Wealth management isn't for old farts anymore. Personal Capital uses technology and design to spice up a boring topic

By Michael Carney , written on April 11, 2013

From The News Desk

Once you accumulate a bit of wealth, managing it can becomes a second full-time job. Making it worse, technology to simplify the process is sorely lacking.

That is, it was lacking.

Personal Capital released a completely redesigned version of its wealth management iPad app today that takes advantage of the touch-based interface to make visualizing and managing one’s financial universe easier than has ever been the case. It’s like a gorgeous love child Mint plus an E-Trade dashboard designed for millionaires who don’t read good. In other words, it makes a complicated process extremely simple, not to mention beautiful.

A typical high net worth individual has their assets spread across multiple checking and savings accounts, brokerage accounts, retirement accounts, real estate holdings, and private company stock options pools all of which change in value daily. This is not to mention liabilities like home mortgages, credit cards, and loans. To effectively create a wealth management plan amid this chaos is a daunting task.

At its most basic level, users begin with Personal Capital by visualizing their total net worth across all accounts, including balances and changes in value. The user can then drill down into each various account such as credit cards, brokerage accounts, or loans, and view recent transactions, value, fees, and a variety of other useful information. Everything is available with a simple iPad-esque touch, swipe, or pinch.

To create an account users simply link their existing financial accounts – Personal Capital supports more than 15,000 – and the system automatically imports all historical transaction and account data.

It’s on the investment side where Personal Capital really shines. The app allows users to view their portfolio, including all asset types, over a variety of time horizons – days, weeks, months, or years – and compare that to the performance of the public markets. Users can also view their portfolio allocation according to asset class and sector and compare that to a target allocation based on their age, wealth, risk tolerance, and other factors. Again, a wealth (no pun intended) of information is available simply by tapping and zooming to drill deeper into each area.

Users can add an stock options that they hold in their employer (private or public) to ensure that those holdings are reflected in both their net worth and their risk profile – this is a rarity in the industry. Another simple, yet powerful feature is the ability to automatically deconstruct mutual funds and ETFs to their underlying stocks so that these assets are properly reflected in the allocation and risk profile data. Finally, Personal Capital has a strong focus on fee transparency, and lists the fee-based cost of each security or asset in a client’s portfolio, including mutual fund fees, 401k administration fees, taxes, etc.

The Personal Capital iPad app is entirely free to use. The company’s business model is wealth management through its RIA (registered investment advisor) practice. By combining this visualization technology and asset allocation with portfolio construction software and human advisors, the firm aims to offer a combination of traditional high-touch service, with a modern, high-tech approach.

The firm already has more than $120 million under management from over 500 clients – 75 percent of which was accumulated in Q1 of this year – and continues to add another $20 million to that sum monthly. These clients have linked more than $13 billion in total wealth to the platform. The firm charges just 0.75 to 0.95 percent per year to manage these assets, including all custodian and trading fees, which is 50 to 65 percent less than the industry average.

Wealth management clients must have a minimum of $100,000 of investable assets, although Personal Capital’s clients average more than $330,000 on its platform. The firm’s advisors focus on long time horizons, and typically construct a portfolio of approximately 90 individual stocks that mirror the S&P 500, while minimize tracking error.

Personal capital was founded 18 months ago by former Intuit and Paypal CEO Bill Harris, and Fidelity personal banking head Rob Foregger (who's no longer with the company). The firm has already raised $27.3 million from Venrock and Institutional Venture Partners, as well as Harris and other angels. The company has grown to nearly 50 people, including 30 on the technical and operations side, and 20 on its wealth management team.

“Our display tools are absolutely what get people in the front door,” Personal Capital CPO Jim Del Favero says. “This gives us the opportunity to engage them and show them what we can do on the investment management services side.”

The update to Personal Capital’s iPad app extends what was already a significant lead in visual wealth management softwares. Whether an individual is high net worth or simply aspires to be, the tools make an otherwise opaque and technologically backward world into one that’s accessible and, dare I say it, fun.