A Tech-Infused Wealth Management Advisor Offering Human-Infused Advice

Personal Capital, a leader in using a combination of technology and personal advisors for wealth management, was ranked third among the nation’s wealth management firms by RIA Channel last year. This year it experienced a 23% annualized growth in net new assets in the first quarter.

The company’s new feature, The Financial Roadmap, generates a prioritized list of financial planning topics based on a client’s personalized data.

CEO Jay Shah said the company started 10 years ago with a free software platform that allows people to connect all their finances: checking, savings, credit cards, investments, mortgage, college savings plans, and car loans. It was the first to offer such a comprehensive wealth management dashboard, while other similar apps focus more on bank accounts rather than investments. Today it has 435 employees and offices across the U.S.

What makes a financial dashboard attractive to consumers?

Many consumers accumulate all these accounts from all over the place, but they are not very strategic. We also understand that people are not inclined to understand their finances. We built a platform that uses technology to allow people to connect all their finances in a matter of minutes. Our mission is to transform financial lives through technology and people.

How has it worked?

Since our launch in 2011 we have accumulated over two million users. A lot of people think of us as a start-up, but in a $36 trillion wealth management industry we have over 1% of investable assets linked to our Financial Dashboard. Consumers are coming in and looking at all their finances to get a strategic view of their financial life — not just a snapshot of where they are today, but to connect savings and spending goals out to the future. 

In 2019, we achieved a 57% increase in assets under management.

How do you make advisors and technology work together?

There’s no better way to enter the advisory marketplace than to let consumers have these tools and construct a financial plan. 

If we are going to offer financial advice, we have to see the entire picture. We have answered their questions through our tech, and now advisors can have strategic discussion of the trajectory they are on. 

We are a tech- and data-infused advisor, but offer human-infused advice. Our customers don’t want to answer a few questions and then get placed in a portfolio.

Is The Financial Roadmap, which you released this month, a more sophisticated approach to planning?

It starts with analyzing some basics like employer plan analysis and estate planning. But then over time, it adds more priorities such as building an emergency fund, paying down debt, saving for retirement — 19 priorities in total — based on a client's personal data, for them to discuss with their advisors.

“WE HAD A 60% INCREASE IN ACCESS TO OUR DASHBOARD SINCE THE CRISIS, SOMETIMES A DOUBLING OF TRAFFIC DURING PEAKS.” 

How active are your customers online?

Our average customer comes in at least every other day, even before the crash. 

We are the one place they can go and see all their transactions and their financial plan. We can detect events that might show a customer is under distress, and it provides advisors with alerts so advisors can outreach digitally or by phone. 

We had a 60% increase in access to our dashboard since the crisis, sometimes a doubling of traffic during peaks, while maintaining sub-second response times. We have also had a 75% increase in interactions between advisors and clients and have talked to the majority of our clients in the last 3 or 4 weeks.

What does your fee model look like?

We have one simple fee — and it is under 1%. 

We have three tiers of services, starting at 89 basis points and scaling down to 49 basis points, depending on the assets under management. 

We have a substantial number of clients in private banking, clients with over $1 million in investable assets — the majority of our assets are in that category. This is very different from robo advisors that have much smaller accounts and a much smaller share of overall investable assets for the clients they serve.

How are your advisors qualified?

We are entirely fiduciary, we don’t have hidden fees, and we don’t use proprietary products. We use products issued by our main competitors like Vanguard, BlackRock, and Schwab. 

We also provide advice in categories like estate and trust planning and insurance, but we are not selling clients an insurance product or an annuity.

Do you compete with advice sites like Credit Karma?

We do some of that, but there are a lot of fintech solutions to find you the best credit card. Rather than focusing down to penny optimization, we think in planning terms across the entire household: cash flow, investable assets, how much you should have in cash vs. how much in an investment portfolio. 

We use our planning software for large spending events over time. We also advise on which debts you should pay down first — home equity student loans, mortgage — a strategic level of financial planning.

But you did recently offer a savings product that pays 2.30% interest, right?

When we launched our Personal Capital Cash, we were able to look at our dashboard and see where clients were holding cash in underperforming bank accounts. We sent them messages that they could have a higher rate, and in four months about 20,000 signed up with Personal Capital Cash, without an external marketing campaign.