Dinner with Personal Capital

If there is one company’s name that pops up in more blog posts than any other it surely has to be Personal Capital. One reason might be that this generates some micro-income for bloggers but more likely it is because Personal Capital’s free suite of personal finance tools are arguably the best thing since Diet Mountain Dew.  Let me assure you I get nothing for promoting Personal Capital or any other entity (including PepsiCo).  I pay for this website because I like to write and I do not monetize anything associated with this hobby.  I do have some hobby side gigs that are profitable but they don’t include blogging.

Just because I’m not getting paid does not prevent me from being a fan. But unlike most in this community I am not only a user of Personal Capital’s tools to track my net worth, income and expenses I am also a paying client.   And because I have over $1 Million under their management I’m also in their Private Client group. Yesterday my wife and I hopped in our $7,000 car and drove five hours to attend a private client appreciation event in Dallas, TX.  We checked into a brand new Hampton Inn in Plano and killed a couple of hours reading then headed to the restaurant.  Let me apologize here for destroying your dreams of what life is supposed to be like if you have millions of dollars and spend your time however you want, free of a 9 to 5 job. Yes, we do have a 2008 model car with 170,000 miles on the odometer and I stay in a lot of Hampton Inn’s, both on leisure and consulting trips.  In fact,  it was a very nice new hotel and it was only $87.  And for people that do not think older cars are reliable we just got off of a 3,050 mile road trip in that car without a single problem so driving five hours to Dallas was no big deal.

 

The restaurant was new to us, a place called Jasper’s, and it had great ambiance, terrific service and excellent food.  Although we were being treated by Personal Capital I did look up the menu and the prices were lower than I would have expected for the quality that was delivered.  We valet parked and were led to the room that had been reserved for the event and found ourselves in the company of about 30 other private clients with at least a million under Personal Capital’s management.  It was a little odd, how often are you ever in a room where everybody is a millionaire?  It was fascinating to mingle and observe these millionaires in their native habitat, a trendy swank restaurant.  I do not know the net worth of the group but the median account in Personal Capital’s private client group is about $2 Million.  Also, most people, like me,  have other million dollar accounts in their portfolio besides their Personal Capital investments so it is reasonable to assume that everyone there was a multi-millionaire.  It was almost all husbands and wives together with only a few singles.  The average age was probably late 40’s, at 62 we were among only a handful of boomers there. Everyone looked very fit and slim and the preponderance of the group were involved in IT as engineers, network specialists or in sales.  There was no dress code specified on the invitations and people ran the gamut from faded jeans to suits.  I think I was the only oil and chemical guy in the group which surprised me considering Dallas is, well, Dallas.  And Dallas used to be all about oil, now not so much.

The two other couples at our table were both involved in networking IT, the husbands quickly found common ground having both worked for Cisco in the past.  One wife worked for a big bank and the other maintained a vow of silence all evening so we never learned anything about her. Interestingly one of the two guys was currently unemployed which doesn’t fit most people’s millionaire model.  Neither professed a plan to retire early.  Neither couple professed any frugal tendencies and the houses they mentioned were 4,500 square foot McMansions.   They were very bright, good conversationalists and nobody seemed interested in one upping anyone else.  They all complained about Dallas traffic on their commutes.  I did not meet anyone else there that was retired but I only got to speak to a few of the attendees.

 

Our main host was one of the big dogs at Personal Capital, Michelle Brownstein.  She was young, brilliant and is the Director of Private Client Services.  She had a couple of representatives from the Dallas office with her as well.  While we ate Michelle and her teammates presented on the current markets, Personal Capital’s newest tools and some “inside baseball” on how the company functions.  It was very interesting and I came away feeling even better about their management of one of my investment accounts.  Was it worth ten hours of driving and a night in a hotel?  Yes it was, and especially valuable to my spouse who knows where every penny is but who prefers to let me direct where we invest.

You may wonder why I pay anyone to handle my investments and it is a fair question.  After all, I currently help manage  $65 Million in foundation trust investments as a volunteer and have managed two similarly sized company retirement plans in my working past, plus I’m a personal finance blogger.  I have the knowledge to handle this myself and not pay anyone else a fee to do it yet I have most of my portfolio split up between Personal Capital, Vanguard Managed Accounts and Betterment, all of whom charge management fees.

Why do I pay fees?  I do it because I do not enjoy managing my money, I prefer to trust professionals and the fees at my stage of life are not going to significantly impact my net worth.  Plus, wives outlive husbands in most cases and if I take a misstep on one of our extreme hikes or ski off a cliff (again) she can just leave everything on auto-pilot if she so chooses and be assured that all will be well.  Personal Capital charges me 0.79% for managing my account because it is over one million.  There is another fee discount for accounts higher than three million and I may move enough money to qualify for that at a future date but I’d like to ride out a major correction or bear market with all three and see how their different takes on diversification hold up.

Now my wife would be upset with me telling you this next thing, if you knew who she was. But since my anonymity is still iron clad I’ll go ahead.  My wife and I had ribs, one of three choices on the event menu.  We are runners and tennis players and cannot afford to haul around any extra pounds so we are pretty light eaters.  The four-high stack of rib clusters on each of our plates was twice what we could scarf down on our best day, so as usual, we left half of our food untouched even though it was incredibly tasty.  When the waitress picked up our plates she asked if I’d like it boxed.  I usually would not do that at a social event because, I don’t know, it seems way redneck? But since she asked I thought, why not? She took the plates away and discretely handed us our doggy bag on the way out.  So, half of last night’s meal is riding in our cooler in the back seat as I type.

I am pretty sure nobody else did that and I would not have if the waitress had not made the suggestion, but I’m glad we did.  Wasting food always feels wrong and eating leftovers from a nice restaurant meal feels kind of like finding a ten dollar bill on the sidewalk.   We are not strict frugalists by any stretch but compared to most of the others in the room we were.  We have a modest house and older cars and we do get left over doggie bags frequently when we eat out.  We stay in borderline budget hotels.   And there was one other difference.  We have both been retired for several years at a slightly earlier than conventional retirement age, and the other people at the event did not seem to even realize that was possible.  The unemployed fifty-something multimillionaire sitting next to me was actively promoting himself to the guy on his other side as a job candidate for another 9 to 5.  It had not even occurred to him that maybe he did not need a job.  Being immersed in the FI and FIRE communities I had come to think that most millionaires probably were just like the rest of us and saw money as giving them the option to hang up the 9 to 5 in favor of something new and exciting.  Sitting in a room with thirty multi-millionaires has convinced me that most do not think they can afford to retire.  I felt like the odd man out or maybe the only one in the room that really “gets it”.

As an aside I’ve heard people speculate that the Millionaire Next Door model of the discreet stealth wealth millionaire, who used to be represented by the small businessman who ran a scrap metal yard or a small plumbing business is now more likely to be an IT person.  By far the majority of the people at the client appreciation event were in the IT or corporate sector.  I did not meet anybody that met the old small family business stereotype.  I think that the model has changed since the world has become so small and interconnected by the web.  Yesterday’s scrap metal guy is today’s app coder or search engine optimization expert.

I am a Personal Capital fan because I like their investment philosophy but I also hedge my bets by having Vanguard and Betterment do their own unique style of investing with my other investment accounts.  My wife and I started out with nothing except our college degrees. We got here by living below our incomes, saving aggressively and avoiding lifestyle creep.   And in no small part due to the fact that I found a career that I loved and that loved me back with affirmation and strong compensation. We used all the investment vehicles available to us including 401k’s, IRA’s, Roth’s and taxable brokerage accounts.  The simple truth is how you invest is relatively unimportant compared to how much you invest and how early you start investing.  But if you are not keen on managing your own investments then Personal Capital is one place you might want to check.  They have a fairly unique stock investment plan that is not market cap weighted.  That means I am not so concentrated in Facebook, Amazon, Netflix and Google as an S&P 500 index fund would be.  They have great tools and are growing exponentially in the amount of money under their management.

 

So what about you, is anybody else a client of Personal Capital’s money management services? 

 

Does it surprise you that a room full of multi-millionaires was not familiar with the concepts of financial independence or aware of the early retirement movement? 

 

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