Personal Capital Review – Forbes Advisor

July 20, 2021

If you have $100,000 in assets to manage and you’re willing to pay higher fees, you’ll gain access to Personal Capital’s robo-advisor wealth management features.

Perhaps of most interest to you will be access to live financial professionals. These fiduciaries answer your investment and retirement questions, set up a comprehensive financial plan and evaluate how well you’re meeting your goals. This can provide a huge amount of relief to those who’ve firmly entered middle age and want to ensure they’re saving enough for their children’s college education as well as their own golden years.

As for the investments themselves, Personal Capital employs a team of strategists and big hitters to help craft tax efficient portfolios that will redound to your long-term wealth. While Ellevest has Sallie Krawcheck and Wealthfront has Burton Malkiel, Personal Capital counts luminaries such as Harry Markowitz of modern portfolio theory fame, and Shlomo Benartzi, a leading behavioral economist, as key contributors.

Part of the appeal with Personal Capital is its so-called Personal Strategy, which creates a specific investment portfolio for you depending on your needs and long-term goals. It uses Monte Carlo simulations to test the probability of you meeting your retirement needs and employs a combination of low-cost exchange-traded funds (ETFs) and potentially some individual stocks and bonds to create a portfolio that aims to maximize your returns based on the timeline and amount of risk you say you’re willing to incur in a questionnaire.

Those looking for an edge over a pure passive indexing approach—keeping your money in an ETF that tracks a broad index like the S&P 500—may appreciate Personal Capital’s “smart weighting” approach, which allows for you to have access to smaller, and potentially higher growing, investments than you might get from competing robo-advisors.

This approach adds an active investing edge, especially in the equity portion of your portfolio, which may involve buying individual stocks. It also helps explain why Personal Capital charges higher fees than many of its robo-advisor competitors—carefully adding in individual stocks requires more than a simple algorithmic approach on its part.

Personal Capital’s hybrid approach to robo-investing—mostly passive investing, some active investing—may make sense if you’re the kind of person who’s willing to pay higher fees in the hopes of gaining bigger returns. But keep in mind those greater costs don’t guarantee better results and you run the risk of underperformance.

Personal Capital will also help your portfolio be tax efficient through tax-loss harvesting, a more standard robo-advisor feature, as well as looking at your asset allocation across your taxable and tax-advantaged retirement accounts. This lets Personal Capital place securities that make regular income payments, like bonds, in tax-advantaged accounts, such as an individual retirement account (IRA), so that they won’t raise your taxes. This may help you feel more comfortable ramping up the equity exposure of your taxable brokerage account.