes.
And you may very well find Personal Capital easy to use in regards to managing cash flow and budgeting. I guess I’m just biased since I’ve been using Mint for the last five years. I do, again, find Personal Capital much more beautiful in its presentation. It also seems to be less “glitchy” than Mint. I love Mint’s service, but it seems to have occasional issues with linking up with accounts, downloading transactions, duplicating transactions, etc. I’m on Mint every few days, so I’m always there to catch any errors.
Financial Advisors
The site also offers a plethora of other services as well. Those include a 401(k) account fee analyzer, where they’ll analyze your retirement account(s) to see if excess fees are seriously dragging on your performance (they likely are).
They also offer fee-based personal financial advisors. Those fees break down as follows:
$0 – $100,000: 0.89%
For clients that invest more than $1 million, the fees break down further:
First $3 Million: 0.79%
Next $2 Million: 0.69%
Next $5 Million: 0.59%
Over $10 Million: 0.49%
So these fees and this service will likely not apply to anyone reading this article, but I wanted to give a complete picture of their available services. It should be noted that if you sign up for Personal Capital and you have more than $100,000 in investments, a financial advisor will attempt to contact you. If you’re like me, these conversations can be easily avoided. However, if you find value in that, Personal Capital will take the first step.
Conclusion
Overall, I think this is a solid service. I’m using it as another tool in my arsenal and it’s cost me $0 since I signed up. I don’t know what more you could ask for in regards to paying no money and getting access to some pretty robust tools that are also easy on the eyes. I wish the performance tab was somehow made to be more accurate, but I think it’s probably impossible to come up with some kind of software that could extrapolate everything backwards with substantial accuracy. The budgeting side of the house could probably be improved as well, but perhaps I’m just too comfortable with Mint.
Personal Capital is probably hoping you’ll sign up for their financial advisor services, but it’s completely unnecessary if that doesn’t interest you (and it most likely doesn’t). Other than some initial contact from the company, Personal Capital doesn’t constantly exert pressure on you via a barrage of offers. I find that refreshing.
I wholeheartedly recommend the service as I’m currently using it, which is as a free service to visually manage a portfolio. It’s certainly not obligatory, as I’ve been doing just fine for years without it. But I don’t think you’d go wrong trying it out.
Have you used Personal Capital? What do you think?
Thanks for reading.
Photo Credit: Personal Capital
Note: If you sign up for Personal Capital using any links I’ve included, I may receive a commission, depending on the size of your account. However, as always, I only recommend what I’ve personally used and benefited from.