Empower Review 2024

Personal Capital is now Empower. Empower’s product offering is twofold: a full-featured robo-advisor platform and a suite of free financial management tools.

The latter provides a nice-looking budgeting dashboard that lets you sync your financial accounts to keep tabs on your day-to-day spending and cash flow. Anyone interested in getting a holistic view of their finances would benefit from this all-in-one solution, which nabbed it the top spot in Forbes Advisor’s ranking of best budgeting apps.

Meanwhile, Empower’s robo-advisor platform makes the most sense for a very specific sort of person. That’s someone who:

• Has already accrued $100,000 in investment savings
• Is willing to pay higher fees to chat with a live financial professional

The first point narrows the field quite a bit:

• Research from the Federal Reserve shows that the median amount of financial assets among all U.S. households is $25,000.
• Only about half of U.S. households have any sort of retirement savings, with a median amount of just $65,000.
• Only slightly more than half of households own stocks, with a median amount of $40,000.

Put it together, and only a sliver of the public will have sufficient assets to qualify for Empower’s investment services—unlike competitors such as Acorns, Betterment or Wealthfront, which have low or zero minimum balance requirements.

But if you can meet the investment minimum and want access to financial planning professionals, that may help justify Empower’s high fees, though even these may be more than you would pay for comparable service at other robo-advisors. For instance, those with less than $1 million in assets under management pay 0.89% in fees at Empower, compared to 0.40% at competitor Betterment’s premium service with financial advisor access.

Think of Empower as a synthesis between a high-end robo-advisor and a budgeting app, which means you can let the Redwood Shores, Calif.-based company manage your entire financial life, if you’re so inclined.

Empower’s Free Budgeting Platform

Link your financial accounts to Empower’s platform, and you gain access to a dashboard that looks a lot like Mint or other rival budgeting apps. You can see your net worth, monthly cash flow and how your budget has changed over the past several months.

This useful tool helps you get a handle on how much money you have coming in and going out each month. By linking to your mortgage, car loan and any other loan accounts, Empower will give you a heads up when bills are due. As a bonus, the app itself is easy to use and available on Android and iOS.

Empower’s Free Investment Planning Features

You can also allow Empower to monitor your investment accounts, which also unlocks a free investment review feature.

Link your investment accounts, and you can see how well your portfolio has performed via what Empower has trademarked as the “You Index.” Essentially it combines your assets—from cash to bonds to stocks—and compares the performance to broad indexes, like the S&P 500 or a blended account. This is a handy tool that allows you to quickly compare your portfolio performance and see where your money is invested.

Empower offers an impressive interactive investment planning dashboard. Enter in some biographical information, from age to income to savings behavior, and the platform will spit out a “retirement planner” page that shows you how much you’re likely to have and what you can count on from Social Security while offering improvements you can make to improve your situation. Savers unsure of where they stand in relation to their retirement goals should use this tool even if they don’t end up becoming a paying Empower customer.

For the medium term, Empower has a savings planner, which tells if you’re saving enough yearly to meet your retirement goals, how well your emergency fund is stocked and how much progress you’ve made on paying down your debts.

The retirement fee analyzer shows you how much you’re paying in annual expenses, what that’s costing you over time and whether your fee burden is higher than it should be. The investment checkup grades your asset allocation—is your portfolio too aggressive or conservative?—and recommends a target allocation of stocks and bonds.

If you have $100,000 in assets to manage and you’re willing to pay higher fees, you’ll gain access to Empower’s robo-advisor wealth management features.

Perhaps of most interest to you will be access to live financial professionals. These fiduciaries answer your investment and retirement questions, set up a comprehensive financial plan and evaluate how well you’re meeting your goals. This can provide a huge amount of relief to those who’ve firmly entered middle age and want to ensure they’re saving enough for their children’s college education as well as their own golden years.

As for the investments themselves, Empower employs a team of strategists and big hitters to help craft tax efficient portfolios that will redound to your long-term wealth. While Ellevest has Sallie Krawcheck and Wealthfront has Burton Malkiel, Empower counted luminaries such as Harry Markowitz of modern portfolio theory fame, and Shlomo Benartzi, a leading behavioral economist, as key contributors.

Part of the appeal with Empower is its so-called Personal Strategy, which creates a specific investment portfolio for you depending on your needs and long-term goals. It uses Monte Carlo simulations to test the probability of you meeting your retirement needs and employs a combination of low-cost exchange-traded funds (ETFs) and potentially some individual stocks and bonds to create a portfolio that aims to maximize your returns based on the timeline and amount of risk you say you’re willing to incur in a questionnaire.

Those looking for an edge over a pure passive indexing approach—keeping your money in an ETF that tracks a broad index like the S&P 500—may appreciate Empower’s “smart weighting” approach, which allows for you to have access to smaller, and potentially higher growing, investments than you might get from competing robo-advisors.

This approach adds an active investing edge, especially in the equity portion of your portfolio, which may involve buying individual stocks. It also helps explain why Empower charges higher fees than many of its robo-advisor competitors—carefully adding in individual stocks requires more than a simple algorithmic approach on its part.

Empower’s hybrid approach to robo-investing—mostly passive investing, some active investing—may make sense if you’re the kind of person who’s willing to pay higher fees in the hopes of gaining bigger returns. But keep in mind those greater costs don’t guarantee better results and you run the risk of underperformance.

Empower will also help your portfolio be tax efficient through tax-loss harvesting, a more standard robo-advisor feature, as well as looking at your asset allocation across your taxable and tax-advantaged retirement accounts. This lets Empower place securities that make regular income payments, like bonds, in tax-advantaged accounts, such as an individual retirement account (IRA), so that they won’t raise your taxes. This may help you feel more comfortable ramping up the equity exposure of your taxable brokerage account.

All of that work doesn’t come free. Empower offers three service tiers, with varying fees and minimum balances:

• Investment Services. For balances between $100,000 and $200,000, you pay an 0.89% fee for a portfolio of managed ETFs and help from one financial advisor.
• Wealth Management. For balances of $200,000 to $1 million, you pay the same 0.89% fee, but you’ll have access to two financial advisors and a portfolio that will include individual stocks, when appropriate.
• Private Clients. For balances above $1 million, you start to see a decrease in fees, all the way down to 0.49% once you hit $10 million. This nets you access to Empower’s Investment committee, two financial advisors, extra love for your retirement planning and even private equity investment options.

The typical expense ratio charged for those in the Investment Services tier is about 0.10%, according to an Empower spokesperson, while those in the highest tiers pay about 0.07%. In either case, you’ll be put in ETFs offered by Vanguard, Schwab and iShares, among others.

There is no minimum or fee involved with the budgeting, spending and portfolio management tools mentioned above, nor for Empower Cash, which is the company’s checking account.

However you feel about Empower’s offerings, these prices are steep. If you start with $150,000 invested, contribute an additional $10,000 each year and earn a ho-hum 7% return for 15 years, you’ll end up paying nearly $70,000 in fees with Empower, compared to only $20,000 with Wealthfront.

Empower offers an easy-to-navigate suite of tools and resources—many of which anyone, even non-clients, may use to get a 360-degree view of all of their finances.

Empower’s retirement tools, which allow you to link your accounts for free, give you perspective on your retirement preparedness based on what you might expect from Social Security, depending on when you claim, and how aggressively you are investing.

The investment platform is sophisticated and backed by a team of industry stalwarts and promises to use its prowess to deliver better returns than you can receive with a standard index fund, all the while minimizing your taxes.

To help ease confusion, you can talk to a dedicated financial professional to understand how your money is being invested, how well you’re making progress on your goals and what to do when your life circumstances change.

Empower’s major downside is the cost. A fee of 0.89% is just much higher than what you’ll pay with other leading robos, including Betterment and Wealthfront. While Empower offers more personal touches to make the cost easier to accept, it is still a robo-advisor. You log in, answer questions and link your important financial accounts. You’re then set up in a portfolio that matches your risk and goal profile, and money is subsequently put into that portfolio the longer you invest.

Empower allows for individual stocks in your portfolio once you’ve accumulated at least $200,000, but many users are shut out financially well before that perk takes effect, if you even view active stock picking as a perk.

Exercise caution before signing up with Empower, only doing so when you know that periodically talking with a financial professional will be worth the potential thousands in higher fees and sacrificed capital gains.