Managing your money properly is vital to securing a high net worth. However, actually doing so can be quite a complicated process. I recently came across PersonalCapital.com, a system that promised to allow me to manage my net worth in a modern, easy to understand and, most importantly, accurate manner. Here is what I found as I set out to review this free service.

The company logo for website "Personal Capital" which is a site dedicated to managing your investment net worth

What Is Personal Capital?

Currently, close to a million people are using the system, and they therefore track around $145 billion in investment. The company is an RIA (Registered Investment Adviser) with the SEC. Under management, they also manage over $1.1 billion in assets.

The company was founded by Bill Harris, former CEO of PayPal and Intuit. At the launch of Personal Capital, he raised $28 million in venture. Most employees with Personal Capital have Certified Financial Planner (CFP) designations and a wealth of experience.

Essentially, the platform exists to help people understand and track their financial accounts. All accounts, such as credit cards, mortgages, investment accounts, bank accounts and so on, can be linked to the service, giving guidance on investment. It is a highly comprehensive service that can track all different types of investment, while also allowing for basic budgeting.

How Does it Work?

When you open a free account, you first have to link all your financial accounts by authorizing them. This is a very easy and efficient process that won’t take long to complete. Once they are linked, they will remain there until you make any changes, and the account information is updated daily. All this information is then aggregated into various charts and graphs that show you your personal financial situation. Some of the graphs you will be able to see include:

Mobile screenshot of personal capital

  • Account balances
  • Net worth
  • Spending and income reports
  • Investment returns
  • Asset allocation
  • Projected investment fees

A wealth of information is provided on each of these graphs, so you can see where your money is really going. For a free service they really give you a wealth of information about your financial status. You can track your accounts over time and really get a handle on whether your net worth is increasing or decreasing (I of course hope it is increasing!).

Track Your Net Worth (The Only Number That Matters)

Perhaps one of the best features of PersonalCapital is the ability to show a snapshot of your net worth. Once all your financial accounts are plugged in, and once your mortgage and credit cards are put in, the site will give you instant access to your net worth. Why is this important? Well, at FinancialSumo we think your net worth is really the only number that matters. It doesn’t matter how much you earn, it matters how much you are worth. By being able to track this number over time, you can measure your progress. Do you know what your net worth is? You should, and Personal Capital can gather that number for you instantly. Here is what that looks like on a mobile phone:

Tracking your net worth is something everyone should do. With PersonalCapital.com that task is easy. Here is a screenshot of what their net worth tracking tool looks like on a mobile phone.

Tracking Your Spending and Your Saving

One of the best things about Personal Capital is the interface that allows you to see all your account balances and how you spend your money. Every transaction is listed here, including details that allow you to see what purchases you have made. You can also create categories, such as merchant, date or type of spend. This also allows you to stay on top of your bills and know what your budget is, for instance by viewing your upcoming bills. Similarly, you can keep track of the money you are saving. Here is an example of what the cash manager screen looks like:

Knowing where your money is being spent is critical to your financial success. That is why the cash manager function of PersonalCapital.com works so well

The Investment Checkup

The Investment Checkup feature is very useful as well. The system looks at when you want to retire, what your income sources are and various other details, and it then tells you whether your portfolio is good enough to meet your goals, or whether you need to make any changes. It also shows you the fees you pay on investments and whether your returns justify these fees. Again, for a free service PersonalCapital does a great job of showing your financial picture all in one place. Also, they offer a tool especially for those with a 401k that will analyze the fees that you are paying…this is totally free and can be quite eye opening to see how much your fund 401k fees are.  Check out the free fee analyzer tool right here.

Prices and What You Get

The basic Personal Capital system is completely free. However, for those who have more than $100,000 investments or capital, there are some more professional options as well. For instance, you are able to work with a trained financial adviser in order to maximize your net worth. A percentage of your AUM (assets under management) will then go to Personal Capital as payment. The annual fees are:

  • 0.89% for investments up to $1,000,000.
  • 0.79% for investments up to $3,000,000.
  • 0.68% for the next $2,000,000.
  • 0.59% for the next $5,000,000.
  • 0.49% for $10,000,000 or more.

There may also be some other expenses if you decide to opt for a paid account. For instance, if you invest in passive EFTs, then there may be an extra 0.1% to 0.2% in fees to pay. However, you are under no obligation to use their paid service if you don’t want to, or if you can find cheaper deals elsewhere. To be honest, I recommend Personal Capital as the free option just to track your finances. As you know, the more information we have at our fingertips about our financial health the better.

The Security of the PersonalCapital.com Site

Naturally, it is absolutely vital that the security of a system like this is as good as it can be, as they will be dealing with your personal and financial information. The security offered by Personal Capital is indeed very good. Each computer or device you use has to be registered individually. To confirm, you will receive an email or a telephone call. Once you have registered, however, you will no longer have to go through this process. Naturally, the site is fully encrypted and you have to log in using passwords and account images. These are the features you would expect of a service of this count.

As an added layer of security, your financial accounts are kept completely hidden. When you sign in, you have to not only log in to Personal Capital, you also have to verify each online account. This is designed to keep you, your information and your money completely safe and secure.

Being able to view your financial planning website on a tablet and phone is very important. The PersonalCapital.com website is responsive and shows great on mobile devices

What I Liked about Personal Capital

  • The system can be used across all types of devices, including laptops, desktops, tablets and smartphones. They have a range of different apps available and these can seamlessly be integrated. Hence, tracking or checking your accounts can be done from anywhere with an internet connection, using a highly intuitive interface.
  • The system is incredibly user friendly. While you do have to sync all your accounts when you first start, this isn’t difficult nor does it take up a lot of time. The system is designed for people who aren’t hugely technical, which is why the charts and graphs are also presented in such an easy to understand manner.
  • The service offers everything you could possibly need. Every single piece of financial information that you have can be linked through the online interface. Hence, you can track everything that you spend as well as everything that you save. If you are an investor, you can compare all your different holdings and make sure your assets are where they should be.
  • It comes with a Universal Check Book, which is a great online tool that allows you to quickly and easily send money to any account. This can be done on any interface as well. By telling the system you want to send money, it will be completed at the push of a button and there are now fees to pay. You can even use photographs in order to deposit checks, which is a very cool feature.
  • You can set up reminder emails so that you see how your net worth has changed on a weekly basis. Plus, you can ask it to remind you when bills are due and a range of other information that you feel you need to receive.
  • It also comes with a range of tools that help you to lower how much you have to pay in tax. Plus, it shows you how to sell your losses so that you can offset your gains, a process known as tax harvesting. This means you could see a significant reduction in capital gains tax.
  • The system allows you to analyze various fees as well, including your mutual funds, 401k and investments. This can help you to bring the amount you pay in fees down.
  • You can also check how you investments are performing. Their Performance Checker allows you to see how your investments are doing in relation to their relevant index. This should help you to better manage your ETFs and index funds.
  • It comes with an asset allocation tool, allowing you to see the different classes that your investments come under (domestic stocks, foreign stocks, cash equivalents, bonds and so on). This is another very useful tool to help you better understand your investments.
  • While the company is not overly open about how they invest themselves, they don’t pick individual stocks or chase hot tips. This makes them a lot more trustworthy than various other similar systems.

What I Didn’t Like about Personal Capital

  • While the system is free to use, they do have investment management fees. Naturally, this isn’t a surprise, as the company has to make their money somewhere as well. While the fees aren’t incredibly high, they are definitely higher than others in the field. It seems that they hope that people don’t want to have two accounts going simultaneously and that they will pay the higher fees so that they can use the various free features that Personal Capital also offers. Again, I recommend using the tool as a way to track your spending and measure your investments and for that, the service is completely free and doesn’t cost a dime. You only pay if you decide to have them manage your money for you.
  • When Personal Capital first started, it was plagued by technical issues. However, they have been running for some time now and it seems that this is a thing of the past. There have been no more complaints about glitches and bugs over the past few years, with the rare exception of some people struggling to link specific online bank providers. I myself use Personal Capital and it has been flawless.

The PersonalCapital.com site helps you track your banking and investment accounts. This is a great tool for keeping track of your net worth

The Final Verdict

The free services offered by Personal Capital are out of this world and really all you need to start managing your money properly. If you do want to use the paid for services, they are slightly more expensive than other similar providers, but only marginally so. Considering the extensive variety of free tools you also receive, it would be worth paying that little bit more.

Overall, Personal Capital is a great service to help you manage your net worth and I fully recommend it. Oh yeah, did I mention that the investment tracking, net worth tracking, and charting are all free? I guess I did but wanted to remind you! You can open your own free account here and get started measuring your financial progress.

Jason

Founder of FinancialSumo.com, his writing has appeared on many financial, entrepreneurial and small biz sites across the internet. When not writing, Jason enjoys spending time with his family in San Diego.
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