Empower (Personal Capital) Review: Free Tools & Wealth Management Services
Empower is a wealth management firm that provides financial advisory services to investors and is the nation's second-largest manager of company retirement plans.
In 2020, Empower acquired Personal Capital, another wealth management firm that was best known for its suite of free tools. These included a financial dashboard, a retirement plan calculator, a net worth tracker, and more.
All of these tools are still available, for free, under the Empower brand name.
Together, Empower offers:
- Free financial tools (including a portfolio tracker) for investors
- Wealth management services
Below is a complete review of Empower.
In the first section, I cover the free tools you can use to track your investments, calculate your net worth, evaluate your investments, and more.
In the second section, you can learn more about Empower's financial advisory services. They do a lot of things well, but I still tend to not recommend them.
Empower (Personal Capital) review: free tools
If you manage your own money and want to learn how Empower's suite of tools can help you accumulate wealth, plan for retirement, and draw from your portfolio in retirement, this section is for you.
Once you create an account, you can access all of these tools for free online or via the Empower app.
If you use Empower's free tools and have a net worth of $100,000 or more, they may contact you about becoming a client. You can opt out of these marketing messages via your profile page or by emailing donotcall@personalwealth.empower.com.
1. Personal dashboard
Empower's personal dashboard is the best place to see your entire financial picture in one place.
You can start by linking your investment accounts and adding any other assets, like real estate properties or a business, as well as any cash balances you have.
You can then input your monthly income from your job and any other sources, plus connect your credit cards and bank accounts so your spending is tracked automatically. This gives you a real-time snapshot of your personal cash flow.
Anecdotally, the dashboard is most popular among investors who want to track their investments and net worth (which is why we ranked it the #1 portfolio tracker), but it's also a solid option for budgeting.
That said, if budgeting is your primary use case, you may prefer YNAB or Mint.
2. Retirement planner
The main thing I use Empower's retirement planner for is running simulations.
After inputting your investments into the personal dashboard, you can see projections for different scenarios based on contribution amounts, average annual returns, how long you live, various financial goals, and more.
The best way to prepare for retirement is by starting early. This tool helps you plan for any situation life may throw at you.
3. Investment checkup
Another popular feature is investment checkup.
This tool shows your past performance, identifies risk, reviews cost efficiency, and evaluates your asset allocation based on your goals.
After evaluating your existing investments, the tool will show you an alternative allocation that may improve your diversification, offer higher returns, or reduce your fees.
4. Other tools and calculators
Empower also offers:
- A net worth calculator
- A budget planner
- An emergency fund calculator
- A college savings calculator
- A life insurance calculator
- An investment return calculator
- A debt payoff calculator
While less popular than its main tools, you may find one of these tools to be especially valuable to you depending on the stage of life you're in.
Remember, each of these tools can be accessed for free after creating an account.
But what if you want someone else to manage your money? Keep reading to learn about Empower's wealth management services.
Empower review: wealth management services
Review summary
- Our rating:
- Account minimum: $100,000
- Level of personalization: Low-moderate
- Fees: Moderate
Empower's wealth management services are a crossover between a traditional financial advisor and a robo-advisor, leveraging technology to serve a large number of clients while still providing access to human financial advisors.
However, some personalization is lost in the process.
Service tiers
Empower offers three tiers of service depending on the size of your portfolio. The more assets you have, the more personalized your experience will be.
Investment services: accounts with $100,000–$250,000
In this tier, you receive a basic financial plan and investing strategy based on your age and financial goals.
You have access to a team of advisors you can request a meeting with, but their goal is to make your account as automated as possible.
Wealth management: accounts with $250,000–$1,000,000
Instead of having a team of advisors, two dedicated advisors will be assigned to your account in this tier.
You also gain access to other advisors who specialize in things such as insurance and stock option plans.
Private client: accounts with over $1,000,000
If you have over $1,000,000 in your account, you become a high-priority client and are treated as such, receiving more one-on-one attention.
In addition to your two advisors, you have access to real estate and tax professionals. Depending on how many assets you have, your portfolio may contain individual bonds and alternative investments, like private equity.
You may also receive more frequent rebalancing and implementation of tax optimization strategies.
Is Empower a robo-advisor?
Empower is frequently compared to robo-advisors, which are investment platforms that use algorithms to automatically invest and manage your money. This isn't a fair comparison.
While Empower does leverage a lot of the same technology, all of its clients have access to human advisors. These advisors serve as ongoing points of contact who can answer your specific questions.
That said, the amount of access (and, correspondingly, the amount of personalization) varies depending on what service tier you're in. Unsurprisingly, the more fees you're paying them, the more personalized they can make your service.
Fee structure
Like most wealth advisory firms, Empower's fees vary based on the total amount of assets you have.
Up to $1,000,000, in assets
For clients with up to $1,000,000, the annual fee is 0.89%.
More than $1,000,000 in assets
For clients with more than $1,000,000, the annual fee is:
- 0.79% on the first $3,000,000
- 0.69% on the next $2,000,000
- 0.59% on the next $5,000,000
- 0.49% on any amount over $10,000,000
Example
This is a progressive fee structure (like the U.S. tax system), so if you have a portfolio of $15 million, you will be charged:
- 0.79% on $3,000,000 = $23,700
- 0.69% on $2,000,000 = $13,800
- 0.59% on $5,000,000 = $29,500
- 0.49% on the remaining $5,000,000 = $24,500
For a total annual cost of $82,500.
Industry standards
These fees are in line with the industry standard for local, in-person financial advisors but are higher than the cost of a robo-advisor (which typically charge between 0.25%-0.50%).
Some robo-advisors, like Betterment, also offer access to human advisors for an additional cost (0.65% at Betterment).
Portfolio construction
The core of every portfolio, regardless of the service tier, looks fairly similar — stock and bond ETFs with weightings based on age, risk tolerance, and financial goals. Some sophistication is added for the higher service tiers.
For example, the Wealth Management tier comes with the option to invest in Empower's individual stock portfolio, a list of curated stocks handpicked by the company's investment committee.
In the Private Client tier, advisors may start buying individual bonds instead of bond funds on behalf of their clients. Additionally, for clients with $5 million or more, Empower offers some private equity investments.
Furthermore, the higher service tiers also receive more hands-on rebalancing and tax optimization.
Rebalancing and tax optimization
Regardless of service level, Empower deploys some rebalancing and tax optimization services.
Empower automatically rebalances client portfolios to keep them in line with their target mix of asset classes, sectors, styles, and sizes. This happens on a pre-set schedule.
Empower also takes advantage of opportunities to save on taxes to help boost overall returns. Its tax strategy looks at asset location, tax-loss harvesting, and — for the higher tiers — other tax planning techniques.
Income-generating assets are placed in tax-deferred accounts to help reduce tax liabilities, and individual securities with unrealized losses are sold to help offset capital gains taxes.
These techniques aren't exclusive to Empower. Most financial advisors, and even many robo-advisors, offer similar services.
Wealth management review takeaway
So, would I recommend working with Empower?
For the cost, I'd (personally) prefer to work directly with a local financial advisor who can give me more personalized advice and more 1:1 attention.*
*I work with Drew Lunt, founder and lead financial advisor at Scratch Capital. Scratch is a fee-only financial advisor located in Boise, Idaho. The firm serves individuals and families across the U.S.
To get a free, custom financial plan built by Drew, you can fill out this form.
That said, Empower does a lot of things right, and by no means is it a bad option.
In fact, if you prefer a digital-first experience and are looking for something that's one step up from a robo-advisor, Empower may be a great option.
So that means the decision really comes down to personal preference.
You can get a free consultation from Empower by creating an account and linking your assets. When you link more than $100,000 in assets, Empower will send you a message with the option to schedule a consultation.
Final verdict
Empower is a wealth management firm that makes money by providing financial advisory services to individual investors and employees via their company retirement plans.
Empower acquired Personal Capital in 2020, another investment advisor company with a suite of free tools available to individual investors.
Those tools serve as a lead magnet — a free resource offered to potential customers — for the company to hopefully acquire new clients.
Empower's wealth management services are a solid option, combining the technology-focused approach of robo-advisors with the personal touch of traditional financial advisors.
And its free tools, though the user interface is a bit drab, are highly useful and work as they should. Just expect to receive some marketing for the other side of the business.
