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Business Operations Business Models

How Does Personal Capital Make Money (Business and Revenue Model)

The Personal Capital business model

How Does Personal Capital Make Money?
Here’s what you should know:
  • What is Personal Capital, and how does Personal Capital work?
  • How does Personal Capital make money?
  • Wealth Management Fees
  • Personal Capital subsidiaries, acquisitions, and exits
  • Personal Capital profit and revenue
  • What is the Personal Capital business and revenue model?
  • Personal Capital funding, net worth, and valuation

How does Personal Capital make money and how is it free to use? Well, here is a full, in depth, breakdown of their main revenue stream and services they offer, as well as the Personal Capital business model, their profit and revenue, and how Personal Capital works.

What is Personal Capital, and how does Personal Capital work?

Personal Capital is a financial company that offers free financial tools, wealth management services, and more.

Founded in 2009 by Bill Harris, Rob Foregger, Louie Gasparini, and Paul Bergholm, Personal Capital went on to get acquired by Empower Retirement for $1 billion on August 18, 2020.

Since that time, Personal Capital now holds at least $22.1 billion in assets under
management (AUM)
from more than 32,100 investment clients with open accounts with them.

So, how does Personal Capital work? To use Personal Capital, users can first either simply download their mobile app on the Apple App Store or Google Play store; or by visiting their website.

Once downloaded, users can get started by signing up for an account and filling out the questions they ask to do so. From there, they can customize their dashboard by linking to all their financial accounts to track their debt to income ratio, net worth, set budgets, and more. As well as access to other products Personal Capital offers.

Some of Personal Capital’s competitors include Dave, Mint, Betterment, Charles Schwab, and other personal finance apps.

Personal Capital App in Apple App Store | Personal Capital Business Model | How Does Personal Capital Make Money | How Does Personal Capital Work
Source: Apple App Store | Personal Capital

How does Personal Capital make money?

According to Personal Capital, they hold $22.1 billion in assets under
management (AUM)
from more than 32,100 investment clients, as of April 30, 2022.

So how does Personal Capital make money off of all those assets under management and clients?

Below is a breakdown of how much money Personal Capital makes and its revenue model. Including their main revenue stream and how much they charge for their services.

Here is how Personal Capital makes money in 2022

Personal Capital has a revenue model that makes money in just one (1) way; by collecting wealth management fees from its clients.

#1. Wealth Management Fees

Personal Capital makes all of its money from taking an annual percentage of all the money they are managing for their clients.

Though Personal Capital’s financial tools are free to use, their wealth management services come at a price. And this price is in the form of an annual management fee that, in return, gives their clients investment advice, portfolio management, custody, and trading.

As noted above, Personal Capital has roughly $22.1 billion in assets under
management (AUM).
Of which, Personal Capital collects an annual management fee of 0.49% to 0.89% on all of AUM. This percentage is based on the amount each client has invested with Personal Capital, which you can see in the fee breakdown below.

  • First $1 Million: 0.89% (for clients that invest $1 Million or less)

For clients that invest $1 Million or more:

  • First $3 Million: 0.79%
  • Next $2 Million: 0.69%
  • First $5 Million: 0.59%
  • Over $10 Million: 0.49%
Personal Capital Fees | Personal Capital Business Model | How Does Personal Capital Make Money | How Does Personal Capital Work
Source: Personal Capital

Note: All of Personal Capital’s other services they offer such as their financial tools and checking accounts are free to use.

Personal Capital subsidiaries, acquisitions, and exits

Aside from Personal Capital being acquired by Empower Retirement for $1 billion, Personal Capital has made its own investments as well.

To date, Personal Capital, Inc. has made a total of 1 investment.

Personal Capital profit and revenue

Personal Capital has not released any official revenue numbers for the company.

Note: Because Personal Capital, Inc. is a privately held company, they are not required to make their annual reporting, such as Form 10-K’s, pubic.

What is the Personal Capital business and revenue model?

Personal Capital makes money through a few revenue models that they combine within their company, they are:

  • Fee for service (FFS) business model
  • Freemium (upselling) business model

Personal Capital funding, net worth, and valuation

According to Personal Capital’s Crunchbase profile, Personal Capital has raised $265.3 million over 10 rounds.

On August 18, 2020, Personal Capital was acquired by Empower Retirement for $1 billion.