I just went through the sales pitch for their "tactical weighting" investment strategy. Overall the experience was pleasant enough and very low pressure with plenty of feedback time for me but I'm just not sure if what they are selling is all that different from a typical actively managed fund.
Their pitch was: at 30 years old, I should be 60% in US stocks, about 40 of them which would theoretically give me equal sector weighting. 25% in developed foreign markets via 2 ETF's. 10% in alternatives, majority REITs and a bit of gold and commodities, and the remaining 5% split between bonds and cash. So its an extremely diverse strategy...perhaps too diverse?
Overall Pros: fees are relatively low (balances under 1 million pay 0.92% per year) over a million is a lower fee. Takes the worry out of rebalancing and keeping an even sector distribution. Supposed professional money management.
Overall cons: fees are much higher than admiral shares index funds I currently own. No set control over how frequently things are traded/could mean high turnover. Buying a select stock that represents a specific sector is a nebulous strategy, and while they claimed they "don't go for the hot IPO's" I don't know enough about what their investment strategy is to be comfortable with them selecting my stocks for me.
Can get the same diversification if i bought 3 index funds: a S&P 500, a small cap, and an international, for 1/6th the annual fee that they charge.
The more I delve into this "tactical weighting" the more it feels like an actively managed fund, and I'm really not convinced that I need to have a team of investors trying to outguess market volatility in order to rebalance my portfolio. That's exactly the strategy that guys like Jack Bogle warned about and I believe it's just the natural inclination for investors and advisers to conclude that one is "missing out" on gains if they just let their money sit and be dumb in one or several index funds.
I believe the Personal Capital is sincere in their goals, but I still do no see how their plan will outperform common benchmarks like the S&P, MSCI-EAFE, or Russell 2000 over 20-30 years.
If anyone has a differing, educated opinion on the matter, I'd love to hear it.