Over the past week or two, I’ve been playing around with a new (to me) online investment tracking service called Personal Capital.
If you haven’t heard of it, it’s sort of like Mint, but with a focus on investing. Whereas Mint seems to target people who are just starting out, Personal Capital is for those with more in the way of assets.
Today I want to share with you some background and first impressions based on the time I’ve spent messing with it thus far.
Note: Before we start… Yes, I do have an account with Personal Capital, and have been quite impressed thus far. Note that I really only use it for the (free) investment tracking features — I’m a diy-er when it comes to management.
What is Personal Capital?
Personal Capital is an online investment tracking/management service that’s led by former Intuit and PayPal CEO Bill Harris. They say they’re building “a better money management experience for consumers” by “blending cutting edge technology with objective financial advice.” Mmmkay. But what does that mean to you and me?
Well, for starters, they’ve built a slick online dashboard for tracking just about all aspects of your financial life. This is similar to Vanguard’s Portfolio Watch, but with a more complete feature set and, based on my limited testing, fewer glitches.
While the online tracking, visualization, etc. is completely free, they also offer investment management — if you’re interested — for a fee. The good news is that you’re under no obligation (and there’s no real pressure) to sign up for investment management. But it’s there if you want it.
As far as monetization goes, that’s it. Unlike services like Mint, there aren’t any ads (aside from one blurb offering more info on their management services) or other come-ons once you get inside. Refreshing, to say the least.
Ultimately, they seem to be shooting for the middle ground between those who are just starting out and that who have already arrived. In other words, it seems like they’re after the same sorts of people that Betterment is targeting.
Tracking your finances
Not surprisingly, the big draw for me was the tracking functionality. So what all do they track? Pretty much everything. Investment accounts, bank accounts, credit card accounts, mortgages, etc.
Importantly, they also let you manually add “offline” accounts so you can create an accurate overall picture of your finances. This includes things like the value of personal property (house, car, or whatever), hard assets, etc. It also provides a means for adding any accounts from unsupported institutions.
Note: The only unsupported institution that I’ve encountered has been TreasuryDirect. That’s not terribly surprising, though, as TD has some wicked login requirements. This includes sending a passcode via e-mail when you try to login and requiring you to click an onscreen keyboard to enter your password.
Once you set it up, their system automatically fetches and updates your information from whatever institutions you use. It then compiles a number of graphics and reports on things like your cash flow, net worth, investment allocation, and portfolio performance vs. various benchmarks.
The allocation tool is quite nice in that it essentially x-rays your funds and breaks them down further. So, for example, you can click to drill down into your U.S. stock holdings to see them broken down by market capitalization and style. Very slick.
What follows is a screenshot of the allocation tool for the investment accounts that I’ve linked up thus far. If you hover over the colored blocks, you get more context (dollar amounts and percentages) and if you double-click on them, you drill down.
Note: The graphic above isn’t clickable, but inside your dashboard it will be.
Beyond providing these high(er) level statistics, the system also fetches your transaction information so you can see the details of all your account activity from a single login. Once again, this is all very slick.
They also offer optional net worth updates via e-mail at set frequencies (daily or weekly) so you can keep up with things, at least in general terms, without logging in. Or you can opt-out entirely.
Oh, and I almost forgot… They also offer mobile apps (iPhone, iPad, and Android) so you can keep track of things while you’re on the go. I haven’t had time to use these very heavily, but the iPad version in particular seems quite nice.
Managing your money
As noted above, Personal Capital also offers asset management on behalf of those who are looking for help with their portfolios. This isn’t really my cup of tea (I’m a diy’er) so I haven’t investigated this in great detail. I can, however, give you some general information.
Note: I should reiterate here that this aspect of their service is optional. You’re welcome to use the free tools described above to keep track of things whether or not you use their management services.
For starters, Personal Capital is a Registered Investment Advisor (RIA) with a fiduciary obligation (i.e., they’re required to put your interests ahead of their own). Their fees for investment management are “less than 1%” including advice, portfolio management, asset custody, and trading costs. This breaks down as follows:
- 0.95% for the first $250k ($0-$250k)
- 0.90% for the next $250k ($250k-$500k)
- 0.85% for the next $500k ($500k-$1M)
- 0.80% for the next $4M ($1M – $5M)
- 0.75% for the remainder ($5M or more)
So… While it may be cheaper than a real-world advisor, it’s not very cheap in absolute terms — at least not compared to a diy approach with index funds from a low-cost fund family. And it’s also more costly than Betterment, which charges a management fee of 0.15%-0.35% plus expense ratios (so 0.30%-0.50% total).
What about their investment philosophy? Well, here are the eight principles upon which they say their investment service is based:
- Cut costs
- Cut taxes
If you dig deeper, you’ll learn that they’re fans of indexing (more or less), which is great. However, if you’re seeking to match the market, you can get a good bit closer if you cut out management fees entirely and just use low cost index funds.
What about security?
Anytime you’re talking about handing over the proverbial keys to the kingdom — i.e., your financial login credentials — security is an obvious concern. Privacy is also an important consideration. So how does Personal Capital stack up?
For starters, let’s talk about login procedures…
When you first attempt to access your account from a new device, they e-mail or call you (automated) to validate your request. Once your device is registered, you shouldn’t need to repeat this step in the future. The upshot is that, even if your credentials are compromised, there’s a built-in access barrier.
Their login system also utilizes a security image, similar to what most other financial institutions have implemented. This is pretty standard fare, but it helps to protect you against scammers who might set up a copycat site to steal your credentials. Sure, they can make it look real, but they won’t know which image to show you.
As far as server-side security goes, they claim to have “numerous perimeter and internal systems designed to prevent penetration and monitor for suspicious activity.” Beyond that, your credentials and data are encrypted (AES-256) on the backend such that your info should remain secure even if someone gets in.
Also, if it makes you feel any better, CEO Harris and CTO Louie Gasparini previously founded PassMark Security, which designed the online authentication system currently used by most major banks. Harris is also on the board of directors of RSA Security and is chairman of XTec, which designs and builds security systems used by the State Department, the DOD, and Homeland Security.
So yeah, these guys seem to know what they’re doing when it comes to security. I’m not sure about you, but this is enough to assuage my security concerns.
As far as privacy goes, they state they are “committed to the protection of your privacy,” and they go on to say that “We NEVER rent, sell or trade your personal information to anyone. Ever.” So that’s good.
All in all, I’ve been very impressed with what Personal Capital has to offer. The dashboard and tracking tools are pretty cool and well worth checking out — the allocation tool in particular. And you’re under no obligation to make use of their management services if you’re just looking for tracking and visualization.
If you’re interested in trying them out, you can create a free account and get started by clicking this link or by clicking the button below…