With its many powerful and user-friendly tools, Personal Capital makes it easy to manage all of your financial accounts in one place. And many of them are free. You can track your income, your expenses, your savings, and you can even manage your investments (such as mutual funds and IRAs).
Personal Capital also offers financial planning services to its customers, but it’s not for everyone. You have to have a total net worth of at least $100,000 in order to use this service. So, it’s clear that the company is targeting people who have more cash in the bank. **Update: They have recently reduced the limit to $25,000.
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What They Offer
If you are able to qualify, Personal Capital’s financial advisors can help you in a variety of ways. They can help you manage the investments you already have with:
- Asset allocation
- Tax-loss harvesting (helps to reduce your taxable investments)
Bear in mind that this is an optional service, so you shouldn’t feel obligated to use them or their advice if you don’t want to. But you should expect a call from them within the month once you hit that $100,000 mark.
How Much They Charge
Like most financial advisors, Personal Capital charges a percentage of all the Assets Under Management (AUM). This fee might be worth it if you prefer to have someone else manage your portfolio. Of course, that still means you have to play an active role in the process.
Some investors prefer a more hands-on approach. They like to look at the charts themselves, weigh the risks and make their own decision on what they should invest. If that’s the case with you, then you most likely won’t find much value in this service.
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Investment Alternatives for the Little Guy
It’s clear that Personal Capital’s financial planning service will not work for the small-time investor. Instead, it is for someone with a larger net worth, who is looking to get more returns out of his or her portfolio. Fortunately, there are some investment alternative options that could help the little guy get a head start in the market.
With no minimum balance and a simple interface, it’s clear that Betterment has been built with the new investor in mind. It has wide range of automation tools that performs both asset allocation and portfolio rebalancing, and if offers a good variety of assets that can help investors get a leg in the market.
In addition to mutual funds and ETF’s, they also sell stock market shares, bonds, and retirement accounts. All of these can help you build a portfolio that can continue to perform in the long term.
Motif Investing offers a very great and unique style of investing, as the site organizes groups of 30 stocks and ETF’s into what they call “motifs.” They are often grouped by industry, which can be an advantage if you want to focus on a particular market or business(of course, it’s always good to diversify).
You can purchase each motif for the price of $9.95 a piece, which allows you to build a sizable portfolio for a small upfront investment. You even have the option to build your own custom motif, which you can share with other people on the site. However, this type of customized trading has different prices and rates, and it can cost a lot more money than what you may find with other online broker companies. Every time you swap one asset in a motif for another, you have to pay an amount of $4.95 a piece.
You do have to bear in mind that there is a minimum balance to get started, but it isn’t very high. You need to have at least $250 in your account to start investing, but other than that it’s free to sign up.
While it’s clear that Personal Capital’s financial advisors are not designed for the small-time investor, they can help people who are already performing in the markets manage their investment decisions better than if they were to make them on their own. This may not be the case for the more active trader whose interest is to take a more hands-on approach on things.
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3 thoughts on “Are Personal Capital’s Financial Advisors for the Small-Time Investor?”
Most of the people who invest in these robo advisors would be much better off and retire sooner if they bought a low cost all equity etf than paying a robo advisor that’s essentially a low cost target dated fund. But I guess some people really like working longer and retiring with less money.
+1 for Person Capital. I’ve been using the managed service for a little over a year now and couldn’t be happier. The customer service is excellent and every time I’ve talked to my account manager it’s been a two-way conversation. They definitely want to understand my goals and help me work towards them.
Also, the web dashboard is great for viewing net worth and cash flow. I had used Mint previously, but find the layout on PC to be more like how my brain works.
Definitely a +1 for Personal Capital. I’ve been a client with their managed program for about 3 months and couldn’t be happier. I switched from Morgan Stanley. I have a very well balanced portfolio and a good relationship with my Personal Adviser who does a great job of understanding my goals and needs and responds quickly to any request. I recently had a need for some additional tax loss harvesting and called him to make that request. It was done the next day. Good luck getting that with a blanket ETF.