Is Personal Capital a Legitimate Firm?

Founded in 2009 by Bill Harris and Rob Foregger, Personal Capital is an online financial advisor and personal wealth management firm headquartered in San Carlos, CA. In 2021, the company has over $2.5 billion in assets under management. Currently, over 1,000,000 people use their free asset tracking service to track over $245 billion. They also offer a Private Client Service for customers with more than $1 million to invest.

The free service is a personal financial software program that aggregates all accounts into a central location for easy computerized tracking and monitoring of investments, spending, net worth, and taxes. Personal Capital makes money by offering a fee-based wealth management service for individuals with more than $25,000. In exchange for personalized financial advice, the company receives an annual fee of between 0.49% and 0.89% of assets depending upon account balance.

Is Personal Capital Safe?

They are legitimate in that the company is a registered investment advisor with the Securities Exchange Commission (SEC). The wealth management service uses individual stocks along with fixed-income oriented ETFs to construct a portfolio for clients based on individual goals and needs. The annual management fee Personal Capital charges customers is on top of any management fees that are charged by the particular ETFs in a portfolio, which may or may not be competitive within that investment's peer group. However, the diversified stocks in an individual portfolio don't charge any fees, so Personal Capital's fee is the only fee assessed on individual stock holdings.

In effect, Personal Capital, along with many other financial advisors, adds another layer of fees to portfolio management. It's a legitimate way to do business, but the extra fee will noticeably reduce a portfolio's annualized return compared with an unmanaged benchmark index.

Is personal capital a scam

Individuals who do not wish to manage their own investments, even as minimally as selecting a handful of diversified index mutual funds or ETFs, may find the extra fee worth paying. Those who prefer to actively manage their portfolios might wish to avoid a company such as Personal Capital that utilizes the Assets Under Management (AUM) model.

Regarding online safety, the company appears to have a robust and secure website for monitoring one's assets. In addition, because Personal Capital does not actually hold clients' assets, there is no risk of fraud or shady account from Personal Capital financial advisors. Also, even though the personal financial software accesses the account information of every account entered into the program by an individual, moving money into or out of an account through Personal Capital's software program is not allowed. Therefore, even if a hacker breaks into the program, Personal Capital claims the hacker won't be able to access any client money.

Is personal capital safe

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Is Personal Capital Insured?

Personal Capital does not appear to be insured, but Pershing Advisor Solutions, a Bank of New York Mellon Company, hold all the assets in Personal Capitals asset management business. Since Personal Capital never directly takes custody of client assets, they aren't required to be insured.

Pershing is insured with both the Federal Deposit Insurance Corporation (FDIC) and Securities Investor Protection Corporation (SIPC) the same as all other companies who manage or hold client assets. Pershing is also a member of the Financial Industry Regulatory Authority (FINRA), a group that monitors and disciplines unethical or unlawful financial services companies.

Is Personal Capital a Scam?

Personal Capital does not appear to be a scam. They are a legitimate financial services business that appears to comply with all laws and offer financial services to clients in exchange for an annual management fee. The company uses a free financial planning software tool to attract potential customers for its asset management business, but that is a legitimate way to generate customers, and the personal financial planning software is not connected in any way to the AUM program. Individuals can choose to use either program, independent of the other.

Personal Capital Complaints, BBB Rating

The only Personal Capital office with BBB information is the Denver office, one of three locations. The company is not accredited by the BBB, but it has earned an A+ rating.

In the past 3 years, no complaints against Personal Capital have been closed with the BBB. The company has received no customer reviews from the BBB.


The strongest competitor to Personal Capital is M1 Finance. This company offers investing completely for free.

Is Personal Capital Scam Conclusion

Personal Capital is a safe and legitimate asset management company that offers free financial planning software as an enticement to open an account with their financial advisory service. Its track record is clean, and the business is growing and has enough longevity to be considered a viable and legitimate competitor in the AUM market. Personal Capital's management fees are higher than many other online asset management companies are, but they do offer individual stocks as well as ETFs, which at least in part justifies a higher fee for more research and screening.

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