Personal Capital, the hybrid automated investment platform focused on
financial planning, is cutting its minimum account requirement to $25,000 from $100,000 in a move to attract younger clients.
The cut will make Personal Capital, which has $1.5 billion in assets under management, accessible to more investors, chief executive Bill Harris said. Users will continue to be charged 89 basis points, or $890 for a client account of $100,000.
"We can now afford to take this same sophisticated and highly-customized service and make it available for people who are earlier in their financial lives," Mr. Harris said. "This is an opportunity to get them on the path of a great plan."
Clients with between $25,000 and $100,000 will get portfolios,
financial planning tools and an advisory service team of human advisers to answer questions they may have about college planning,
estate planning and home purchases. For accounts with $100,000, clients will gain access to a second financial adviser.
WIDER NET
The company has had the same minimum since the platform launched in 2011. Back then, Mr. Harris said, the firm targeted the mass affluent with investable assets of $100,000 to $1 million. Though that is still the company's main audience, cutting the minimum will allow the company to cast a wider net.
"It may not seem like a lot, but that additional $75,000 is significant for many investors just getting started," said Matthew Fronczke, director of product consulting and research at Kasina.
Mr. Fronczke said the industry is
seeing competition grow stronger, especially as robo-advisers gather more assets.
Betterment, for example, just crossed the
$3 billion threshold.
ADVISER USE OF ROBOS TO GROW
An A.T. Kearney study in June found that investors' use of robos will grow. According to the research, the percentage of total investable assets that robo-advisory services manage will jump to
5.6% in 2020 from 0.5% today.
As that happens, online platforms will need to keep up with one another, and prove to consumers why they are the best option around.
"Fees on automation will continue to be stressed," Mr. Fronczke said. "Customers need to see value in other financial budgeting services that they are offering."
