Personal Capital vs. Wealthfront for ESG Investing (Review)

Robo-advisors Personal Capital and Wealthfront offer socially responsible investing strategies, though the two platforms have different approaches. Having reviewed over 30 robo-advisor portfolios, we will help you compare Wealthfront and Personal Capital from the environmental, social, and governance standpoint.

SustainFi October 14, 2021

Personal Capital Advisors Corporation (“PCAC”) compensates SustainFi for new leads. SustainFi is not an investment client of PCAC. Some of our posts may contain links from our affiliate partners. However, this does not influence our opinions or ratings. Please read our Terms and Conditions for more information.

At a glance

  • Both Personal Capital and Wealthfront offer environmental, social, and governance (ESG) investing options that consider carbon emissions, diversity and shareholder rights. But, because their approaches are so different, the best option depends on what you are looking for
  • Best for high-net-worth investors: Personal Capital. Although Personal Capital’s fees are higher, you get access to dedicated human advisors who can help you plan for the future
  • Best for new investors: Wealthfront. Wealthfront is a low-cost, low-minimum robo-advisor. It may be a better option if you don’t have a complex financial life or a lot of assets or are simply looking for the lowest-cost solution

Keep reading to learn more.

Minimum investment

 $100,000 ($200,000 for Socially Responsible Investing)

Minimum investment

$500

Management fee

0.49% - 0.89%

Management fee

0.25%

ESG option

Socially Responsible Personal Strategy

ESG option

Socially Responsible (SRI) Portfolio

Human advisors

Yes

Human advisors

No

Tax-loss harvesting

Yes

Tax-loss harvesting

Yes

What is Personal Capital?

Personal Capital is a hybrid advisor that combines a robo-advisor with human professionals. The company likes to call itself a “digital wealth platform.”

Founded in 2009, Personal Capital was acquired by a Canadian insurer, Empower, in the summer of 2020. In September 2021, the company had over $21 billion in assets under management.

Personal Capital has a higher account minimum ($100,000) and charges higher fees (0.49%-0.89%) than most robo-advisors. But it is not a typical robo-advisor, so comparing it to low-cost robo-advisors that don’t provide the same level of service isn’t fair.

With Personal Capital, you get ongoing access to a human financial advisor. He or she can help you with complex financial needs, like optimizing your portfolio for stock option ownership.

In 2018, Personal Capital launched its Socially Responsible Strategy, which reached $1 billion in assets by mid-2020.

🔔 Read the full review of Personal Capital.

What is Wealthfront?

Wealthfront is a top robo-advisor with a focus on tax minimization. A robo-advisor will create an investment portfolio for you based on factors like how much risk you want to take, your age, and your financial goals. All you need to do is answer a quick, online questionnaire.

Wealthfront’s investment team is led by Dr. Burton Malkiel, a famous economist and the author of A Random Walk Down Wall Street, an investing best-seller. Wealthfront has over $21 billion in assets under management. 

Wealthfront was late to the game in offering sustainable investments, but they finally rolled out the Socially Responsible Investing (SRI) Portfolio in September 2021. The funds in the SRI portfolio are screened for environmental, social, and governance factors like greenhouse gas emissions.

Although ESG ratings and screens are not a perfect indicator of how “good” a stock is, companies with better ESG scores are generally better for the environment and their shareholders.

The Palo Alto-based firm was founded in 2008 as Ka-Ching, a mutual fund analysis company, but has long since pivoted to robo-advisory. Today, Wealthfront appears to be pivoting again to allow for more self-directed trading.

🔔 Check out the full Wealthfront review.

Personal Capital vs. Wealthfront: Account Types

Personal Capital and Wealthfront both support the following account types:

  • Individual and joint taxable investment accounts
  • Retirement accounts for traditional, SEP, and Roth IRAs, plus rollover 401(k)s
  • Trusts

Wealthfront also offers 529 college savings accounts. Personal Capital can advise you on a 529 college savings plan or your 401(k), though they won’t manage it.

💰 The winner: Tie for most investors, but Wealthfront wins if you need a 529 savings account.

Personal Capital vs. Wealthfront: Banking

Personal Capital lets you open a cash account, which pays a 0.05% APY. The APY goes up to 0.10% if you are a customer of Personal Capital advisory services. (And you probably won’t be opening an account with them if you are not an advisory customer). There are no fees or minimum balance. The account is FDIC-insured. However, you don’t get a debit card, so you can’t withdraw cash at an ATM.

Wealthfront also offers a checking account, which comes with a Visa debit card. You can set up direct deposits and deposit checks. You earn 0.10% annual interest on your cash and get access to 19,000 free ATMs. Your account is FDIC-insured through partner banks.

💰 The winner: Wealthfront. It offers a 0.10% APY to all customers, and accounts come with a debit card.

Personal Capital vs. Wealthfront: Minimum investment

Personal Capital’s minimum investment – $100,000 – is comparable to what many human financial advisors need to work with you. However, you need to invest at least $200,000 to choose the Socially Responsible Strategy.

Here are the Personal Capital service tiers:

  • Investment Services ($100k-$200k investment assets.) You get ongoing access to a financial advisor, and your portfolio is invested in exchange-traded funds (ETFs.) You are not eligible for the Socially Responsible Strategy at this service tier
  • Wealth Management ($200k-$1 million investment assets.) You get ongoing access to two financial advisors. Your portfolio is invested in stocks and funds, which you can customize. You are also eligible for the Socially Responsible Personal Strategy
  • Private Client (over $1 million investment assets.) In addition to two dedicated financial advisors, you get priority access to investment specialists and private equity investments 

The minimum balance to get started with Wealthfront is only $500. More sophisticated features, like stock-level tax-loss harvesting, require a $100,000 balance.

💰 The winner: Wealthfront. A $500 minimum balance clearly makes Wealthfront more accessible than Personal Capital’s $100,000 minimum ($200,000 if you want to invest sustainably.)

Personal Capital vs. Wealthfront: Management fees

The more humans are involved, the more expensive it’s going to be. Personal Capital’s fees are closer to financial advisor than robo-advisor fees. A typical financial advisor charges around 1% of assets under management.

For the first $1 million invested with Personal Capital, you pay 0.89%, but that percentage drops to as low as 0.49% for over $10 million invested. Here is the full breakdown:

  • Up to $1 million: 0.89%
  • First $3 million: 0.79%
  • Next $2 million: 0.69%
  • Next $5 million: 0.59%
  • Over $10 million: 0.49%

Wealthfront’s fully automated service is much cheaper: Wealthfront charges an annual fee of 0.25% of assets under management.

Neither Personal Capital nor Wealthfront charges any account opening fees.

💰 The winner: Wealthfront. Wealthfront charges 0.25% of assets under management, compared to 0.49%-0.89% for Personal Capital. But the services aren’t comparable: with Personal Capital, you are paying for access to human advisors. The cost may be lower than what you would pay by going directly to a human advisor, particularly for larger balances.

Personal Capital vs. Wealthfront: Socially Responsible (ESG) Portfolio

Both Personal Capital and Wealthfront offer socially responsible investing options. ESG portfolios score better on environmental, social, and governance metrics like carbon emissions, worker treatment, diversity and governance.

🔔 Read our ESG investing guide to learn more.

Personal Capital offers its ESG option in partnership with Sustainalytics, an ESG rating agency owned by Morningstar. This option is only offered to customers with over $200,000 in their portfolio.

Just like the core, non-ESG portfolio, the Socially Responsible Strategy invests in six types of assets:

  • U.S. stocks
  • International stocks
  • U.S. bonds
  • International bonds
  • Alternatives
  • Cash

The Socially Responsible Portfolio replaces large and mid-cap U.S. and international stocks with ESG stocks and funds. Personal Capital relies on non-ESG funds for other types of investments, like small-cap stocks and bonds.

How Personal Capital selects U.S. stocks for your ESG portfolio

For the U.S. stock component of your ESG portfolio, Personal Capital invests your money in a basket of individual stocks. In contrast, most other robo-advisors invest in exchange-traded funds (ETFs) instead of stocks.

To create the basket of ESG stocks, Personal Capital takes the Russell 3000 index of U.S. stocks, ranks each company using Sustainalytics ESG scores and excludes all stocks rated below their industry average. They aim to invest in the top 10% of stocks in each industry.

They also exclude these industries from ESG client portfolios:

  • Energy (except utilities)
  • Tobacco
  • Adult entertainment
  • Gambling
  • Small arms

The final portfolio includes between 75 and 85 stocks across nine sectors, so that 10-12% of your portfolio is invested in each sector.

60% of the U.S. stock portfolio is in large-cap stocks, and 40% is in mid and small-cap stocks. Small-cap stocks, which are around 20% of the U.S. stock portfolio, are not ESG-optimized.

Personal Capital is one of the few robo-advisors that remove fossil fuels from your U.S. stock investments, except for small-cap stocks. According to Personal Capital, less than 1% of your U.S. stock portfolio will be invested in energy if you choose the ESG portfolio.


For international stocks, including both developed and emerging markets, Personal Capital invests in ESG funds.

The portfolio can be customized for each client, so expense ratio and portfolio construction will vary.

Smart Weighting 

Most robo-advisors invest your money in ETFs that mirror the broad market. But the broad market is generally skewed towards more popular sectors, such as technology. For example, technology stocks are over 30% of the S&P 500 index.

To diversify your investments and protect you from market bubbles, Personal Capital puts your money equally in all sectors (excluding fossil fuels for the Socially Responsible Strategy.) In practice, that means that your U.S. stock exposure to any sector is 10-12%.

The downside to Smart Weighting is that you might miss out on the hot sectors while those are doing well.

Socially Responsible Strategy Performance

Personal Capital is one of the few robo-advisors that publish performance data. Although past performance doesn’t guarantee future performance, according to Personal Capital, the Socially Responsible Strategy has performed in line with the benchmark made up of low-cost non-ESG ETFs from Vanguard and iShares since its inception in 2018. However, a three-year track record is not very long.

Over the past year (through 6/30/2021), the performance of the Socially Responsible Strategy vs. the non-ESG benchmark varied depending on the riskiness of the portfolio. The riskiest, Full Growth, Socially Responsible Portfolio returned slightly less than the non-ESG benchmark. But the least risky portfolio beat the non-ESG benchmark by 0.5%. All in, it doesn’t look like the performance of the Socially Responsible Strategy is very different.

Socially Responsible Investing with Wealthfront

Wealthfront’s SRI Portfolio invests in fewer funds by default, though you can add more from a pre-approved selection. As of October 2021, the SRI portfolio invested in U.S. stocks, developed and emerging foreign markets stocks and U.S. bonds.

Here are the funds in the Wealthfront SRI portfolio:

  • U.S. stocks: iShares ESG Aware MSCI USA ETF (ESGU)
  • International developed markets stocks: iShares ESG Aware MSCI EAFE ETF (ESGD)
  • Emerging markets stocks: iShares ESG Aware MSCI EM ETF (ESGE)
  • U.S. bonds: Vanguard Tax-Exempt Bond Index Fund ETF (VTEB) (not ESG)

Only stock investments are in ESG funds; the bond fund, VTEB, is a non-ESG option. With only four funds, the SRI portfolio is very simple. All SRI funds are from BlackRock, a large exchange-traded fund provider. 

🔔 Read the full review of Wealthfront’s Socially Responsible Portfolio.

According to Wealthfront and based on the data from the past three to five years, the performance of the SRI Portfolio should be similar to the standard portfolio (despite slightly higher fees).

In the past, SRI Portfolios have also been less volatile than standard portfolios, despite similar returns.

Wealthfront lets you customize your portfolio to a degree. You can do that by adding new funds from a pre-approved list. For example, you can add a clean energy fund like ICLN.

Wealthfront clients with access to U.S. Direct Indexing can also exclude stocks they don’t like by putting them on the restriction list. (Only clients with over $100,000 under management are eligible for direct indexing.)

The funds in the Wealthfront Socially Responsible Investing (SRI) Portfolio cost from 0.06% to 0.25%. The SRI Portfolio includes four funds, and their mix depends on your goals and how much risk you want to take. As an example, an SRI Portfolio with the 8.0 Risk Score (81% stocks and 19% bonds) costs 0.16% and the SRI Portfolio with the 10.0 Risk Score (94% stocks and 6% bonds) costs 0.18%.

💰 The winner: Tie. Wealthfront and Personal Capital have different approaches to selecting ESG portfolios. Wealthfront will put your money in a few low-cost ESG funds and let you make a few changes. Personal Capital puts your money in a basket of individual U.S. stocks and several ESG ETFs. Both robo-advisors say that ESG portfolios should perform in line with their non-ESG counterparts.

Personal Capital vs. Wealthfront: Tax-loss harvesting

Tax-loss harvesting is a tax minimization strategy that involves selling funds or stocks at a loss to offset capital gains from investments that have made money.

Both Personal Capital and Wealthfront offer tax-loss harvesting to clients with Socially Responsible Portfolios.

Wealthfront customers with less than $100,000 invested only get tax-loss harvesting at the ETF level. (Wealthfront will sell one ETF at a loss and replace it with a comparable ETF to lock in the loss and use it to offset taxable gains from other investments.)

A more advanced version of tax-loss harvesting, stock-level tax-loss harvesting (also known as direct indexing), is reserved for Wealthfront customers with over $100,000 in assets.

💰 The winner: Tie. Both Wealthfront and Personal Capital offer advanced tax-loss harvesting capabilities to customers.

Personal Capital vs. Wealthfront: Human Financial Advisors

Out of the two, only Personal Capital gives you ongoing access to financial advisors. Investors with over $200,000 invested have access to two advisors.

💰 The winner: Personal Capital. Wealthfront doesn’t offer access to financial advisors at all.

Personal Capital vs. Wealthfront: Margin lending

Wealthfront gives margin loans to customers with at least $25,000 in their investment account. Depending on your account size, borrow rates are between 2.40% and 3.65%. You can borrow up to 30% of your account value.

💰 The winner: Wealthfront. Personal Capital doesn’t offer margin loans.

Personal Capital vs. Wealthfront: Automatic Rebalancing

Both robo-advisors automatically rebalance your portfolio. Automatic rebalancing means that the robo-advisors will buy or sell investments to get to the asset allocation that suits your goals.

Sometimes, when one asset class, like stocks, does much better than another one, like bonds, your portfolio may “drift” and become riskier (or less risky) than it should be. Automatic rebalancing solves that.

💰 The winner: Tie. Nearly all robo-advisors now offer this feature.

Personal Capital vs. Wealthfront: Free tools

Personal Capital offers free financial planning tools, including a net worth calculator, a savings planner, an education planner, a fee analyzer tool, and much more. You don’t need to be a wealth management client to use these tools.

Wealthfront also offers several planning tools helping you decide what house you can afford, whether you are saving enough for retirement, and if you can take time off to travel.

💰 The winner: Personal Capital. Personal Capital has more comprehensive, easy-to-use, free tools.

💰 The Overall Winner

  • There is no clear winner: the best investment platform depends on what type of investor you are
  • Best for high-net-worth individuals: Personal Capital. With Personal Capital, you get personalized attention from a dedicated financial advisor (or two.) They can help you with complex financial needs like estate planning
  • Best for beginners: Wealthfront. Wealthfront is an accessible, low-cost robo-advisor. Their platform lets you start investing with as little as $500 and pay only 0.25%. It is cheaper than Personal Capital, but services are automated, and you don’t get to talk to human advisors

🔔 Want to compare more options? Read our guide to ESG robo-advisors.

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Methodology

We compared robo-advisors with an ESG offering based on management fees, ESG portfolio expense ratios, the percentage of the ESG portfolio invested in ESG funds vs. traditional funds, ESG portfolio ratings (from Sustainalytics and MSCI), portfolio exposure to energy, transparency, features like tax-loss harvesting and automatic rebalancing, and access to human advisors.