Personal Capital Broker Review

|


Founded in 2009 as SafeCorp Financial Corp, the broker’s name was changed to Personal Capital in 2010 and the company launched publicly in September 2011. The firm is registered with the US Securities and Exchange Commission (SEC) as an investment advisor since 2011.

The founders of Personal Capital, which has its headquarters in San Carlos, California with offices in San Francisco and Denver, states that it has one goal in mind: “to build a better money management experience for consumers. That’s why we’re blending cutting edge technology with objective financial advice. We believe this is the best way to empower individuals and their money.”

 

 

The company has some 1.9 million registered users and has $625 billion in tracked accounts and $8 billion assets under management.

Personal Capital is not a traditional brokerage firm and has no offer for individual traders to use platforms to invest in the markets themselves. Clients have access to a range of financial trade tools to bring all their accounts into one place so that income, expenses and net worth can easily be tracked. All of a client’s financial brokerage accounts can be aggregated and is effectively an online budgeting service where bank accounts, mortgages, credit cards, auto or other loans and investment accounts are brought together. There is a set of tools and resources provided by the company, so investment portfolios can be managed as well as retirement planning and asset allocation.

Personal Capital services for these are provided free of charge and may be a useful way of pulling together all an individual’s finances with the ability to get a broad overview of how everything is performing.

Products and trade offers

It is worth reiterating that Personal Capital is not a stockbroker that offers clients the products and platforms to trade on the markets. It is a registered investment advisor, which stockbrokers are not, and offers the aggregation of financial accounts along with the tools to keep on top of budgeting and monitoring finances.

In addition to its free services, the company offers an optional asset management service. Clients are under no obligation to use these and the firm’s business model is to provide the free services to help attract site users who are more affluent and have money available to invest.

As well as the ability to bring all financial accounts under “one roof”, Personal Capital has experienced financial advisors to help clients avoid the mistakes that can often be made by “do-it-yourself” investors that, over time, can cost them a lot of money. That is not to say that individual traders using a brokerage platform for investing in products such as forex, CFDs, indices or commodities will be unsuccessful. Many are but there are high risks involved for those less experienced, especially in products that are leveraged.

Some advisors who are brokers might have a conflict of interest as they have an incentive to sell high-fee products to clients, whereas Personal Capital’s advisors specialise in money management for institutional clients and high-net-worth individuals and do not sell products such as insurance.

 

 

Broker Commission Rate

One of Personal Capital’s most attractive features is that it does not charge for its financial tools and many potential clients are likely to find this appealing when they want to draw all their accounts together to get a comprehensive overview of what their net worth is.

For clients who do not want to do their own trading by using a broker platform to invest and speculate on the markets, the asset management option provided by Personal Capital is an attractive route to explore. Naturally, there are fees for this option because clients will have their own personal manager to discuss goals, risk appetite and what will best suit the client’s long-term plans.

An all-inclusive annual management fee is charged, and the company states on its website that this “at a fraction of the cost of traditional banks”. With no hidden fees or trailing fees and with no commissions on trades, clients know what they will pay without the uncertainty when it comes to playing the market as an individual trader.

The fee schedule for the first $1m invested is 0.89%, and there is a minimum of $25,000 to open a brokerage account.

The percentage charge drops as more is invested, in common with the majority of financial organisations.

  • First $3m: 0.79%
  • $3m – $5m: 0.69%
  • $5m – $10m: 0.59%
  • Over $10m: 0.49%

Personal Capital may not be the cheapest provider but it does provide human providers as opposed to a purely digital service.

 

What others say

  • “Personal Capital is a wealth management company that offers a powerful suite of financial tools you can use to track your money. Thankfully, these tools aren’t just for clients; Personal Capital’s financial tools are available for anybody to use, allowing you to see a complete picture of your financial situation all in one place. Here’s the best part: They are completely free!” This review by clubthrifty.com highlights the main attraction for the company, the free tools to use for managing money. The reviewer also states that it is easy to sign up for an account and there is no obligation to buy anything from the company.
  • “The security is very good overall, with numerous protections in place to protect your financial accounts.” According to cashcowcouple.com, the brokerage requires clients to register every electronic device they use. Once the devices are registered another layer of security is used for linking financial accounts from other providers to the Personal Capital account, and after that, there are strict internal access controls. In the current climate of hacking clients should feel reassured at the high levels of security in place to protect their financial interests.
  • “At no additional cost, Personal Capital provides numerous tools to help you make better financial decisions. These tools can help reduce your taxable income, improve your asset allocation, lower your investment fees, and track your investment performance over time.” The broker review by cashcowcouple.com also highlights the tools available at no charge for users of Personal Capital and the various ways these can help improve client’s financial performance.

 

Customer service

Customer service is available by phone and email, but clients using only the free services for accounts management might find that they are often contacted to persuade them to take up the option of paid services. This is understandable because the free tools are there to attract clients and then, hopefully, to make them into paying clients, a well-known business model.

So, clients who access the free service are likely to find they get phone calls, emails and popups to try to get them to take up the paid option. Phone calls might be directed to a message service and call-backs could take some time after a message is left. Emails, according to stockbrokers.com, could take several days to get answered but responses are brief but to the point.

Clients also need to know that there is no chat option available for support and though many financial advisers do not have this option, it could be argued that as an online advisor it would be an attractive option for would-be clients.

 

 

Platform features and tools

Although Personal Capital does not provide a trading platform for individuals to access the markets, there are a range of tools available to help clients keep track of all their finances. There are five main tools that Personal Capital gives access to so clients can manage their money effectively. These are:

 

  • Net worth calculator – the tool allows clients to track their assets and liabilities so that it is easy to find their net worth at any time. By setting long-term financial goals, the net worth calculator lets users know if they are well on track with their finances, so they can see how effectively they are getting towards achieving those goals.

 

  • Retirement planner – retirement comes to most people and it can be easy to lose track of what is the need for a comfortable life when finishing working. The Personal Capital retirement planner helps clients to know if they are on track to retires, given their financial goals. Adjustments can also be made for major life changes such as changes to a job or career or other changes in incomes. Changes might also include childbirth, illness or saving up for college and the tool gives a projected portfolio value as well as tips on how to improve it.

 

  • 401(k) fund allocation – clients who have retirement plans sponsored by their employer can allow Personal Capital to analyse the plan, although the company cannot manage it. However, it can use its analysis of the plan’s available investment options to make suggestions about asset allocation that could help increase the plan’s overall value when it matures.

 

  • Investment checkup tool – there is always a level of risk with investments and this tool gives clients a risk assessment of their portfolio, including their retirement plan. Suggestions will be made to help improve the asset allocation plan so that it is consistent with the client’s goals and personal preferences.

 

  • Cash flow analyser – one of the keys to good financial management is by creating a budget and, as far as is possible depending on circumstances, sticking to it. The Personal Capital cash flow analyser allows clients to create a budget, so all income and expenses can be tracked, whatever source they come from. It helps clients see where money is being spent so income can be freed up for savings, investments and paying off debt.

 

 

Mobile trading 

Although Personal Capital is not a brokerage firm for individual traders to invest by themselves, the company provides apps for mobiles, both for iOS and Android platforms and that can be used for smartphones, tablets, laptops and desktops.

The app lets clients access all their accounts and investment holdings as well as spending, investment allocations, portfolio performance, sector weighting and the value of their home. Access to all financial details is available 24/7 so keeping track of all the various financial accounts can be done from anywhere at any time. The company has multiple levels of security to keep all financial data safe and secure.

 

 

Robo trading

As stated previously, Personal Capital is not a broker, so it does not offer robo trading. However, as a digital wealth manager, the company is neither a traditional adviser nor a robo-adviser, but rather a hybrid of the two. The financial tools provided free are automated to collate the information clients give and offer them overviews about their financial situation, but for larger investors prepared to pay for services there are real people to discuss options and offer advice.

 

Research and learning

Personal Capital offers access to videos and articles to help clients explore the various topics about investing and saving.

 

 

Regulatory details

Personal Capital operates under the jurisdiction of the US SEC (Securities and Exchange Commission), the regulatory body set up to protect investors and to maintain fair, orderly and efficient markets to help facilitate capital formation. The firm is audited for compliance with the SEC’s cybersecurity regulations and website encryption for the company is rated “A” by the independent Qualys SSL Labs.

 

Personal Capital ProsPersonal Capital Cons
Experts in wealth management Fees may be considered high
Putting the client's interests first Some accounts need manual tracking
Fast reaction No guarantee of performance
Good online app High entry price

 

Conclusions

For clients who are looking to manage their money effectively and have any time access to where their finances are, Personal Capital has effective tools to do this and, importantly, they are free. Drawing a wide range of accounts together in one easy-to-access dashboard allows people to have a close focus on income, outgoings, debts and other financial impacts.

The paid-for management of investments is ideal for those who do not want to be hands-on investors but have experienced financial experts to advise and do the actual work. These services may cost more than other providers but in the end, you get what you pay for so it’s always worth making comparisons.

Customer service for free users might be slow and without a chat option, there may be some who would prefer a faster and more efficient response service.

All in all, Personal Capital appears to offer a very good free financial service and well-managed paid-for services as well.

 

 

Brian Ducey

Brian graduated from Chaminade High School and the University Of Vermont Kalkin School Of Business with a concentration in Finance. He began his career with Knight Capital Markets, working his way to market maker. Brian later expanded his market repertoire, working with various sell-side research brokerage firms, such as Sidoti & Co., and William O’Neill & Co., as an Account Executive. With over 20 years-experience in the financial industry, Brian has built a unique perspective into “market intelligence” understanding an ability to read the tape and apply second level thinking in a fast paced environment. Brian also carried several market licenses, including the series 7, 24, 55, 65, and 63 licenses as well as previously passing The Connecticut Life and Health Insurance Exam