Tag: personal finance software

Is Personal Capital Right For You?

pc_track_net_worth728x90

Personal Capital Review – Updated for 2016

Executive Summary

PersonalCapital.com offers personal financial services for a lower cost than the typical financial adviser by using proprietary software to make investment management decisions. You can track your investments and expenses for free on their site and users are now tracking over $100 billion on their free software. Additionally, Personal Capital now has over $1 Billion in managed investments as well. If you sign up they also provide you with a free assessment of your portfolio to check asset allocation and to see if you are on target for retirement. They also have a Mutual Fund fee analyzer and a 401k analyzer to help you see if you are getting charged too much.

If you decide to go with their investment management services, you’ll receive personalized recommendations for fees below industry averages.  Asset management fees (discussed below) are a little less than 1% of the value of the assets under management. Personal Capital Advisors now manage over $600 Million in assets for individuals and families. As Registered Investment Advisors, they are obligated to act in your best interest.

Personal Capital is a next generation financial advisor. By taking advantage of technology, the company’s fees are lower than the typical advisor but you still get personalized service. It’s great for anyone looking for better clarity on their financial situation and is targeted towards individuals and families needing a more hands on approach to asset management, but want lower fees than the typical investment adviser.

Click here to Join Personal Capital.

Summary of Services

Personal Capital provides a number of free services including:

1. Free Investment Checkup – See if you are on target for retirement.

2. Free Expense Tracking – Like Mint.com, Personal Capital puts all of your accounts in one place and allows you to track your expenditures.

3. Free Financial Planning – The free services include asset allocation review, mutual fund fee calculator,   and a 401k analyzer. These services help you optimize your portfolio to lower fees and improve performance.

4. Free Net Worth Calculation – With all of your accounts in one place you get a clear picture of your net worth.

5. Free Mobile App – Personal Capital’s mobile app is an award winning personal financial management tool (and one of my favorite apps).

The paid service is primarily investment management. I’ll go over the graduated fee scale based on portfolio size more below.

Does Personal Capital provide a summary of my financial position?

PersonalCapitalDashboard
The Personal Capital Dashboard gives you a great summary of your net worth, spending, and portfolio balances.

Yes. Personal Capital provides an excellent personal financial summary. They track spending, net worth, and investment portfolio. The emphasis for personal capital is primarily on the investment side so the budgeting and expense planning is not as robust, however, the user can easily track expenses and cash flow with the automatic categorization. It will be interesting to see what changes are made as the software goes forward because the CEO was formerly with Intuit, the current owner of Mint.com.  Personal Capital’s focus on portfolio management provides a level of service that Mint does not have.

The summary pages are very clean and user friendly. The financial aggregator is also easy to use and you will be able to quickly get investment portfolio into their system. 

Investment Management Services

The minimum required for investment management services is now just $25,000, a significant decrease that puts Personal Capital in line with their competitors.  Investors with at least $25,000 in investable assets receive access to:
– Portfolios composed of ETFs that are designed to take advantage of asset location, tax loss harvesting and disciplined rebalancing
– Access to Personal Capital’s full suite of financial planning services
– A licensed Advisory Service Team to answer questions and advise clients on college planning, estate planning, home purchases, 401k allocation, and more

You will see a lot of news in the press calling Personal Capital a robo advisor, and while the company uses computer algorithms to help with portfolio allocation, you get the human touch with access to licensed advisor. Other online financial advisors are starting to copy this model as the demand for the personal touch is not going away any time soon.

There are also no performance based fees, meaning that you won’t be charged a premium if your portfolio reaches certain targets. That’s not to say that the investment management is free (see below). The company’s focus is on asset allocation, portfolio diversification, and tax optimization as opposed to analyzing individual securities.

How Much Does Personal Capital Cost

Opening an account is free so you’ll track your money and your portfolio free of charge.

How Much Does The Investment Management Service Cost

The fees have been simplified as follows:

First $1 Million: 0.89%

For clients that invest $1 Million or more:
First $3 Million: 0.79%
Next $2 Million: 0.59%
Over $10 Million: 0.49%

The fees include everything. There are no additional charges for trades or fees.

The fees are cheaper than standard personal financial advisors so you can feel confident that their investment management is competitively priced. I’ve written another piece summarizing a Wall Street Journal article on fee structures for financial advisors.

Personal Capital’s Investment Philosophy

When you invest with personal capital, your portfolio will contain a combination of individual stocks and Exchange Traded Funds (ETF). The portfolio will be designed by their Investment Committee based upon your conversations with your Financial Advisor. Your money is held by Pershing Advisor Solutions, a Bank of New York Mellon Company. Pershing is one of the largest US custodians, with over a trillion dollars in global client assets. Personal Capital never directly takes custody of client assets, and only you have access to your money.

They look to help the user create a “Personal Fund” and a “Personal Strategy.”  It’s really a personal financial plan and it’s free. The company describes the Personal Strategy as:

“A comprehensive investment portfolio designed specifically for you. It’s the way wealthy families and endowments manage their money – from the top down. Strategy first.

We start with a 360-degree view of your finances, and assess your goals. Then we custom-build a portfolio to match those goals, based on the time-tested principles of diversification, risk control, tax savings and low cost.”

The Personal Fund is described as:

“A Personal Fund is a managed portfolio of stocks and ETFs with a targeted investment objective. Unlike a mutual fund, you own the securities themselves rather than shares of a mutual fund.

Because you own the individual securities, a Personal Fund is customizable, tax efficient and less costly than a traditional mutual fund. For investors with $100,000 or more, Personal Funds offer a better alternative to mutual fund investing.”

pc_improve_your_investing728x902

 

 

Clearly this is the beginning of a seismic shift in personal financial management. The typical financial advisor charges quite a bit in fees. Personal Capital looks to lower the cost for individuals by leveraging the power of the technology.

Personal Capital is worth using if you are looking to shore up your future by creating a personal financial plan that requires asset and portfolio management. If your goal is to pay down credit card debt or to simply live within your means, you may want to start a Mint.com account. However, if you are looking for long term advice, it makes sense to get started with Personal Capital in order to leverage their professional investment management advice for free. Again, emphasis on the ‘free’ personal financial plan, regardless of the size of your portfolio.

 

I spoke with an investment advisor from Personal Capital and had a great experience. The advisor was friendly and easily communicated the company’s investment philosophy. You have a free consultation available when you sign up with Personal Capital’s account aggregation software so after you load your accounts, take time to speak with their advisors and see if it is the relationship that you want. In general, Registered Investment Advisors are the best way for individual investors to manage their money. Personal Capital is leveraging people and technology to lower fees and provide a great service.

Is my personal information safe with Personal Capital?

When I tell people about online personal financial tools, their biggest concern is that their information will be stolen. It is an important question and a serious issue. Personal Capital’s information security standards are the same as or exceed most banks. Chief Executive Officer, Bill Harris, and Chief Technology Officer, Louie Gasparini, are the former founders of PassMark Security, which specialized in on-line authentication and created the authentication system used by most banks.

Personal Capital requires multiple authentication steps when you are logging in, which is consistent with the best banks. The two steps verify your password and then verify your computer. If the computer is not recognized, an additional verification is required for safety.

The company also ensures security through firewalls, data encryption, and constant monitoring of their site.

The information security at personal capital is very good.

Also see the summary of PersonalCapital.com reviews for more opinions.

In the end, it’s worth opening an account with Personal Capital. You get access to professional software that helps you to build a personal financial plan, track your investments, and review your expenses. As your portfolio grows, you’ll have access to professional investment management to assist you on your journey to financial freedom.

Click the link to Join Personal Capital.

Questions? matt@humblebroker.com or comment below.

Understanding and Using Wikinvest Portfolio Tracking Software

So what is Wikinvest? How does it work? Should you use it? Let’s see if we can answer your questions.

On a basic level, Wikinvest is a portfolio tracking service. In reality it is a portfolio tracking service, an investment advisory service, and an investment analysis resource.  As the number of portfolio tracking apps increases, Wikinvest maintains its foothold as the very best.Wikinvest has the ability to combine accounts from 25 major brokerages and provide real-time updates of your accounts. The power to combine your accounts into a single view provides powerful analytical opportunities. If, like me, you have jumped companies a few times, you potentially have a 401k with Vanguard, a Roth IRA at T. Rowe Price, a day trading account with E*Trade, and an old account at another brokerage that you opened 10 years ago. Wikinvest will not only allow you to combine them, but within a minute you will have an update on all of your accounts. Their mobile app is also the best available bar none.

Wikinvest Analtyics

What I have found to be valuable is the portfolio insights that help me identify hidden fees and the true performance of my portfolio. While the Internet has brought a lot of accessibility, it has not always made life easier. Wikinvest makes life easier for those who are looking to quickly track stocks across a large number of portfolios. Simple insights and a clean intuitive view make it a great product.

I also like the ease of use. I was able to add three accounts in less than a minute. This has a lot to due with the nature Wikinvest. You are not investing through them. They do not hold your money and they do not authorize trades. Because the service is to conglomerate, they have established relationships with brokerage houses to give them read-only access. One the website, they call it “fail-safe.” It says, “Wikinvest’s portfolio tracker is read-only; you can’t transfer money into or out of your brokerage account using our system.” Despite the fact that you can’t transfer money using their system, they still provide 256 bit SSL encryption for all data and physical servers are kept safe as well.

Who will really benefit from Wikinvest? Well, if you are an active investor who wants visibility of multiple accounts and relationships, Wikinvest will provide that for you. You will also benefit from Wikinvest if you have a financial planner whom you wish to monitor and track. Have your planner load your information to Wikinvest so that you can receive real-time updates of your position. Don’t use the service as a way to get back at your planner as much as a way to monitor and track the progress of your investments over time.

Who will not benefit from Wikinvest? Well, the reality is that even a small player can gain some benefits from Wikinvest. I previously tracked my investment accounts on Mint.com but have never been satisfied with the reports and aggregation of brokerage accounts. They seem to run into more problems that Wikinvest so I plan to keep both. One will provide me with an accurate gauge of my overall financial position and spending habits, while the other will give me updates on my investment portfolio in a clear and insightful manner.

I trust the security more with Wikinvest as well because it requires less information knowing that it is a read only format. Other aggregation services have me enter usernames, passwords, and security questions. I feel uneasy with that level of disclosure. Wikinvest takes that disclosure out of the picture.

Wikinvest also takes crowdsourcing to a new level by empowering users to add notes to stocks that include investment analysis and

Apple Discussion on Wikinvest

notes telling users to buy or sell certain stocks. The site divides investments into various asset classes and then invites users to participate in the analysis of the company. Top contributors get their names next to the company stock, essentially creating an open source investment management service. You can read reasons why people are bullish or bearish on the stock, see what trends others are highlighting and then head to your broker to take action on the analysis.

The Internet provides a lot of noise, especially in the personal financial software arena. Wikinvest provides quiet clarity by leveraging the knowledge of many and allowing the wisdom of crowds to dictate instead of the wisdom of an individual. It’s investment analysis for the Internet generation.

 

UPDATE

Wikinvest will be phased out. SigFig replaces Wikinvest. See my review here.