When I first started keeping track of my money I used Mint to monitor all my credit cards as well as my checking and savings accounts. Later, I used Bank of America’s net worth tracker which allowed me to link to all my accounts.
Eventually, Bofa’s layout changed and so I stopped using it and have since maintained a spreadsheet to track my net worth.
Personal Capital has been a popular net worth tracker which is marketed heavily to those with higher net worths. They apparently have have $7.5 billion of assets under management and 1.8 million users who are tracking a total net worth of $550 billion – or a $300k net worth per person.
Personal Capital’s Layout
I got started with Personal Capital 3 years ago and have used them side-by-side with my own net worth spreadsheet.
Personal Capital is by far one of the easiest, most reliable, and functional financial platforms on the web. They have been around since 2011, according to Wikipedia.
Their retirement planner is amazing and I’ve used it to plan for my own retirement. However, I was less impressed after my financial advisor drew up a plan using his own fancy software. My financial advisor was able to build a much more comprehensive view of my retirement which is impossible to do with the limited application Personal Capital offers.
Personal Capital also has a fee analyzer which analyzes all your funds and calculates the weighted expense ratio. For the investor who isn’t aware of the race to the bottom in terms of fees, this is a money-saving tool.
Problems with Personal Capital
I am perhaps excessively critical of advertising and the news media.
And though their referral bonuses and affiliate marketing is quite lucrative for a personal finance blogger, what risk does Personal Capital pose to the average investor?
Personal Capital Market Watch
Personal Capital is an indexer’s wet dream. It compiles all index fund data in one neat little place and calculates the weighted expense ratios and passive income numbers for these clients.
Which is why I’ve been confused by Personal Capital’s market watch.
Why should I care what Craig Birk, CFP is saying about Trump’s trade tariffs? How does Facebook’s $1 trillion valuation status affect my investing strategy? What is a certified financial planner doing reporting market news?
Instilling fear or doubt through such articles is often later followed by selling the investor reprieve. I would fear what reprieve Personal Capital has in store for me if their CFP’s are reporting short-term market trends.
My Rate of Return
I can’t recall the last time I logged onto my Personal Capital page to see that my ‘personal index’ was positive. I know I’m not doing anything wrong because my investments have been growing steadily. I mean shit, we are in a bull market, after all.
Is this is a fear technique or am I just logging on during times when my investments are performing poorly?
My Cash Holdings
There is also a heavy emphasis on me investing my cash. I see popups, I get emails, and there are notifications all over my Personal Capital page telling me to invest my idle cash.
This isn’t good advice because PC doesn’t have enough information about my personal situation and my investing strategy to give such advice.
Sure, I might seem overly critical but general advice that’s not uniquely tailored to an individual makes for shitty advice.
Advertising their CFP’s
There is nothing wrong with a business offering me their paid services so that they can earn an income. Personal Capital wants to push their CFP’s on me which I can appreciate.
The problem with someone seeking you out versus you seeking them out is that they often approach you with an agenda. I don’t know what the agenda is. I don’t know how great of a salesperson this CFP is and I certainly don’t agree with this strong index fund investing which Personal Capital peddles.
I would advise any medical professional to seek out their own financial advisor and interview several before choosing one. Even then, you probably will have to change your financial advisor a few times until you find the right fit.
The Value of Your Data
As data aggregation grows, I place more and more value on my data. I put some effort into protecting it but I also don’t want someone else profiting from my data without reimbursing me.
I could make the argument that the beautiful account overview that Personal Capital provides for free should be adequate payment in return for the data I provide them.
I might be okay with my data being used and sold by such a company but I am not okay with being advertised to. Advertising is one of the most powerful tools in our economy and it will indirectly affect my investing behavior.
I have seen more and more advertising by Personal Capital and though I appreciate their services and the amazing product they have created, the time has come to delete my account and continue tracking my net worth using my spreadsheet.
The Disproportionality of Large Companies
One disadvantage with technology – and our ability to communicate so easily with each other – is that we tend to spread the word of a product or service too readily.
This allows big companies to get bigger. A snowball effect takes place and a power disproportionality arises within one particular company. Not because that company is better but because we all flock to it due to a proximity effect.
When one company like Personal Capital gets really large, it squashes competition. When competition decreases innovation stops and the consumer, you and me, gets screwed.
Medicine is experiencing this as we speak. Look at how many doctors have left private practices for large medical groups. Despite my attendings warning me, I chose the path of least resistance and this eventually hurt me.
Now, we’re not responsible as consumers to help balance the market – some of that responsibility falls on lawmakers as well. But we can make choices and I think choosing a good CFP who isn’t swayed by a large company like Personal Capital is a good start.