Comparison & Alternatives
Because we track advisory firms that aid in self-directed IRAs for retirement, we take a closer look at the highest profile firms in the space. There are a number of the publicly-available firms that are well-suited to our readership.
These firms include Wealthfront, Personal Capital, Acorns, Betterment, and Vanguard.
We are likely to review other firms as they present themselves for review, but our first class of reviews will focus on these seven firms.
To compare these services, we will focus on their fee structure, ease of use, and flexibility. We will then put these factors in the context of the ongoing expenses for investing in stocks, bonds, and real estate.
Finally, we will briefly discuss the alternatives to these firms, including DIY investing, traditional broker-dealers, and a few other alternatives worth considering.
We will take a harder look at some of the comparisons and points of differentiation in sections that follow. For now, though, let’s look at some of the points of differentiation and advantages to these services.
The first consideration is that each of these firms offers a unique service for self-directed IRAs.
Wealthfront, for example, was one of the original robo-advisors that focused on the automation of investment portfolios. Personal Capital is a natural extension of its core business with an eye on retirement.
Vs. Personal Capital is a topic worth researching. Let’s compare the two service and see which offers the best deal.
Both services are online investment advisors but there are major differences when considering which service the best one is.
Personal Capital is a comprehensive financial platform that does include investments. They do have some “proprietary” algorithms that help you decide what your best investment options are.
Wealthfront is a more complete financial services setup. They are an investment advisor and wealth manager rolled into one financial company.
Wealthfront focuses solely on investment management. While Wealthfront does have algorithms that help decide the best investment options, they believe in having an actual human make the final decision.
Overall, Personal Capital has more functionality. They do have investment advisors that are based all around the country and will be able to help you if you ever have questions.
Personal Capital does charge fee’s on different types of transactions and they do have a minimum to get started.
Both Personal Capital and Wealthfront are going to cost you—so don’t expect to make money right of the bat.
Getting started with Wealthfront.
Wealthfront is an online investing service that promises to manage your investments so you can spend your time doing what you truly want to do. Whether that’s traveling, exploring new hobbies, or relaxing more… the key is to sit back and let them do all the work.
Wealthfront doesn’t have an account minimum.
Higher fees. Wealthfront's annual fee ranges from 0.25% to 0.5% of assets depending on your balance. Personal Capital's annual fee is 0.89% of assets.
Vs. Wealthfront: Who Meets the Requirements? – Personal Capital wins.
There are many aspects that differentiate Personal Capital from Wealthfront as well. While both are extremely easy to use, we found that Personal capital was easier to use.
With Personal Capital you are able to see the amount of money spent at each store.
With Personal Capital you can track your spending and get alerted about over spending in specific areas.
The Wealthfront portfolio has a high number of accounts.
If you have a few thousand dollars to invest, there are many other companies that can help you.
The reason we like Wealth Front best is because they are a newer company.
Portfolio rebalancing seems to be less expensive.
Individual account management.
The fees paid to Personal Capital and Wealthfront are higher than they can be with some other robo advisors. This is because of the level of service each company offers. Personal Capital charges an 0.89% annual advisory fee for managing an investor’s portfolio. Wealthfront charges a 0.25% annual advisory fee, though it waives that fee for its first million in AUM. The company also offers a range of services that cost extra, including estate planning and custom financial plan, as well as credit-card optimization services.
The main advantages of using Personal Capital vs Wealthfront are its user-friendly investment analysis tools and the access it provides to human advisors. Personal Capital’s investment tools answer common investor questions, such as “How are my investments performing?” or “How much should I save for retirement?” These tools allow individuals to gain access to information about their investments without having to hire a financial advisor.
Wealthfront doesn’t offer users investment analysis tools. That said, its simple and automated investment strategies are probably a better choice for the average investor.
Investment management strategy.
The personal finance landscape is changing. The number of consumers that use online investment management services has risen by 300% since 2005 according to the Pew Research Center. We have to wonder how this trend will continue to play out, because the way we spend our money is constantly evolving. We’re no longer just buying physical items to store in our homes, our money is making the decisions for us. If you’re looking at investing your money, you want a proactive approach. You’re already making the right choice by sticking it out and trying to take control of your finances, and a low-cost, smart investment management solution is the next step to take control of your monetary future.
For now, we are going to focus on Wealthfront and Personal Capital because they are both great investment management solutions, each with their own perks and benefits.
How Personal Capital and Wealthfront Measure up to Each Other
Wealthfront: No live chat or phone support, but has a great internal customer service system where users can send questions and get answers.
Personal capital: Phone support & live chat.
Wealthfront: An annual fee of 0.25% for wealth management and advisory services. There are no account or other fees to get help building your portfolio.
One of my biggest gripes about Personal Capital is their lack of customer service (or lack of response to my inquiries).
Every time I email customer support, it seems like it takes days or even weeks for a response, let alone a solution to my problem.
With Wealthfront on the other hand, I never had any significant problems. The people who reply are first-rate experts.
That is one of the main reasons I switched to Wealthfront.
As long as you remember to email customer support with your Wealthfront email address, you can expect them to respond quickly.
Personal Capital fees.
Personal Capital charges a 0.49% annual advisory fee, which is the same as Wealthfront’s advisory fee. The personal balance sheet and cash flow cannot be exported. Personal Capital offers significantly more services, including:
- Face-to-face financial planning, holistic financial planning, financial planning software that’s free and more.
- Tuition planning, tax management, investment management, and retirement planning.
- Real estate, business and tax planning and more.
- Wills, trusts, and asset allocation.
- Live financial advice and planning.
- Checking and savings account, credit card, and investing them; plus access your investments there.
- Portfolio analysis and modelling.
- Generate a net worth statement.
- Financial planning and advice.
- Full wealth management.
- Automatic rebalancing based on your needs.
- Find us clients.
- Master limited partnerships and investing.
- Get second opinions and the third opinion.
What are their differences?
All important tools are valuable, but some are more valuable than others. Some refer to the person, some refer to the tool itself. In finance, the subject of the tool is the most important element in your financial success. This investment comparison article will help you understand how Personal Capital and Wealthfront narrow the gap between the person and the tool.
Personal Capital has been around for a while in the financial world, and has made a name for itself by becoming a leader in the world of online financial management tools. It is a solid tool with a great ability to manage your personal finances, budgeting, and investing. Personal Capital will allow you to watch your asset allocation, understand where you are within your tolerance, and analyze your income and spending.
Wealthfront is a relatively new player in the personal finance game. They have also focused heavily on providing a powerful tool for people to track and manage their investments. Wealthfront has a slightly different focus, however. They focus on the analytics of financial growth. While this is very useful for the experienced investor, it doesn’t cover the need for basic personal financial management that Personal Capital gives a heavier focus on.
Why You Might Prefer Wealthfront
Wealthfront is considered a Robo-advisor, while Personal Capital is an Investment Advisor. Therefore, Wealthfront is not regulated by the SEC. Yet, Wealthfront strategies have been analyzed over time. While they can provide the same financial freedom that Personal Capital offers, the drawback is you may need to contact Wealthfront for possible delayed investor service. Let’s look at the real time differences between the two.
Why You Might Prefer Personal Capital
As you may be aware, Personal Capital has gotten a lot of press recently because of its seamless integration with Google Finance. It enables you to track your investments, retirement planning and net worth. The app is free for Android and iOS phones. You must be a registered user of the Personal Capital website in order to sign in and use it.