Ash The Great | Oct 31, 2017 | 0
Personal Capital Review
There is a paid and a free Personal Capital service. The paid service is mostly for people who have a lot of money (over one million) to invest, or for people who have $25,000 and are looking for a hands-off investment. The free service allows people to centralize and track their financial data. Personal Capital offers personal financial software that allows you to track and monitor your spending, net worth, investments and taxes. The company makes its money through paid services to people with over 1 million dollars, and by offering a wealth-management service to people who have more than $25,000. If you take them up on their personal wealth-management service, Personal Capital receives an annual fee of between 0.49% and 0.89% of your assets based upon your account balance.
What Does Personal Capital Do?
Personal Capital puts your investments, spending, taxes and net worth in one place. It saves you from having to sign in and out of numerous accounts in order to see where you are financially.
They also have a wealth management service that utilizes individual stocks and fixed-income oriented ETFs in order to construct a customer portfolio. The portfolio is based on the customer’s needs and goals. The only problem is that the Personal Capital service and its financial advisers do business by adding another layer of charges and fees to the management of your portfolio. An unmanaged benchmark index is more likely to have a higher return due to it not having the extra fees that a Personal Capital portfolio has.
In effect, Personal Capital, along with many other financial advisers, adds another layer of fees to portfolio management. It’s a legitimate way to do business, but the extra fee will noticeably reduce a portfolio’s annualized return compared with an unmanaged benchmark index. The extra layer of fees is worth it if you do not wish to manage your own investments.
Trust And Security When Money Is Involved
I just have to make a point about something I read regarding Personal Capital. One review I read explained that there is no risk of a shady account or fraud because Personal Capital doesn’t hold its clients assets. This part about there being no risk is not true. Whenever there is money involved, even if another person simply allows you to track your online bank balances, there is always a risk of shady accounts or some sort of fraud. Thieves and con men/women are opportunistic and are attracted to any system where other people’s money is on show.
Is Personal Capital And Its Software Safe?
All of the data shared with Personal Capital is locked with a AES-256 encryption with multi-layer management. Plus, your information and your credentials are stored by a different company called “Yodlee,” which means nobody at Personal Capital has direct access to your credentials.
Few people have programmers, security testers and hackers on hand to test to to see if these types of programs are truly safe. So, we have to look at what Personal Capital has invested in its good name. If there was a big security breach or if some of Personal Capital’s customers were ripped off, how would that affect the company?
Firstly, they are registered investment advisers with the Securities Exchange Commission (SEC), which they may lose if they mismanage or are negligent in their actions. Also, the company has a reasonably good online reputation, which draws in a lot of customers and money. They would lose their good reputation if they were hacked or their customers were ripped off. Also, the company has 5.5 billion assets under management, so they have plenty to protect.
Make your own mind up as to how safe you are when you hand over your details to Personal Capital, or if you take its paid/commissioned advice. They are obviously a big business and are not a back-alley company, but there are one or two niggling concerns that may cause you to step back and do a little more research before you trust them.
There are a few factors that may worry the security conscious. For example, there are almost no negative reviews about this company, even though it has been running 8 years. This suggests that they have a very good reputation-management team. Also, Personal Capital is not registered with the BBB, so they only hold themselves to the standards they set. In addition, Personal Capital has a generous affiliate program that encourages online reviewers to give them a very good online review.
Personal Capital Claims That Hackers Cannot Move Money In Or Out Of Your Accounts Via The Personal Capital System
You may use the Personal Capital software to see various elements of your personal account information, and you may do this by giving Personal Capital permission to access your various financial accounts.
As a result, a hacker may gain information from the Personal Capital system that helps him or her steal your identity. However, it would be notoriously difficult to instigate a funds transfer either through the Personal Capital system or through the access that Personal Capital gives the hacker. In fact, it would be so difficult that it is likely to dissuade anybody but the most highly funded and highly dedicated hacking groups.
In short, when Personal Capital says that hackers will not be able to transfer your funds through the Personal Capital system, they are being fairly honest. However, a decent hack into the Personal Capital system may go a long way to helping a hacker steal your information with the aim of stealing your money. You should always be aware that whenever you give away your financial information that you are putting your money at risk. The same is true in any circumstance where you give away your financial information, from when you enter your credit card details into a website (you should use PayPal instead), to when you enter your financial details into balance-tracking apps such as Mint. There is always a risk whenever you give your financial details to another party/person.
Personal Capital – Pros
- The wealth management services take the effort out of managing your Personal Capital investment portfolio.
- Personal Capital offers a free financial tracking service that centralizes and tracks things such as your taxes, savings, wealth building, and so forth.
- The Personal Capital GUI looks daunting, but most of what you see is self explanatory.
- Their free financial planning software doesn’t have a catch, except that they try to entice you into using their financial advisory and/or wealth building services.
- Personal Capital allows you to see things such as your cash flow, your net worth, your investment returns and their projected fees, your portfolio balances and allocations, and your spending.
- The Personal Capital fee analyzer is a great tool that helps you identify the hidden fees in your retirement savings, which is a very big (yet unknown) issue in the USA at the moment.
- Personal Capital has a retirement planner that is probably the most sophisticated we have seen in all the years we have been running eCheck.org.
- The Personal Capital net worth calculator is fairly accurate because it includes all your savings accounts, your 401(k), your mortgage, IRA, credit cards and investment accounts.
Personal Capital – Cons
- Personal Capital adds another layer of fees to the management of your Personal Capital investment portfolio.
- There are asset/money requirements set in place for their wealth building/ investment packages that start at $25,000 and run up to $1 million.
- You have to give away your financial information in order to use Personal Capital, which poses a risk (no matter how small).
- Not all of the Personal Capital offices are registered with the BBB.
- The wealth management services are for people with $25,000 or more, but only people with $1 million are able to use the advisory service.
- Adviser fees are (first $1 million) 0.89%, (first $3 million) 0.79%, (next $2 million) 0.69%, (next $5 million) 0.59% and (over $10 million) 0.49%.
Conclusion – Is Personal Capital Right For Me?
If you are looking for a free financial dashboard for your PC and/or your mobile device, then services such as Personal Capital (or Mint) are good options. If you are looking for wealth management services and you don’t mind paying extra fees to stay hands off, then Personal Capital is a fine option too. There is a slight risk to your financial information, but that is true in any situation where you have to give away your financial information to another party/person.
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