At the ripe ole’ age of 10, I was given the task of having to invest $50,000 into stocks I thought would be winners. This was part of a county wide contest where each elementary school was represented; and one student selected to make the purchases (fake money of course). After 30 days, you could no longer make buys and after three months the contest was over.
Sadly, I must report that our school finished in dead last. In just three short months, I lost over $22,000 of my fake money, because I was heavily leveraged in Topps (the baseball card company) and they had a dreadful earnings report. It was the first of many lessons about how I invest … with my heart and never with my head.
Enter Personal Capital, an investment and wealth management platform which I think fits well for emotional investors like myself. Personal Capital is a start-up company, launched in September of 2011 which currently has hundreds of millions in investible assets under management. If you’re looking for competitors or similar investing platforms, companies like WealthFront and Betterment come to mind. But unlike those companies, Personal Capital is designed for a specific investor, as the rock bottom amount one can invest with them is $25,000.
How Does Personal Capital Work?
The process in getting set up with Personal Capital is fairly straightforward. After signing up for an account (which takes all of 60 seconds), you’ll be able to log in and begin connecting your financial accounts. It’s in this way that I find Personal Capital to be a little different than the rest as they’ve added on a money management component to just regular personal investing. Connecting accounts is as simple as entering your secure information and allowing the software to do the rest. As you continue to add accounts, your “investible assets” number will continue to grow. Once you hit the $25,000 number, expect to hear from the Personal Capital team.
After signing up, I immediately received an email which let me know I’ve been assigned a personal advisor. Mine is Cameron, and while I’m sure he’s a fine fella … he’ll likely never hear from me as I don’t have $25,000 in investible assets at this point in time. If and when you should sign up, you’ll also be given a dedicated personal advisor that will be your point of contact once you’ve linked at least $25,000 in assets.
What Happens Next?
After a conversation with your personal advisor, the decision will be made on whether or not to invest with Personal Capital and how to do so. The fee for using these guys is a flat 1% of all invested assets, whether you make or lose money. In my opinion, this is a reasonable fee; but higher than that of its competitors. Unfortunately I am not in a position to tell you whether or not these guys are worth it, but as they have hundreds of millions in investible assets and a fairly strong client list, I would hope they know what they’re doing!
Some key features about Personal Capital:
- Stock Option Tracker – Track the value of stock options and exercising from the company you work at.Universal Checkbook – Deposit checks via their mobile app. Take a picture of your check and the funds are deposited.
- Investment Checkup – Are you meeting your retirement goal? It is simplistic compared to other planners, but a good starting point.
- 401(k) Fee Analyzer – Find out how much your retirement plan is costing you.
- Tax Optimization – Are your investments fully optimized for taxes? Though currently Personal Capital does not understand the difference between taxed deferred accounts and taxable accounts (another planned feature).
- Fund Costs – How much in taxes and expenses does it cost you with each fund you own? Currently it does not understand taxable, and tax deferred accounts.
- Asset Allocation Target – Are you overweight or underweight in any of the major equity categories? This currently lacks customization with adjusting allocations and is currently hard coded to their formula (additional future feature).
Admittedly the details on this review are somewhat light because the bottom line here is where or not Personal Capital can increase your net wealth. At the very least, signing up, being assigned an advisor and using all of the free tools these guys have to offer is something that everyone should do. If you’re comfortable with the presentation Personal Capital gives you (references of current clients and all), and decide to allow them the opportunity to grow your portfolio; I encourage you to let us know how your doing!