The latest entrant into the wealth management arena comes not from Wall Street but from just outside Silicon Valley, and is taking dead aim at the Internet brokerage space for higher-end investors with a slick Web-based dashboard, holistic account monitoring and a stable of financial advisors to complement the technology with a human touch.
Personal Capital had its coming out party this week at the Finovate conference in New York, taking the wraps off of a registered investor advisor (RIA) service that's been two years in the making, catering to higher-end investors, but not the ultra-wealthy.
Personal Capital states that its mission is "to deliver truly personal and objective wealth management for the Internet age."
"Think about the personalization that's gone on in the last decade in the United States for commercial activity for consumers," Rob Foregger, Personal Capital's chief strategy officer, said in a telephone interview, noting the rise of social media sites, tailored shopping recommendations and online clothing retailers that enable shoppers to make highly customized purchases.
"Why aren't there truly personalized financial services for the mass [market]?" he said. "Really that's what we're out there to change and build."
Personal Capital is targeting investors with assets in the range of $100,000 to a few million dollars. At the core of the service are a host of interactive visualizations that offer clients a comprehensive and highly granular view of their various holdings, powered by an aggregation engine that pulls real-time fluctuations and transaction information from their 401k accounts, bank and brokerage accounts, credit cards, loans and any virtually any other component of their portfolio that they choose to link.
The Web interface offers bill reminders, snapshots of gainers and losers in the market and a net worth calculator that tallies a client's assets and liabilities, as well as features commonly found on online brokerage and banking sites, such as asset allocation and expense categorization. Forreger calls it the "financial cockpit."
"The whole notion of what we're doing is essentially building a holistic service," he said.
"Essentially our mantra is give our clients information that their bank or broker won't tell them."
At launch, Personal Capital has a roster of 10 financial advisors to manage it is portfolio, responsible for the initial interviews with prospective clients and overseeing accounts and providing advice in areas such as risk assessment, rebalancing and tax optimization. The portfolio management service entails a fee of less than 1%, designed to undercut the fees associated with mutual funds and equities.
The vision, then, is to pair high-gloss technology with a level of personalized service unavailable from the typical online broker.
"This is the way that the family office for the ultra-high net worth operates," Forreger said. "We think that the online brokerage space is going to be a very ripe target for our market," he added, suggesting that many investors whose money is housed with online brokers "are there by default."
The leadership team at Personal Capital counts executives who are veterans of the financial services and technology sectors. CEO Bill Harris previously served as chief executive with PayPal and Intuit, while Foregger most recently held the position of president of Fidelity Investments Personal Trust Company. Other executives are alumni of companies such as E-LOAN, Scottrade and RSA.
The firm only opened its portfolio management service to non-employees a couple weeks ago, and its current level of assets under management sits at just a few million dollars. With venture capital backing from Institutional Venture Partners and Venrock, Personal Capital is betting big that the financial services market is heading into what Forreger called the "post-mutual fund era," while at the same time failing to provide the wealthy -- but not ultra-wealthy -- the right type of portfolio management services.
"You can see that there's a secular trend in my opinion in the move away from mutual funds as the investment vehicle of choice," he said.
"We truly do believe that we're bringing wealth management to a market that is essentially highly served, but is highly served with the wrong stuff," he added. "Do you need anther mutual fund?...Do we need more? I don't think so. What they need is personalization."
Register or login for access to this item and much more
All Financial Planning content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access