Personal Capital is an online financial advisory and wealth management service founded in 2009 by Bill Harris, Louie Gasparini, Rob Foregger, and Paul Bergholm to streamline and make more transparent wealth management. Personal Capital drives revenue by charging advisory fees to its clients in exchange for managing their capital. The fees are structured based on the portfolio’s weight and whether the client is private or institutional.
The company was founded in 2009 by Bill Harris, Louie Gasparini, Rob Foregger, and Paul Bergholm. After overseeing the merger that saw the creation of PayPal, finance executive Harris looked toward his next project.
He noted that available money management solutions at the time were subpar at best. Consumers with checking accounts, credit cards, loans, mortgages, and retirement accounts had to access each of these services individually. Aside from being a major inconvenience, this lack of streamlined access also created a lack of transparency through hidden fees.
Personal Capital was then launched, with $2 million provided by Harris and his co-founders. The team then spent two years refining the product, eventually launching in 2011 to great success. The company differentiated itself from services like Wealthfront and Betterment by incorporating both human and algorithmic expertise. It also targets more affluent households with over $100,000 in assets.
In 2020, Canadian firm Empower Retirement acquired Personal Capital for $1 billion. Together with Empower, the company now serves 12 million individuals holding over $1 trillion in assets.
Personal Capital revenue generation
Personal Capital drives revenue by charging advisory fees to its clients in exchange for managing their capital.
There are three options, structured loosely around investment amount:
- Investment services – for $100,000 to $200,000 in investment assets. Users here get access to financial planning tools, an advisory team, retirement planning, portfolio monitoring, and rebalancing, and investment in exchange-traded funds.
- Wealth management – for $200,000 to $1 million in investment assets. This option includes extras such as a customized portfolio of individual stocks and tax optimization. There is also access to two dedicated advisors who can provide guidance on insurance, home finance, stock options, and compensation.
- Private client – for over $1 million in investment assets. A premium service affording access to specialists, wealth planning, and private equity and hedge fund review. Capital can also be directed into bonds and private equity investments.
In terms of fee structure, Personal Capital charges a single, all-inclusive management fee annually. True to the company ethos, there are no hidden fees, trailing fees, or trade commissions.
The annual management fee is structured as follows:
Investment Services and Wealth Management clients
For clients of the first two investment options, the fee is a flat 0.89%.
For private clients, the fee works on a sliding scale based on capital:
- For the first $3 million, the fee is 0.79%.
- For amounts between $3-5 million, the fee is 0.69%.
- For amounts between $5-10 million, the fee is 0.59%.
- For amounts exceeding $10 million, the fee is 0.49%.
- Personal Capital is an online wealth management and advisory service founded by Bill Harris, Louie Gasparini, Rob Foregger, and Paul Bergholm. Initially, Harris provided the impetus for the company after noting the inefficiencies and lack of transparency in personal finance management.
- Personal Capital has a simple revenue generation model, charging advisory fees across three management options. In general, advisory fees decrease as the amount of capital invested increases.
- Personal Capital does not charge any hidden fees, trailing fees, or trade commissions. This keeps it in alignment with the company ethos established by former CEO Bill Harris.
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