Supposedly, the next big thing in financial tools is automated portfolio management – getting a little slice of the billions of dollars sitting in people’s IRAs using mostly computer-generated guidance and less human hand-holding. A recent Slate article discussed three start-ups in this niche: MarketRiders, Betterment, and Personal Capital.
Personal Capital attracted me most because it first lets you become comfortable with them with a nice free “Dashboard” tool that aggregates all your investments in one place. It’s rather like Mint.com, but with more of a focus on investments and asset allocation and less on bank accounts and budgets. The idea is to provide a “holistic” view of your money by letting you see how your money is distributed across all your banks and brokerage accounts.
The tool does provide some nice charts based on your investments. There is a nice visualization that breaks down the different asset classes inside mutual funds, a Checkup tool lists all the fees and expense ratios that you’re paying via ETFs and mutual funds, and you can also add in employee stock options.
On top of that, Personal Capital is a Registered Investment Advisor. This means they can legally offer investment advice, and also that they must act as a fiduciary and keep your interests ahead of their own. I noticed that they say that if you have over $100,000 in linked accounts, they will assign you a “complimentary personal Financial Advisor”. I haven’t had any contact with one yet, so I’m not sure what kind of limited advice you’d get in a free capacity.
If you decide to hire them to handle your portfolio, you’ll be charged a wrap free that includes the cost of investment advice and all trade commissions. The tiered fee schedule is 0.95% for the first $250,000 and goes down slightly as you increase your assets under management. Even though the Slate article says this is less than what other advisors pay, I would not consider it cheap. If you decide to hold mutual funds, their fees would still be on top of mutual fund expense ratios. They point out that because they rebalance for you, you’ll save money on taxes. I still think it’s too expensive for my DIY sensibilities.
I do like the free portfolio analysis charts though, and I would say currently Personal Capital is definitely better than Mint for tracking investments. But as with similar sites, you’ll need to provide them with your logins and passwords to sync unless you want to do manual imports.