Personal Capital Investment Services

[jackebee1]

My husband and I are looking to move two Roth IRAs and his traditional IRA from Edward Jones to someplace with less fees.  I signed up for personal capital so I could track our net worth, and of course they called to set up an assessment.  I decided to hear them out since we want to move our funds anyway.  I know the .89 %PC charges to manage the money is more than Betterment or Wealthfront, but we aren't comfortable investing on our own just yet so the thought of having an adviser sounded kind of appealing.  Does anyone have any experience with Personal Capital Investment Services or any suggestions for someone who knows she's paying too much in fees right now but would still like some guidance with investing? 

Thanks.

[matchewed]

http://jlcollinsnh.com/stock-series/

It's really this simple, don't pay 0.89% if you don't have to.

Vanguard, Total Market fund, and then learn. Adjust as necessary after you learn.

[ShoulderThingThatGoesUp]

Just get comfortable investing on your own. Schwab and Vanguard won't charge you any fees to have the account and they have perfectly good ETFs with very low expense ratios. The 0.04% - 0.14% I spend to keep money in Schwab ETFs is much less than 0.89%, and the resulting allocation can be exactly the same as Personal Capital's if you want it to be.

[gluskap]

I had the consulting call with Personal Capital too and decided to just do it on my own.  Open a vanguard fund and put it all into VTSAX.  Then go out and learn as much as you can and adjust later.

[a1smith]

I use the Personal Capital (PC) website to track my finances and it is an excellent tool to do that.  However, I don't use them as an investment advisor; their fee is too high.  With the push for lower fees and the number of robo-advisors out there I'm surprised they charge that much.  They're starting to explore ways to get more business; they just lowered their minimum from $100K to $25K.  Eventually they'll realize they really need to reduce their fee.  From their ADV, it looks like they have 11,355 customers as of 7/23/2015.

One thing PC says they do in their Investment Strategy whitepaper is to equal weight sectors instead of cap weighting them for better investment return.  However, this is not magic - you are just increasing risk and therefore increasing your (expected) return - just moving up the capital market line.  Also, if you do a literature search you will find papers that show the difference in investment return is not as high as what they show with their Russell 1000 example.  One of the other main benefits PC touts is tax harvesting but since you only mention IRA's that is of no use to you.

The question I have not seen PC answer is how does their investment strategy return at least 0.89% more than market return (at your asset allocation) such that investing with them is value added.  Don't expect an answer; there's an overwhelming body of evidence to show it is not possible on a consistent basis.

I do what's been mentioned above - invest on my own.  Our Roth IRA's and some after tax accounts are with Vanguard.  My recommendation is that you do the same.

Rather than put it all into VTSAX (Total Stock Market Index Fund) you can use Vanguard's questionnaire to get an initial asset allocation.

Then, after you learn more, you can fine tune your allocation as you see fit.  The J Collins series mentioned above is great along with this website and https://www.bogleheads.org/.  Since your accounts are IRA's there will be no tax consequences of adjusting your allocation later.

[Interest Compound]

Step 1. Call Vanguard.

Step 2. Tell Vanguard you want them to manage your money for you. Tell them you've heard great things about their "Automatic Robo-Advisor" services. They call them "TargetRetirement". All they'll need is your age, and they'll handle your investments for you, for the rest of your life. You don't have to change a thing, they'll manage it for you as you get older, and they won't charge you any extra fees.

How can they afford this without charging any extra fees?



Step 3. Go about your day.

[a1smith]

Here is the whole list of Vanguard funds.

The Target Retirement funds are target - date funds.  (Target a certain retirement date, but AA over time is decided by Vanguard.)

The LifeStrategy funds are target - risk funds.  (Target a certain risk level)

The questionnaire I linked to above sometimes uses Target Retirement funds, sometimes Lifestrategy, and sometimes a combination of Total Stock, Total Bond, Total International Stock, and Total International Bond index funds.  It depends on how you answer the questions.

For the four fund approach Vanguard currently recommends: for your stock allocation, 60% Total Stock and 40% Total International Stock; and for your bond allocation, 70% Total Bond and 30% Total International Bond.

So, if you have 70% stock and 30% bond you'll have 42% Total Stock, 28% Total International Stock, 21% Total Bond and 9% Total International Bond.  Basically, that is what I am using but I also have some REIT and GNMA.

[jackebee1]

Thanks for all of the info.  Looks like I've got some good resources to read over.  :)