I’m finally up to here with Personal Capital’s fear-driven marketing. As a former affiliate, I apologize for shilling for them.
In case you’re unfamiliar with PC, it’s a financial advisory company that runs an online personal finance tracker similar to Mint and Quicken. PC uses the account data you link to their system to generate sales leads from its family of services. I like the tracker and use it myself to manage the roughly $2.5 million aggregation of our assets and liabilities. However, it’s one of those “if the product is free, you’re the product” situations. You give PC your financial data so they can try to sell you products that “suit your needs.”
And to that point: now comes Jay Shah–PC’s CEO–with a cynical spin on the usual theme that Americans have unrealistic retirement expectations.
In an article entitled “Retirement reality: Many Americans will not be able to live out their dreams” as published by CNBC, he states that:
America is in the midst of a retirement crisis, and many people are in danger of not being able to live out their retirement dreams.
Which is spot-on, of course. One reason is:
…many investors [are] at risk of losing chunks of their savings to hidden fees and conflicts of interest from unscrupulous brokers — the very same people who Americans trust to help them achieve their retirement goals.
And he’s still right. Furthermore:
Sadly, 39 percent of millennials and 34 percent of Gen Xers have no retirement savings.
So given these problems, what’s the remedy?
First, Shah mentions in passing the maxing out tax-advantaged accounts. Great advice. Next he recommends becoming familiar with one’s financial structure and assessing long-term goals. Also great advice. But then–and not surprisingly for a financial services company–he extolls the prudence of hiring a financial advisor.
Good financial advisors can help you build out this comprehensive long-term plan and manage conflicting financial priorities. Not only will they help with planning, they’ll act as guides, helping you stay on track and manage unexpected roadblocks so you avoid emotionally driven decisions that can have an undesirable impact on your financial future.
There’s certainly no shame in selling somebody a service they’re unwilling/unable to perform for themselves. But this next quote is where Shah and I get crossed up:
When choosing an advisor, make sure you understand the fees you’re paying and how that person is being compensated.
I mean…sheesh. In one breath he’s telling you to make sure you’re not paying unnecessary fees, and in the next he’s trying to convince you to pay fees that may very well be unnecessary.
Puts me in mind of George Orwell, man. “Ignorance is Strength.” And I say that because understanding the advisory fees you’re paying by definition requires you to know whether you need to pay advisory fees AT ALL.
And as I said, you very likely don’t. Explanation to follow.
Another reason I don’t like this article is a pic in its sidebar. Benjamin Harrison—PC’s managing director and head of new business development—is quoted as saying:
The growth of Vanguard’s digital solution has largely been driven by their existing client base …Personal Capital’s growth has been truly organic.
Come on. Really? Who gives a flying rat’s ass whether Vanguard’s digital solution is customer-driven or organic?
I’ll tell you who: potential investors in Personal Capital. Venture capitalists and the IPO people at Morgan Stanley and suchlike. The proof is this: as a customer, give me a customer-driven digital solution any day of the week. PC’s growth model is literally irrelevant to me. So it’s straight-up disingenuous to use a quote like that in this article designed to grow sales.
From day one I’ve always known Personal Capital’s game was to sell people financial services. Again, there’s no shame in selling somebody a service they’re unwilling/unable to perform for themselves.
But here’s Shah cutting you so he can sell you stitches. You may not NEED stitches. What you definitely need is at least a modicum of financial self-knowledge and quite possibly a handful of low-fee mutual and/or exchange-traded funds…if that many. This is information you can acquire yourself off the web in one afternoon. You don’t need to pay PC an annual percentage of your assets for it.
I mean…check it out. If Harrison didn’t consider Vanguard–and by extension their low-fee funds–a major competitor, he wouldn’t be competing with Vanguard in his quote.
You know…articles like this fly thick and fast in the personal finance space, and it’s far from PC’s first one. Why did this particular one set me off?
I have no idea. Guilty conscience, maybe. Since I first started this blog I’ve earned…what, $2,500 in sales commissions from PC? Something like that, yeah. So I’m culpable, and for that I apologize. I’ve long since spent the $$$, but I won’t be chasing any more.
The other thing is: I have to give some thought to the auto-feed sidebar ads that I run. They’re cookie-driven, so I’m not sure I have any control over what you yourself see…but if you’re seeing ads that you think aren’t suited to your best interests, please let me know so I can bring the matter up with the company that pushes them.
And there you have it. By all means use Personal Capital’s online tracker–after twenty-five years of closely tracking my finances it’s the best one I’ve ever found–but don’t buy into their sales hype. To repeat: the odds are very good that you don’t need their services, or those of any other paid financial advisor. Assuming you’re a middle-class American you’ve got the tools right there on on your computer to evaluate whether that’s the case.
Go ye forth and do so.