Empower review
Moneywise.com / Moneywise.com
Updated: January 03, 2024
We adhere to strict standards of editorial integrity to help you make decisions with confidence. Please be aware that some (or all) products and services linked in this article are from our sponsors.
We adhere to strict standards of editorial integrity to help you make decisions with confidence. Please be aware that some (or all) products and services linked in this article are from our sponsors.
Empower, formerly Personal Capital, is one of the hottest financial technology products on the market. Founded in 2009, the goal of Empower was to provide a blend of cutting-edge technology with objective financial advice, including retirement and budgeting tools. The company has grown by leaps and bounds and has over $12 billion in assets under management.
Here at Moneywise, we've been so impressed with the Empower app's vast array of services and tools that we've consistently rated it the best personal finance tools.
In our Empower review, we cover the main features, fees, pros and cons, and how to ultimately decide if it's the right money management tool for you.
What is Empower?
Empower is an online wealth management company that's known for its range of free financial tools and its paid wealth management service. The platform can help you budget, analyze your investment portfolio, and create a financial roadmap. And its wealth management service lets you invest and work directly with an Empower financial advisor to create a more customized portfolio.
If you want useful, free financial planning tools and calculators, Empower has what you need, and without costing a penny. And for those looking to invest at least $100,00, its wealth management service could be of interest.
Get started for free with EmpowerEmpower's top features
Empower is three services combined into one.
- Free money management tools
- Retirement management tools
- Wealth management tools
Let's take an in-depth look at each of these features.
Empower money management tools
One of the best features of Empower is its free financial tracking tool. This lets you monitor not only your spending but also your bank, credit card, and investment accounts all in one place. You can even track your cryptocurrency investments with their crypto BETA tool. Just add in your crypto manually and you'll be able to see it alongside your other assets.
Under Financial Tools, you'll find a variety of tools that can help you to manage your money in what Empower calls a “360-degree” view.
Net worth tracker
Empower can calculate your net worth by simply subtracting what you owe from what you have. To do this, it reviews all your credit accounts, investments, retirement accounts, and bank accounts.
Once established, it can help you track your net worth as compared to the national average. This enables you to focus on your finances. And it will truly highlight just how damaging credit debt can be and inspire you to make changes.
Budgeting tool
Follow weekly, monthly, and yearly income and spending habits with the Cash Flow Analyzer Spending tool. This is available on the Empower app and website. Budgeting can be tough, especially trying to keep track of where all of your money is going.
Because Empower is connected to all of your accounts, it tracks your expenses for you. And then, following the 50-30-20 rule with 50% of your budget devoted to what you need in life, 30% to what you want, and 20% to savings, you'll be able to see if you are on a healthy budget or if it needs tweaking — and where. The Upcoming Bills feature shows you a report of the forthcoming bills and their due dates.
Cash flow tracking
A key to budgeting is watching what is coming in and what is going out. With the Empower dashboard, you will see all of your accounts in one place. And you can view spending and earnings in a bar graph. By seeing it all together, it makes it easier to create a budget and make changes when you see you have deviated from it.
Empower Cash™
Empower Cash is a free cash management account that's open to regular members and advisor members. It currently pays account pays 3.35% APY to start and 3.45% APY for Empower Advisory clients.
This rate is competitive with many high-yield savings accounts, and it makes it easier to move money around within your account if you use Empower's wealth management service. And, your account has aggregate FDIC insurance of up to $1.5 million ($250,000 per program bank).
Savings planner
The Savings Planner was created to help users set up savings tools without the need for hiring planners. Using this tool, you can plot out how much you need for retirement, emergencies, and other big-ticket items like a down payment on a house. Then you can move funds directly into the appropriate account.
Empower retirement management tools
Empower's secondary financial planning tool is its free Retirement Planner. This is one of the most comprehensive retirement calculators out there. Offering more than other planning sites, Empower provides long-term financial planning. The best and easiest part of using Empower is keeping all of your information together and creating a planner and forecaster for the future.
Empower's retirement planner
With Empower‘s Retirement Planner, you can finally answer the question of whether you have saved enough for retirement, and with a reasonable degree of confidence.
Find out if you are on target for retirement.
This feature allows you to access spending goals and income events and project future portfolio value. The Retirement Planner pulls all of this together and tells you what kind of shape you're in for retirement. They also have a Recession Simulator that can tell you how your portfolio would have performed during past recessions. This is an excellent resource for those concerned about the effects a recession can have on their portfolio.
There aren't many good retirement-planning tools out there. Even the paid tools I've seen lack many features. Empower's tool is perhaps one of the most comprehensive I've seen — free or paid. There is a multitude of variables available in it. And you can play many what-if scenarios with your finances.
You do not have to enter your assets and accounts manually; it automatically populates the information. This feature is available on the website and the Apple and Android apps.
Retirement Paycheck — This feature provides users with guidance on how to withdraw money during retirement in the most tax-efficient way.
Fee analyzer
This useful feature tells you how much your retirement plan is costing you. If your 401(k) is like most, the amount lost to fees will surprise you.
Similar to the Retirement Planner tool, Empower's 401(k) Analyzer determines the annual 401(k) expenses of the accounts you add within the service. Then, based on some assumptions that you can adjust, you can see the annual fees that are eating into your retirement plan over time.
In my family's case, our annual expenses are just 0.38%. And at the time of retirement, the total cost of our retirement plans is expected to be over $500,000! That is half a million dollars lost to fees!
You need to pay close attention to the annual fees in your 401(k) plan.
College savings
The Retirement Planner also allows you to set up a New Education Goal. If you have children, you can add each child by name and birth year and then indicate whether you want to save for college or are considering private school before college.
You can use this planner to compare the costs of colleges and determine your savings needs to meet your educational goals. Pulling in the average college costs by your state and the number of years you'll have until your child goes off to school, Empower calculates an amount you'll need. It even adds in inflation. From there, the planner lets you know how much you need to save each month to be prepared.
Empower wealth management
Apart from its free financial fees, Empower offers a top-notch paid wealth management and personal advisory service that's available if you invest $100,000 or more.
There are three tiers for management that influence which types of assets you can invest in, like real estate or even private equity:
- 1.
Investment Services for $100,000 to $200,000 in assets
- 2.
Wealth Management for $200,000 to $1 Million in assets
- 3.
Private Client for those with more than $1 million in assets to invest.
Regardless of your tier, here are the perks and features you get as a Empower wealth management member.
Dedicated personal advisor
When you begin under Wealth Management, you are assigned a dedicated financial advisor who will have a meeting with you to discuss your goals. From there, he or she will make recommendations and set up accounts for transferring assets.
The financial advisors will review your portfolio and allow you to personalize it, beginning with a Personal Strategy Guide.
Your financial advisor implements and maintains your portfolio allocation. And he or she monitors it and adjusts it as needed to help you reach your financial goals. The company's Investment Checkup focuses on asset allocations and fees. These are the most important part of your portfolio — and are manageable. You'll be notified if there are areas that can be improved.
Monitor the health of your investment asset allocation. By determining your risk profile, Empower will recommend an asset allocation that's right for you.
Empower's investment strategy
The asset allocation part gets interesting. Empower uses baskets of individual securities and exchange-traded funds (ETFs) to create a model portfolio. Empower is aware that annual fees can decrease the performance of your investments for the long haul.
- Using index funds with annual fees adds expenses on top of Empower's management fee. Therefore, using index funds decreases your annual return. Instead, Empower invests in individual stocks in a basket of funds.
- By investing in individual securities, your portfolio is more tax efficient as well (if your investments are in taxable accounts, of course). So while the basket of funds won't mirror an index fund exactly, it will come very close and should have lower fees and taxes. Also, with individual securities, Empower can better manage the taxes you pay via a process called tax-loss harvesting (TLH).
- Empower also offers Personal Funds, which targets a specific investment objective, but you own individual securities rather than a mutual fund.
- For socially conscious investors, Empower also offers its Socially Responsible Personal Strategy (SRI) portfolios. Socially responsible investing is a way to align your investments with personal values and beliefs, so this may be a strong point of interest for investors looking to align their finances with corporations that are more active with environmental, social, and corporate governance issues.
Financial roadmap
Announced in April 2020, the Financial Roadmap is a tool available for Empower's wealth management clients. It's designed to improve the financial outcomes of advisory clients by delivering personalized, useful, and timely guidance at scale.
The Financial Roadmap generates a prioritized list of financial planning topics such as employer plan analysis and estate planning based on a person's personalized data. Over time, it recommends new topics to prioritize based on changes in the data. It also recommends where to prioritize savings, how to pay down debt, build an emergency fund, or the amount to save for retirement.
All of this is based on accounts and loans aggregated in each client's individual — and secure — dashboard. You'll also get daily or weekly summaries of your investment portfolio and spending.
Empower fees
Most of Empower's tools are completely free, like its net worth tracker, budgeting tools, and savings planner. However, you pay annual management fees for Empower's wealth management service that can range from 0.49% to 0.89%.
It's worth noting that Empower Wealth Management fees are all-inclusive. This means no hidden or trailing fees, and no trade commissions. For the first million dollars, fees are 0.89%. For private clients, fees are 0.79% for up to $3 million, 0.69% for the next $2 million, 0.59% for the next $5 million and 0.49% for over $10 million.
For private clients
Includes family tiered billing
Is Empower really free?
Yes! Empower offers a completely free version. The company makes money from its wealth management service, but the majority of its tools and features are free to use.
Without paying a dime, you can link all of your existing checking, savings, mortgage, credit card, retirement, and investment accounts. You can also track your spending, create a budget, monitor your net worth, find out how far along you are on your retirement savings journey, and analyze your fees. That's quite a lot of value for absolutely zero dollars. Visit the Empower site, sign up, and start managing your financial accounts.
Is Empower safe?
Yes, Empower is safe to use and has numerous security measures in place to protect your personal and financial information. Furthermore, it never sells your data to third-parties and takes customer security and privacy extremely seriously.
In doing this Empower review, we find the security level very similar to Mint.com's service. Empower requires you to register each computer or other device you use. You must authorize the device you're using. You can choose from either an email or phone call to verify.
Security measures and features that help ensure your data is safe with Empower include:
- Data encryption: All data is secured with AES-256 encryption, which Empower says is the same standard as the U.S. military
- Multi-factor authentication: Secure your account with multi-factor authentication for devices. You can also use biometric authentication on mobile devices.
- Security bounty program: Empower has a bug bounty program that pays hackers and users for finding and reporting possible exploits or security weaknesses in the platform.
- Fraud monitoring: You can opt-in to a daily transaction monitor email to receive a list of daily transactions, helping you spot potentially fraudulent transactions
- FDIC-insured: Your account is insured by the FDIC up to $250,000.
Fritz Robbins, Empower's Chief Information Officer, spoke with Moneywise about online financial security. One layer of security relates to how your passwords are managed when a personal finance software application uses them to pull information from credit cards, bank, and investment accounts.
“We never send information to the user's browser,” explains Robbins. “That's big protection for banking passwords. Even if your own computer is compromised, the banking passwords aren't going to be exposed.”
It's safer for you to look at your bank account information through Empower than it is to log into online banking.
— Fritz Robbins, Empower's CIO
Ease of use
Everything is automated on Empower, and it's easy to use on both desktop and mobile.
However, you can't use a mobile internet browser to access Empower. You must use the mobile app. But it's more basic than the desktop experience. Instead of the wonderful pie charts and bar graphs, you'll just have lists that look similar to your banking app.
And Empower shines on a desktop computer. It's filled with charts and graphs to make it easy to see exactly how your finances look — great for visual people such as myself.
How to sign up with Empower
Opening an account with Empower is quick and easy. We mapped out all the steps you need to take here: How to get started with Empower.
Meet your money goals with Empower for freeCustomer service
Empower is an automated platform, but you can speak to advisors online or by phone. Your advisor will have access to your dashboard, and you don't need to meet face to face, just virtually.
Empower pros and cons
Pros
- Complete view of your finances: Get access to all of your finances in one easy-to-use service. Empower calls it a “360° View of Your Financial Life.”
- Powerful investment checkup: It's a decent starting point and should be adequate for most individuals, though it doesn't give concrete and actionable items. And I suspect the reason is to upsell you on their advisory service.
- Support for any device: Empower has an app for Apple iPhone, iPad, Apple Watch, and Android. Empower is also available on desktop.
- You Index: A performance metric of your current stock, ETF, and mutual fund holdings extrapolated backward over time. It doesn't include your cash, MMFs, individual bonds, options, or other alternative investments.
- Easy to use: Account setup is brain-dead simple. Their user interface navigation and reporting is well laid out.
- Custom allocation of unknown assets: Empower now allows you to categorize unknown assets.
- Great reporting: Similar to Morningstar's X-ray tool, Empower offers a great way to drill down into asset allocation and performance.
- All-inclusive Wealth Management fee: Empower's paid-service annual fee includes everything to manage your account. So there are no hidden fees.
Cons
- Asset allocation not customizable: Empower has predetermined asset, allocation models. This is adequate for most people, but not if you want to vary from the recommended allocations.
- Budgeting tool needs improvement: You can monitor cash flow and spending, but the spending feature is available only on the mobile app and not on the website.
- No reconciliation tool: You cannot reconcile your monthly bank statements to ensure all transactions are accounted for. However, since the transactions are coming from your bank directly, they should already be in sync.
- Expensive Wealth Management service: Compared to traditional advisors, Empower is much cheaper, but it's expensive when compared to robo-advisors without human guidance.
- High minimum for Wealth Management: To be considered as a client of Empower, you need at least $100,000 of investment assets. This minimum is higher than competing robo-advisory services.
- No import option from Quicken: You can't import your data from Quicken into Empower.
- Sales calls from Empower: If you use the free tool, Empower may contact you to become a customer of their paid service.
Alternatives to consider
Because Empower has so many tools and features, picking the best altenative really depends on what your needs are.
For budgeting and financial planning, apps like Mint and YNAB are popular to keep on top of spending. You can also use apps like YNAB if you want to create a visually-appealing financial roadmap and budgets, similar to Empower.
As for the wealth management side of things, popular alternatives include two leading robo-advisors, Betterment and Wealthfront.
| Highlights | Betterment | Wealthfront | SoFi Automated Investing |
|---|---|---|---|
| Rating | 4.5/5 | 4.5/5 | 4/5 |
| Minimum to open account | $10 | $500 | $1 |
| 401(k) assistance | ✅ | ❌ | ❌ |
| Two-factor auth. | ✅ | ✅ | ✅ |
| Advice options | Automated, Human Assisted | Automated | Automated, Human Assisted |
| Socially responsible investing | ✅ | ✅ | ❌ |
| Read reviews | Betterment review | Wealthfront review | SoFi Automated Investing review |
| Sign up | Get started | Get started | Sign up |
The main advantage of Betterment and Wealthfront is that both robo-advisors only charge 0.25% in annual management fees, which is significantly less than Empower. And you still get features like tax-loss harvesting and automatic rebalancing for this fee.
Getting to work with a human advisor is a selling point for Empower, as is its range of free tools and calculators. But for hands-off investing, some robo-advisors offer more affordable alternatives.
Is Empower right for you?
Whether or not Empower is right for you depends on what you're looking for. If you're looking for free money management tools, then it's definitely worth checking out.
If you're considering using Empower as a wealth management service, then you should keep a few things in mind.
- You need at least $100,000 to start using this service. Empower is trying to go after higher-net-worth individuals and squarely compete against the high-fee financial advisors like Edward Jones.
- The fees at Empower are much lower than those charged by traditional financial advisors. Wealth management, trade costs, and custody fees are included — you do not pay trade commissions.
- Every account gets a dedicated advisor, even if you don't use the wealth management service. It's been reported each advisor within the firm handles approximately 200 clients, and you can schedule a consultation with your advisor through the app.
Final thoughts on Empower
What makes Empower such a great personal finance platform is that it does it all: budgeting, retirement planning, and investing. Not all platforms offer everything. Here's a roundup of Empower's standout features:
- Empower's financial software is free to use, and you're under no obligation to use wealth management services.
- Empower's finance software is currently the best online service for monitoring your portfolio. Unlike some other money management platforms, you can use it to manage your investment accounts. This is why we've put it on our list of best online brokerages.
- The retirement planner is second to none/ I found it very useful to perform many role-playing situations. The investment checkup tool is excellent for high-level recommendations.
- Compared to traditional advisors, the wealth management service is cheaper than the standard 1% to 2% advisors usually charge. But it's not cheap when compared to competing robo-advisors.
For those who don't know how to allocate their investments appropriately, Empower is a godsend. If this describes you, then you should consider the lower-than-average-cost financial advisory service.
Sign up to Empower for free
