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Written by Ed Canty, CFP® on March 24, 2021
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Personal Capital vs Fidelity 2021: Which Is Better?

When it comes to investing your money, there are countless brokerages and advisors from which to choose.  

Fidelity is a tried and true brokerage that had its beginning in 1946. This firm has been serving customers for over half a century! The company offers different tools, research, and resources to help the average Joe investor make meaningful decisions when investing. Fidelity has some really great and exciting features such as $0 commission for trades and 3,700+ fee-free mutual funds.

This brokerage is a standout company that offers high-class research tools to help the average buy-and-hold investor. Its platform is easy to use and can be customized to help advanced investors make the most of their investment strategies. Fidelity is an incredible choice for many investors. 

Personal Capital is a newcomer on the block, entering the playing field in 2009. They provide access to financial advisors in exchange for a management fee of 0.89% for investment balances starting at $100,000. 

While the fee that Personal Capital charges may be high, they also carry some tools that are completely free to users. 

Clients with Personal Capital can access a team of advisors who help them make financial planning decisions. Those who have $200,000 and above can get at least two dedicated advisors. 

The fee depends on the balance you have, for instance, the first $1 million is charged a 0.89 percent fee while a balance up to $3 million attracts a fee of 0.79 percent. 

In this article, we look at Personal Capital vs Fidelity to compare the two investment services. We will review the investing, financial planning, and the many other tools they offer. 

Personal Capital vs Fidelity: The Basics

Fidelity is the all-in-one spot for DIY investors. This platform allows users to save for retirement, open a brokerage account, invest in zero-cost mutual funds, options, and bonds. In short, Fidelity has everything an investor could want including Fidelity Go which is its response to the growing field of robo-advisors. Because of the large amounts of information available, many users may find the Fidelity platform overwhelming if they are new to investing.

Personal Capital is a great asset for those looking for financial advice from professionals. It also comes with a management fee that is considered high for the industry. Though the fee decreases as your balance gets larger, users should still understand the full cost of using Personal Capital. The fee, of course, covers the cost of human advice from a professional. This resource can have huge impacts on your portfolio over time.

Summary

  • You have access to free financial planning tools with Personal Capital 
  • Fidelity offers Zero-expense ratio index funds
  • Users can access financial planners with Personal Capital
  • Fidelity offers commission-free stock, option, and ETF trading 
  • The account minimum for a Personal Capital investment account is $100,000
  • Fidelity offers a robo-advisor called Fidelity Go, with $0 minimum balance and 0.35% annual management fee
  • Personal Capital has a higher fee that starts from 0.89% but offers access to financial planners
  • Fidelity offers over 3,700 no transaction fee mutual funds
  • Personal Capital offers investment management and portfolio construction, meaning they pick the individual securities (stocks, bonds, ETFs) in your portfolio
  • Fidelity offers a variety of services but truly caters to the DIY investor and those who would like to pick individual stocks or funds. 
  • Extensive and free research as well as data with Fidelity
  • Access on iOS and Android for both Personal Capital and Fidelity 
  • Fidelity offers investments in mutual funds, options, bonds, stocks, ETFs, and cash managed accounts
  • There are no account fees – closing, inactivity, transfer, or annual fees with Fidelity 
FeatureFidelityPersonal Capital
Best ForDIY investorsWealth management clients
Account typesIRAs, brokerage account, cash management, 529 plan, Fidelity Go (robo-advisor)IRAs, brokerage account, cash management, trusts
Advisory Fees0.35% for Fidelity Go (no minimum balance)Starting at 0.89% for $100K
Minimum Balances$0 for investment accounts$100,000 for investment accounts
Dedicated Financial AdvisorsNoYes

Which robo-advisor is the best for you?

Answer a few quick questions and we'll recommend the best advisor for you, based on our objective analysis.

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Personal Capital

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What Is Personal Capital?

Personal Capital is a company that offers online financial advisory and combines the power of robo-advisor algorithms with the expertise of human advisors to help make wise investment decisions. Personal Capital requires a minimum investment of $100,000 and you will get access to a team of financial advisors.

With the next tier of $200,000, users will have two dedicated financial advisors assigned to them. 

Personal Capital comes with a fee, which to be frank, is considered higher than its peers. The fee starts at 0.89 percent and goes down as the account balances increase. The largest account balance, which is more than $10 million, has a fee of 0.49 percent. 

The fees that Personal Capital charges pay for a set of financial as well as investment planning tools.

However, Personal Capital has numerous free investing tools available here!

Personal Capital also gives its users the ability to link their existing accounts to track spending, portfolio performance, net worth, retirement progress, and the accruing fees.

The retirement paycheck feature also helps investors plan their withdrawals when they retire, including tax-optimized withdrawal strategies. This way you can make the most of your money and pay less in taxes over time. 

Personal Capital Dashboard and user interface

How Does Personal Capital Work?

The signup is pretty fast and will require you to provide information including your address, name, telephone, email, social security number, date of birth, and other details. 

When you are done with the registration, you will need to link your bank account to make a deposit into your account. 

Personal Capital also allows you to link your other financial accounts, including loans, mortgages, 401(k)s, IRAs, checking accounts, savings account, credit cards, and others. This allows you to view your net worth and have a holistic view of your financial situation. Here, you can begin tracking progress and create a budget for retirement. 

You can track your investment using the dashboard features as well as speak with an advisor to start planning for the future. The Personal Capital advisors go over your investing strategies, spending habits, net worth, or even life events. The advisors will then review your goals and come up with a comprehensive strategy. 

Personal Capital Features 

Investment Portfolio

Clients who have invested $100,000 to $200,000 have their capital invested in a portfolio of exchange-traded funds. These traded funds attract a weighted-average-expense ratio of 0.08 percent. These funds are also designed to provide efficiency in tax planning. 

At the same time, clients who have an asset value of $200,000 to $1 million enjoy the above benefits as well as the ability to tailor a portfolio that features ETFs and stocks. 

Moreover, investors who have assets worth $1 million and above receive all the said services in addition to being able to invest within individual bonds. 

Smart Weighting

Personal Capital utilizes a personalized approach in selecting a portfolio for its investors. This approach takes a holistic view when it comes to the client’s financial picture. So it doesn’t just consider the assets it manages. The selection process for the portfolio allows investors to invest equally in entire sectors instead of mimicking indexes such as the S&P 500. 

Investment Strategy 

Through the Smart Weighting process, the company can reduce risks in investments while also optimizing returns.

With hypothetical backtests, Personal Capital is able to see how it performs against the S&P 500, where it often outperforms this index. The hypothesis of backtesting also allows Personal Capital to find individual tax-loss harvesting opportunities.

Financial Planning Tools

Personal Capital offers different comprehensive free tools such as investment checkups, spending trackers, and 401(k) fee analyzers. However, you need to create an account so that you can utilize these tools. 

Non-investors can still access these tools. Although you aren't paying the management fee, you will still be able to connect your bank account, credit card, and brokerage accounts. 

The company will analyze the allocation of assets in your investment account, depending on the information that it garners. This way, it can tell you exactly the amount you should increase and the amount you should decrease in your holdings of particular asset classes so that it aligns with its recommended target. 

Personal Capital Investment Tiers

 

Accounts Supported

  • Taxable
  • Joint
  • Traditional IRA
  • Roth IRA
  • SEP IRAs
  • Trust

Personal Capital also supports cash accounts, which are similar to regular brokerage accounts.

While Personal Capital advises on 401(k) as well as the 529 plan allocations, it is not directly involved in the management of these accounts. 

Tax Strategies

Personal Capital utilizes a tax-loss harvesting strategy for portfolios holding ETFs and individual stocks. 

The retirement paycheck feature recommends tax-optimized retirement withdrawal strategies. This helps investors make the best decisions when it comes to distribution. 

Personal Capital Pros

  • Free financial planning tools (even for non-investors)
  • Access to human financial planners
  • Complete investment management
  • Easy to set up with a step-by-step process
  • Marrying human advice with robo-advisor algorithms
  • Intuitive design and interface for easy use

Personal Capital Cons

  • High minimum for Wealth Management at $100,000
  • Limited budgeting capabilities
  • Fees start at 0.89% which is higher than other offerings

What Is Fidelity?

Fidelity is a brokerage investment company founded in 1946, one of the oldest brokerage companies in the industry. The company is always investing in technology and research to help provide a concrete platform for the average investor. It commits itself to reduce investment costs among investors. Fidelity is one of the only brokers that offers zero-expense ratio index mutual funds. 

As an average investor, you can take advantage of the 16 base currencies it offers - one of the brokers with a wide range of base currencies. 

Opening an account with Fidelity can take about 1 to 3 days. If you are still undecided as to whether you should join Fidelity or not, you can consider the demo account to help you test the features of the platform. 

While Fidelity supports the use of credit cards, including the Fidelity Debit Card, the company also allows other methods of funds transfer, including automatic deposits from the bank, direct deposit, and bank transfers. 

Fidelity allows you to invest in both international and domestic stocks. There are over 30,000 different kinds of investment-grade bonds as well as fixed-income securities that you can purchase. 

fidelity spire

How Does Fidelity Work?

When you want to invest with Fidelity, you are required to open an account.

During the time of opening, you will be asked to fill in personal information that includes your address, name, phone number, email, social security number, date of birth, and other details. 

After your account is opened, you will choose the preferences and the features you want. For example, you can choose to receive your financial documents in an electronic format as opposed to receiving them by mail.

After you review and accept the terms and conditions, you can transfer money into your new Fidelity account. However, you can still use the demo version if you just want to take the platform for a test drive. 

Fidelity Features

Commission-Free Stock Trades

With Fidelity, you can invest in online ETFs and stocks that cost an investor $0. 

However, if you will opt for broker-assisted trades, you will pay $32.95. There is no limit to your trade size or the pricing. If you trade stocks valued under $1, you will not incur extra fees.

Minimum Deposits

Fidelity has no minimum account balance to trade in a cash account. However, an investor should have $2,500 to trade certain mutual funds. While this may seem high to some, opening an account doesn’t require users to have a minimum deposit. You can open an account and begin investing in several different assets without a minimum balance. 

Margin trading, however, is a bit unique. An investor will need to have a minimum deposit of $2,000. Fidelity also touts that it has some of the lowest margin rates in the industry - starting at 4%. 

Stock Options

If you are interested in trading options with Fidelity, it will cost you $0.65 per contract. However, there are no fees for assignment or exercising your contract. While Fidelity might not directly charge you a fee, there is an Options Regulatory Fee (from $0.03 to $0.05 per contract) which applies to both buy and sell transactions. 

Mutual Funds

As an investor with Fidelity, you have access to an excess of 13,000 varieties of mutual funds along with 3,700 mutual funds that don’t attract transactional fees (NFTs). 

That said, if your fund sells within 60 days of purchase, you will be charged a redemption fee amounting to $49.95. This fee is paid directly to the fund and not to the broker. 

A minimum balance of $100 to $250 is needed for broker-assisted trades and the NASD has limited mutual fund sales loads to exceed 8.5%.

Portfolio Analysis

Using the Full View tool in the platform allows an investor to pull other accounts that are not within the Fidelity platform to allow for analysis. The investor can check the other accounts, analyze them, and see where they stand in terms of assets and liquidity. You can also give access to the Full View analysis to your financial or investment advisor. 

fidelity funds

Fidelity Go

Lastly, Fidelity recently launched a robo-advisor called Fidelity Go.

You simply answer a few questions about your investment strategy, goals, and risk tolerance. Then, the Fidelity Go team will decide what your asset mix should be. After that, you regularly contribute to this account and let the team handle the rest.

The minimum balance is $0 and the annual asset management fee is 0.35% which is fairly reasonable for a robo-advisor coming from one of the titans in the brokerage world.

Your money will be invested in a variety of mutual funds and the portfolio strategy will be based on your goals and risk tolerance as well as age and other factors. However, it is important to understand this does not come with access to an advisor you can communicate with directly.

Fidelity Pros

  • Zero Expense-ratio index funds
  • Commission-free stocks, options, and ETFs
  • Asset screeners
  • Solid research tools
  • Strong customer support
  • Both international and local stocks traded
  • Uninvested money swept back to the market fund
  • Fidelity Go offers portfolio guidance for 0.35% fee

Fidelity Cons

  • Not eligible for non-US residents
  • No commodities or options on futures
  • High broker-assisted fees
  • Relatively high account financing rates
  • High mutual fund fees

Personal Capital vs Fidelity: Final Thoughts

Looking at Fidelity and Personal Capital, you may find that they have many differences. Fidelity is designed for the average Joe, do-it-yourself investor. It has low minimum balance requirements and low fees. Fidelity has extensive tools and research information available to investors.

Personal Capital is a high-end investment platform where investors need to have a minimum of $100,000 to invest in professionally managed portfolios. 

However, with Personal Capital, as the name suggests, you can access human advisors that help you in your investment management and financial planning.

Fidelity Go offers a robo-advisor with a $0 minimum and annual asset management fee 0f just 0.35%. However, this does not come with access to an advisor you can communicate with directly.

So if you are a more hands-on investor who likes to choose your funds and do your own financial planning then Fidelity may be a better platform for you. 

If you require more assistance in managing your investments and need help in creating a financial plan then Personal Capital may be the better option to help you reach your goals. 

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Article written by Ed Canty, CFP®
Ed is a CERTIFIED FINANCIAL PLANNER™. At his day job, Ed helps clients plan for retirement, manage their investments, and navigate their tax situation. In his free time, Ed enjoys golfing, traveling, fishing, and wrenching on his old car.

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