When it comes to web-based investment management platforms, two names are battling it off – these are Wealthfront vs Personal Capital. Both are very promising in their own respective ways, but which one stands out? That we will find out.
Back in the days, investing is quite challenging. Thanks to digital advancement and the internet, today, people who want to invest and manage their investments do have the means to do so wherever and whenever they want to.
There is a growing number of web-based investment management platforms, and with so many options around, it can get a little challenging to choose one. But you know, the thing is, there are companies, rather an investment arms that have earned popularity over the rest. Among them are Wealthfront and Personal Capital. Later on, we are going to do a head-to-head comparison between the two to know which one is better.
Before we get into our comparison review, here’s an interesting fact about Americans’ attitude towards investing.
In a report published by Gallup, it says that in the study they conducted back in April 2019, only 55% of Americans reported that they own stock. This number is just one percent higher compared to previous years. According to the report, the number was based on “a question asking respondents about any individual stocks they may own, as well as stocks included in mutual funds or retirement savings accounts, like a 401(k) or IRA”.
For some people, this statistic is quite surprising given how people thought of American people. You know, a lot of non-Americans thought that we are better at handling money and that we are goo in investing as well. Obviously, only a few of us are.
However, with the advent of web-based investment management platforms, plus more resources coming out about investing and personal finance management, the numbers may change in the future. Today, investing has become like a household name, and more people are becoming interested in it. So, who knows, our prediction may be right!?
Anyway, going back to Wealthfront and Personal Capital, we are, in particular, going to look into the following details as we go through this comparison review:
- A quick comparison between Wealthfront and Personal Capital
- Brief backgrounder on Wealthfront and Personal Capital
- Wealthfront and Personal Capital Investment Management
- Notable features of the two platforms
- Customer Service
Having said all that, let’s begin.
WEALTHFRONT VS PERSONAL CAPITAL: QUICK COMPARISON
Before we go into a detailed comparison, you may want to check the table below to have a quick idea of what to expect on both Wealthfront and Personal Capital. The table will also show how similar and how different Wealthfront and Personal Capital are from one another.
|ITEM FOR COMPARISON||WEALTHFRONT||PERSONAL CAPITAL|
|Account Fees||0.25%/year Days||Wealth Management: First $1 million: 0.89% ; $1-3 million: 0.79%; $3-5 million: 0.69%; $5-10 million: 0.59%; Over $10 million: 0.49% Days|
|Account Available||Taxable, Joint, Traditional IRA, Roth IRA, Rollover IRA, SEP IRA, 529, Non-Profit||Taxable, Joint, Traditional IRA, Roth IRA, Rollover IRA, 401(k), Trusts, 529|
|Socially Responsible Investing||Yes||Yes|
|Invests in Commodities||Yes||Yes|
|Invests in Real Estate||Yes||Yes|
|Assets Under Management||$11,022,761,706||$8,500,000,000|
|Number of Accounts||272,792||37,793|
|Tax Loss Harvesting||Yes||Yes|
|Access||Web-Based||Web Based, iPhone App, Apple Watch, Android App|
|Customer Service||Phone: M-F 7A-5P PT; Email||Phone: 24/7; Email|
|Promotions||$5 Managed for FREE||Join for FREE|
Looking at the above data alone, it may be hard to decide yet which one is better. However, that’s opposite to those who already know what they want when it comes to a web-based investment management platforms.
WEALTHFRONT VS PERSONAL CAPITAL: BRIEF BACKGROUNDER
Meanwhile, let’s take a look at the history of both Wealthfront and Personal Capital. This will give us an idea of how trusted the brand is.
Wealthfront is one of the popular names when it comes to the Robo-advisory industry, also known as automated investment service. Basically, it means putting your money into an account, and all the other aspects of investment management are handled for you by the Robo-advisor.
Wealthfront was founded in 2008 by Andy Rachleff and Dan Carroll. It was initially called, “KaChing!”. The idea behind Wealthfront was intended to mimic the portfolios of stock professionals while using your money.
In 2011, the company was renamed to what it is now – Wealthfront. Apart from renaming and rebranding, Wealthfront also started molding the company to be an all-in-one financial solutions provider.
Fast-forward to now, the company is focused on three automated services, which include:
- Free financial planning,
- Investment management, and
Once you sign up with Wealthfront, it means you are allowing your money to be invested in a globally diversified portfolio of ETFs. However, it is important to take note that your portfolio varies depending on the kind of account you open – whether it is a tax-deferred or a taxable account.
If you are interested to know more about Wealthfront, you may want to check the below video by Chris Guthrie as he shares his personal review on this investment management platform.
ABOUT PERSONAL CAPITAL
Personal Capital is primarily a fee-based wealth management platform. However, it also offers free financial software for budgeting and personal finance management.
As compared to other online platforms, Personal Capital’s free financial software is quite comprehensive. Needless to say, it also offers very extensive investment tools. What’s even good about it is that you have the option to either use the free financial software in conjunction with wealth management, or you can just use the software itself.
Furthermore, Personal Capital was launched in 2011. As mentioned, it is an investment management service platform that at the same time, also provides a free personal finance dashboard.
Personal Capital comes with two important elements — the personal financial aggregating and advisory services to manage your finances. While the personal financial aggregator is great, Personal Capital excels when it comes to tracking every aspect of your investments.
In addition, free online money tools are standard when it comes to helping you understand your investments. Personal Capital breaks down your asset allocation, calculates your net worth, and shows your portfolio performance by every account or across accounts. It also provides you with a high-level overview of your cash flow on a per-category basis.
Essentially, all you have to do is connect all your financial accounts, and let Personal Capital take care of the rest.
WEALTHFRONT VS PERSONAL CAPITAL: INVESTMENT MANAGEMENT
To have a better idea of which between Wealthfront and Personal Capital is better, let’s look into their respective investment management features.
Wealthfront makes use of modern portfolio theory. They follow a passive investing strategy that includes matching underlying investment benchmarks instead of trying to outperform them. Wealthfront is able to do so by investing their members’ portfolio in low-cost, index-based ETFs.
Wealthfront spreads your portfolio in as many as 11 various asset classes, which include the following:
- U.S. Stocks
- Foreign Developed Market Stocks
- Emerging Market Stocks
- Dividend Growth Stocks
- U.S. Government Bonds
- Corporate Bonds
- Emerging Market Bonds
- Municipal Bonds (taxable accounts only)
- U.S. Treasury Inflation-Protected Securities (TIPS)
- Real Estate (through a real estate investment trust)
- Natural Resources
What Wealthfront does is they use a corresponding ETF for every asset class. Wealthfront provides both periodic rebalancings as well as automatic dividend reinvestment on all accounts.
PassivePlus is designed to increase returns without increasing portfolio risk. This feature uses time-tested, rules-based strategies to invest beyond index funds. Furthermore, it includes smart beta.
Personal Capital makes use of a tactical weighting approach with customary indexing of U.S. equities. They get to do this by sustaining more evenly weighted exposure to every sector and stock. Generally, Personal Capital favors passive investing.
What Personal Capital does is that they customize investment strategy by basing it on your overall financial situation as well as your personal goals. Moreover, they will include medium-term investment goals, such as financing a college education or buying a home.
The portfolio of its members will be done according to the Modern Portfolio Theory. This means equities will incorporate a well-diversified sample of 90 to 120 individual stocks for tactical weighing, tax optimization, and small-cap index ETFs.
The different asset classes that are included in your portfolio are as follows:
- U.S. Stocks
- International Stocks
- U.S. Bonds
- International Bonds
- Alternatives – This includes “hard assets”, such as real estate investment trusts (REITs), gold and energy, as hedges against inflation.
- Cash, for liquidity
With Personal Capital, they do not require you to deposit your investment funds with them. What happens instead is that your account is held with Pershing Advisor Solutions, a Bank of New York Mellon company.
This basically means your portfolio is monitored on a daily basis, and it is rebalanced as needed to ensure asset classes are within target allocations.
You can check how Personal Capital is doing in this aspect on their website by checking the “Performance” button.
WEALTHFRONT VS PERSONAL CAPITAL: NOTABLE FEATURES
So, we’re done discussing both Wealthfront and Personal Capital’s investment management aspect. This time, let’s look into some of the notable features of both web-based investment management platforms.
Portfolio Line of Credit
This is one of the unique features of Wealthfront. This basically means you are given the freedom to borrow against your Welthfront investment account without any application process, no fee, as well as no need for a credit check. Since it is considered as a secured like, currently, the interest rates range between 4.25% and 5.50% APR.
To be eligible for this feature, you have to have an investment account balance amounting to $100,000. Also, you are allowed to borrow up to 25% of your account balance at any time and for any reason. In addition, Wealthfront allows you to repay your debt on your preferred schedule.
Wealthfront Path Tool
This tool helps you plan out, as well as track your financial goals in life such as buying a home, retirement, as well as saving up for college.
As earlier mentioned, Personal Capital is primarily a wealth management service. However, it also offers free financial software and provides budgeting as well as investment applications.
In Personal Capital’s free version, you will get to enjoy the following features:
- Goal setting
- Investment management
- Planning and managing retirement accounts
- Creation of income, spending reports, and upcoming bills
What makes Personal Capital different from Wealthfront is that it lets you assemble all your financial accounts in one place. This includes your bank accounts, investments, credit cards, mortgages, retirement accounts, and other loans
In addition, Personal Capital lets you track your net worth. Being knowledgeable about it allows you to compare your net worth to the median U.S. household net worth according to your age bracket.
Furthermore, there are other interesting features you can find in Personal Capital free version:
This helps you identify investment fees, as well as recommends alternative investments to cut fees, and also in improving your long-term investment performance.
This provides you with different retirement-related tools like the Retirement Calculator. This allows you to track your progress when it comes to your retirement goals, so you can make necessary changes if needed.
Investment Checkup Tool
This helps analyze your portfolio, as well as recommends improvements to help you meet your financial goals.
WEALTHFRONT VS PERSONAL CAPITAL: PRICING
Comparing Wealthfront and Personal Capital is not complete without looking at pricing and fees. Let’s admit it, in everything, we always consider pricing. In fact, some people consider it a major factor in making decisions.
Having said that, here’s how Wealthfront and Personal Capital fair –
Wealfront charges a flat yearly advisory fee amounting to 0.25%. Compared to other Robo-advisor companies, this fee is at the lower range.
Apart from this, Wealthfront does not charge any additional fees like trading commissions.
In addition, according to Wealthfront, the expense ratio of the ETFs they use is 0.09% annually. This pertains to fees charged within the ETFs used.
As mentioned earlier, Personal Capital is financial software that is available to anyone without a fee. Yes, it’s for free! That includes not just its budgeting capabilities, but also the investment support services.
Meanwhile, Personal Capital’s Wealth Management versions use a tiered advisory fee, which can be as low as 0.49% annually for very large account balances. However, most investors will pay 0.89%. Please note though that the fee only applies to actual investments that are under management with Personal capital.
WEALTHFRONT VS PERSONAL CAPITAL: PROMOTION
Another thing you may consider when choosing a web-based investing tool is their promotions.
Wealthfront offers free management for the first $5,000 invested with them. However, this is applicable to DoughRoller readers only.
Meanwhile, Personal Capital, as of this writing, do not have any promotions. But that should not make us feel bad. After all, the platform is free for everyone.
WEALTHFRONT VS PERSONAL CAPITAL: ACCESSIBILITY
In this time and age, people prefer anything that is convenient to them. Do you agree? Thus, it is not surprising why we are talking about the platform’s accessibility now.
So, let’s start with Wealthfront. Wealthfront is available for mobile devices (both iOS and Android), as well as desktop and tablet.
Meanwhile, Personal Capital is also available for mobile devices (both iOS and Android users), desktop, and tablet. In addition, it can also be accessed through Apple Watch. The app is downloadable through the App Store and Google Play.
WEALTHFRONT VS PERSONAL CAPITAL: CUSTOMER SERVICE
To cap off our comparison review between Wealthfront and Personal Capital, we are going to look into their respective customer service support.
Wealthfront does have a customer service, which can be reached either through phone or email, Monday until Friday, from 7 in the morning until 5 in the afternoon (Pacific Time). Wealthfront also has a Help Center page wherein you can find answers to commonly asked questions on different topics.
In addition, Wealthfront does have a Learning Center, which provides you with articles and videos on a wide variety of topics like IRAs, 529 plans, 401(k) plans, and general investing.
As with Personal Capital, they can be reached through phone or email 24 hours a day, seven days a week. In addition, they do have a comprehensive FAQ page, which main focus is on Wealth Management.
Personal Capital also provides a Support Portal wherein you can find a large amount of information regarding the software.
FINAL THOUGHTS ON WEALTHFRONT VS PERSONAL CAPITAL
There are so many options when it comes to web-based investment management platforms. But among the many options, there are two names that are popular in this industry – Wealthfront and Personal Capital.
The two offers impressive services. While they both have similarities in different aspects, they do have a lot of differences as well, which makes one unique from the other.
Are you looking for a web-best investment management platform? How do you find Wealthfront? How about Personal Capital? Have you decided which one is the best yet?