Off the Hook

Michael Flack

ONLINE INVESTMENT advisor Personal Capital offered me a $25 Amazon gift card to open an account and then link it to one of my existing financial accounts worth more than $1,000. As a bonus, it also offered a complimentary financial checkup.

I duly signed up and linked one financial account. I then dodged the complimentary checkup and subsequently used my newfound wealth to purchase a portion of a good-enough HP computer.

I thought I was home free until I inadvertently answered a phone call from a member of my “Personal Capital team,” who again offered me the complimentary financial checkup. I couldn’t bring myself to hang up, so we made pecuniary small talk until I’d made an appointment.

As soon as I hung up, I realized that I had just chatted with staff. Apparently, “Mr. Big,” the actual financial advisor, was too important a fisherman to cast his own lines.

Mr. Big called a few days later and asked a few perfunctory questions. He then assured me that Personal Capital would use “sector and style weighting, risk minimization, and tax optimization [to] build a personalized portfolio based on your unique situation and goals” that would return more than the S&P 500 and with less risk.

I agreed to update my financial dashboard at Personal Capital with all my financial accounts, and we agreed to meet again in a couple of weeks to discuss great things.

Mr. Big, or Blake to use his given name, called me at the duly appointed time and introduced his colleague, who was either included to provide specific analysis of my unique financial needs or help sink the hook into this medium-sized fish. For the next hour, we spoke freely about a variety of investment topics, highlighted as follows:

  • Personal Capital does not use S&P 500 or other market-weighted index funds. Instead, it creates a “smart weighting” (that’s trademarked, by the way) that uses tactical allocations based on historical risk-return ratios to minimize stock-specific risk, maximize return and achieve the desired factor weightings.
  • As an investor slides into retirement, it’s important to have a tax strategy.
  • Clients can access quarterly investment committee conference calls where various macro and microeconomic trends are discussed.
  • Marketing was offering six months of free wealth management if I signed up before the offer ended in five days—and paid a fee of 0.89% of assets thereafter.

They did provide a detailed analysis of my portfolio. I needed more international stocks, more U.S. bonds, more international bonds, more alternatives and a skosh less cash. I also needed to start thinking about the net unrealized appreciation ramifications of the company stock in my 401(k) and maybe a consultation with a CPA was in order regarding my tax strategy going forward.

I wasn’t a fan of the “smart weighting” special sauce. To me, it seemed like they had data-mined back to 1990 to find a specific portfolio that outperformed the S&P 500.

The quarterly investment committee conference calls also had no allure. I used to find all that stuff fascinating but—now that I’m retired—I just can’t be bothered. Also, the “buy now, while supplies last” had a QVC vibe and was “not cool,” and I specifically told Blake so.

We agreed that “marketing was sometimes not that helpful.” He tried to set up a followup appointment, but I wriggled off the hook.

It wasn’t a complete waste of time, though. A benefit of these calls is that it forces you to compile all your assets, review your financial plan, make the necessary updates—and hopefully provides the inspiration to act.

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