Personal Capital: A Place to Aggregate Your Financial Data

Today I am going to talk about Personal Capital, an online wealth management service available to rich and poor alike.  While my use of it to date has been to track investments, Personal Capital also allows you to track spending and Personal Capital makes it money by managing investments and providing financial planning services. If you use my link to sign up with Personal Capital and link one of your accounts, we both get $20.00

Using Personal Capital to Track Investments

I don't think my family is abnormal in having my 401(k) with one brokerage house, my husband's with another, and our IRAs in multiple accounts with yet another company.  Throw in a couple of accounts we have for my entertainment, and keeping track of how much we have overall and how it is distributed can be time-consuming.

Personal Capital allows you to link all your investment accounts.  Most can be set to automatically update both the number of shares and the price per share.  We can do this with our accounts at MFS, Motif, Vanguard, Lending Club,  and Prosper.  For these accounts, new purchases, dividends and exchanges are all automatically updated on Personal Capital.  Personal Capital knows that we have bond funds in my 401(k) and in my husband's Roth IRA. It knows that we have a REIT fund in my IRA.  

For my husband's 401(k) with AXA and our accounts at Stockpile and Robinhood, linking is not possible.  Since Stockpile and Robinhood sell stocks anyone can purchase at any licensed broker, all we have to update is the number of shares; Personal Capital looks up the price and updates it daily.  The funds sold by AXA are not trackable by a ticker symbol so we have to update everything manually. 

Personal Capital also allows you to enter the value of assets such as real estate, and liabilities, such as mortgages or other loans.  If you consider your Beanie Babies to be an asset, you can enter a value for them (I don't think it has a way to automatically value collectibles).    

Now that everything is in Personal Capital, I can run an "Investment Check-up" that analyzes our entire portfolio against their ideal allocation for someone who answers their profile questions the way I did.  I run a check-up when adding new money to the account, to see which investments to purchase and I run it quarterly to see if re-balancing is necessary.    Today's version of the results is below:

Personal Capital also has a Retirement Planner that takes information about my assets, my plans for future spending (like when we plan to buy a new car) and my saving plans, looks at my risk tolerance and estimates whether I will meet my retirement goals.  It is a basic Monte Carlo analysis that estimates what is likely to happen in the worst markets and the best and then predicts how likely it is that I will have enough money to meet my goals (90% chance right now).

Using Personal Capital to Track Expenses

Tracking investments,in my nerdy opinion, is fun, particularly in years like this when the market does well.  Tracking expenses, not so much so.  However, one of my financial goals next year is to sit down and link my credit card and bank accounts to Personal Capital to track my spending.  

According to things I've read, Personal Capital will import your spending information and then allow you to slice and dice the data.  How much did I really spend at Amazon.com last  year?  Is my coffee habit really hurting our plans?  Where is the low-hanging fruit for spending reduction?  

Cost of A Personal Capital Account

Setting up an account with Personal Capital is free, as is linking all your accounts to it.  They hope to make money by selling you advisor services.  As a matter of fact, right now, setting up an account is better than free:  if you use this link to Personal Capital, set up an account and link one of your accounts to it, then both you and I get $20.00.

Should you decide to use them as your financial advisor, they are fiduciaries, meaning they are obligated to act in your best interest.  For accounts under $1 million, they charge 0.89% per year of assets under management.

Using Personal Capital as a Financial Advisor

I have not used Personal Capital as a Financial Advisor, and honestly I doubt I'll ever hire anyone for that job again.  However, compared to my experience using an H.D. Vest advisor, at least according to their website, you get a lot more service for a lot less money.  

Personal Capital claims to take all your assets into consideration when planning your investments, which makes perfect sense.  I know over half our assets are in our 401(k) accounts, and the funds in which we can invest are limited.  If we want a balanced portfolio, those assets have to be considered.  Personal Capital says they offer 401(k) advise as part of their package.  

Another thing that aggravated me about our financial advisor is that all three accounts we had with him (two IRAs and a taxable account) were invested in the same funds in the same proportions.  to me, it made more sense to put funds that paid dividends regularly into tax-deferred accounts, and funds that had price appreciation as a goal in the taxable accounts, since tax would not be due until we sold.  Personal Capital claims to tax-optimize your accounts in the way assets are allocated. 

While you don't get quarterly sit-downs with your advisor, or invitations to sales dinners, you are able to contact an advisor via email or web chat. 

I have been adding data to my Personal Capital account for the last couple of months and I have found the insights on my investments to be valuable.  Why don't you use my link and give it a try, and we'll both get $20 out of the deal.  

*Part of Financially Savvy Saturdays on brokeGIRLrich.*

Is a Financial Adviser Worth the Cost?

We hired a financial adviser because we wanted some unemotional professional advice on whether we were on-track to meet our retirement and other financial goals, and, if we were not, how we could go about getting there.  We also were not happy with the performance of our stock portfolio and wanted some help picking new funds and thought it would be nice to have someone who knew what they were doing watching the funds and deciding when it was time to move the money elsewhere.  We hired a CPA we knew who has done our taxes a few times over the years when I thought I needed professional advice.  He offers financial advising services and sells life insurance and mutual funds.  He charges financial advising clients a percent of assets under management.  I really wanted someone who billed by the hour who would give us a plan and let us implement it, but I wasn't able to find such a person.  The CPA is an old friend and so we decided to give it a try. Still, I wondered "Is a financial Adviser Worth the Cost"?

We have been with him since July.  He interviewed us about our goals and about our risk tolerance.  He gathered the paperwork necessary to switch our IRAs and other funds to the firm with which he works (HD Vest), and gave us a pep talk about sticking with the program even in down markets (which we've been doing for twenty-five years).  I get that he gets paid for getting our money invested and keeping it there, so I was willing to forego the "advice" part of the equation until he got everything set up.  However, when we met recently, the phrase that came to mind was GIGO--garbage in, garbage out.  He had a nice chart drawn up showing how we were doing fine, how we were in the optimal zone to reach retirement on our schedule, with half our current pay (that would be possible but awfully tight) and he was only showing about 80% of our assets.  I asked him to redo the chart but he said it took a while to put it together.  We meet every three months and before our next meeting I will make sure I get him a full list of all our assets.  I really want to know how much money we are going to need, given our situation and lifestyle and how much we need to save every month to get there.  I know there are a lot of variables, but the information I got from him was information I could have gotten from any number of web calculators.  If what I am paying for is personalized advice, so far, I'm not impressed.

As far as the mutual fund portfolio, it has tracked the market, which is no great surprise.  On the other hand, I can really see the fees he is charging eating into our returns.  

So, is a financial adviser worth the cost? I'm going to watch things for another year or so, but I'm leaning toward going it alone again.  

End of 2014 Report

Photo compliments of Christmasstockimages.com

The end of the year is time when we take stock of where we have been and where we are going.  2014 was a year of changes in our financial management.  I inherited money from my father and we switched from managing all of our own investments to hiring a financial adviser. I'm not going to give out dollar values but we believe our portfolio is on track to lead us to a comfortable retirement.  Here is what we have and how it is invested, along with the changes we've made this year:

My 401k:

This is a substantial account as I have been with the same firm for twenty years.  For quite a few years the firm has contributed 5% of our salary to the 401k; prior to that, they contributed 4%.  I've been contributing 15% of my pay for quite a few years but I really increased the value of this account this year.  I got the first installment on my inheritance in June, so I had about that much money withheld from my pay and put into my 401k, in essence living off that tax-free money and shielding my paycheck from income taxes by investing it for retirment.  The 401k is with Hartford Retirement and the funds I own are Delaware US Growth A (DUGAX), Franklin Total Return A (FKBAX), Janus Triton A (JGMAX), MFS Aggressive Growth Allocation A (MAAGX), and MFS Growth A (MFEGX), I put about one-third of the money in Franklin Total Return (basically a bond fund), and split the rest among the stock funds.  Between dividends and increased value, I earned over 6% last year.

My husband's 401k:

This is a relatively small account.  He has been at his job for about ten years but has only participated in the program for about five.  The fees are high and the investment choices are low.  I finally talked him into switching from investing in a money market fund to investing in a stock fund and of course the market then went down.  Still I think the long-term potential is better with stock and the whole point of a tax sheltered account is to grow it.

Our Roth IRAs.:  

We've had these account for several years and while we haven't often maxed them out, they are no longer a small part of our holdings.  They are invested in Vanguard 500 Index Admiral Share (VFIAX) which went up over 15% last year.  

Our Regular IRAs and other Mutual Fund Holdings:

Our IRAs were started years ago when neither of us could contribute to a plan at work.  They were invested in the hottest funds of the early 1990's and had not been substantially changed since that time.  Life and children got in the way of keeping up with the funds, and in general, they went higher every year, so things must have been ok, right?  Upon doings some research, I realized that there were better options out there.  We also made the decision to hire a financial adviser.  He/his company put us into a portfolio of twenty-three different mutual funds.  Looking at what they did, I can see where each fund plays a different role in the portfolio but I'm not going to list them all simply because typing all that would drive me up the wall.  We bought into that portfolio in August and the share prices fell shortly thereafter.  While dividends meant we earned a little money on this large portfolio, the share prices are not back to where they were when we bought.  That, coupled with the fees we pay, makes me question the wisdom of using this adviser.  We'll give it another year or two but if I don't see better results, we will go back to doing it ourselves.

Peer-to-Peer Lending:

My investment in Lending Club started out as a toy. I read about it online somewhere, thought the idea sounded good, and made a small investment.  I tried some different strategies and read a lot and became more convinced this was a good idea.  Before the end of the year I had also opened an account at Prosper.  Between July and December, I earned $124 from money that had been sitting in a savings account earning almost nothing.  

Savings Account:

We have a savings account at our bank, which, like most bank accounts, isn't paying much of anything.  At the end of the year we had about two months living expenses in that account, which is about where we want it right now.