Personal Capital is the latest robo to offer SRI

The company says it is responding to demand from its growing client base

Feb 9, 2018 @ 1:53 pm

By Ryan W. Neal

Personal Capital is the latest digital advice provider to offer investors socially responsible investment strategies.

For no extra charge to clients, Personal Capital will screen U.S. equity holdings based on environmental, social and governance factors from Sustainalytics to determine best-in-class companies in each domestic peer group.

(More: Morningstar's sustainability ratings: An opportunity to talk to your clients about responsible investing)

Personal Capital CEO Jay Shah says this saves do-it-yourself investors hours it would take to research companies' sustainability practices without having to pay the high fees of an actively managed portfolio.

"Selecting a socially responsible investment strategy should be easy," Mr. Shah said in a statement.

SRI strategies will include exposure to six major liquid asset classes and individual stocks. They also use Personal Capital's Smart Weighting methodology to ensure a balanced exposure to size, style and sectors of U.S. equities.

The company says SRI strategies retain the same features as Personal Capital's core product — automatic portfolio management, tax loss harvesting, tax location and rebalancing.

Craig Birk, executive vice president of portfolio management at Personal Capital, said the company is responding to a "surge of investor interest in aligning their money with their values." A third of the robo's customers already have customized portfolios that exclude certain stocks or sectors they don't want.

Personal Capital now manages $6.5 billion in client assets and tracks more than $500 billion on its personal finance tools. It trails competitors like Betterment and Wealthfront, which respectively manage $11.8 billion and $10 billion. Personal Capital says its AUM doubled over the last 12 months and its average client has $430,000 invested.

Betterment and Wealthfront already offer SRI strategies to investors, citing high client demand for the feature.

(More: Robos are offering SRI, so shouldn't live advisers?)

Traditional financial institutions are also using digital advice to offer SRI investing to consumers. TIAA introduced a robo-adviser in June that provides access to socially responsible mutual funds and ETFs.


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