Friday, November 24, 2017

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 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.*

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