Empower Review: Paid vs. Free Financial Tools

The company also offers a free online dashboard spanning all of your financial holdings. If you’re able to maintain a minimum balance of at least $100,000, you’re eligible for Empower’s wealth management tools. Empower offers access to human financial advisors and sophisticated portfolio building strategies. However, with a high minimum balance and high fees compared to its competitors, Empower won’t be the best digital wealth manager for everyone. 

Empower quick facts

Here are some of the primary services Empower offers:  

• Fee-based wealth management and free investment guidance
• Personal Strategy, your personalized investment portfolio
• Three Wealth Management tiers from $100,000 invested to above $1 million
• Empower Personal Cash, an FDIC-insured account paying 4.70% APY
• Access to IRAs through Empower or other brokerages
• Investment accounts
• Empower Personal Dashboard to manage and oversee all financial accounts from one place 
• Empower mobile app for convenient account access

Pros and cons of Empower

Empower has a lot to offer when it comes to investing, but it isn’t right for everyone. Here are the main pros and cons of working with Empower:

Pros

• Tax strategy including automatic tax-loss harvesting
• Access to human financial advisors
• Free personal finance dashboard with tools for net worth, saving, budgeting
• Interest-bearing cash management account
• Strong portfolio building
• Socially responsible investing portfolio

Cons

• High fees compared to competitors
• High account minimum of $100,000
• Only one brokerage option for investments
• App only rated 3.5 stars out of 5 on Google Play (based on 14K reviews)

Overview of Empower

Empower functions in two primary ways: as a wealth management platform, which users pay for, and as a free financial planning guide. Within its wealth management services, investors fall under three tiers based on value of assets managed. Other tools for budgeting, net worth tracking, and an interest-bearing cash account are also available. 

Wealth Management 

Empower’s Wealth Management stands out with personalized guidance, tax optimization strategies, and ongoing portfolio rebalancing. Initial sign-up consultations set the tone for your investment strategy. The Personal Strategy tailors your portfolio with individual stocks and ETFs. Additionally, the Personal Strategy + service manages employer-sponsored 401(k) or 403(b) accounts. Wealth management clients begin with a $100,000 minimum in assets under management.

Tiers of Wealth Management	Investment services	Wealth management	Private client
Investment assets	$100,000 to $250,000	$250,000 to $1 million	$1 million and up
Financial advisor access	Team of advisors	Two dedicated advisors	Two dedicated advisors and priority specialist access
Portfolio	ETF portfolio and reviews upon request	Customized portfolio and regular reviews	Private equity options for those above $5 million
Other tools	Primarily digital	Tax optimization and individual stock investments	Estate planning, insurance review, and college planning

You’ll pay a fee for wealth management services, but no fees for trade commissions. For the first two tiers of service (“primary” and “premium”) the cost is 0.89% on the first $1 million. 

Fee percentages decline for private clients. Here’s the fee structure for private clients, who must have at least $1 million invested with Empower:

• First $3 million: 0.79%
• $3 million to $5 million: 0.69%
• $5 million to $10 million: 0.59%
• $10 million and up: 0.49%

Empower says that it helps investors to optimize their tax bill in several ways. First of all, they don’t invest in mutual funds, citing them as being “extremely tax-inefficient.” Asset allocation (placing different investments such as stocks or REITs in the best types of accounts) is another facet of their strategy. Finally, Empower uses tax-loss harvesting, which means offsetting capital gains on some securities with losses from other securities. 

Empower Personal Cash account

You can also put your cash to work via Empower Personal Cash, a high-yield account. As of this writing, account holders earn 4.70% APY on their money, and the account has no minimum daily balance. Your funds are FDIC-insured up to $5 million. 

After linking an external bank account to your Personal Cash account, you can transfer funds between them, and direct deposit is available. You’re able to access the money in your Empower Personal Cash account via mobile app or website, through the Empower dashboard. No debit cards or bill pay option exist thus far, though. 

IRAs with Empower

Empower offers a Premier IRA and Brokerage IRA as well. The platform’s Premier IRA allows you to select from over 130 mutual funds, while the Brokerage IRA requires quite a bit more knowledge and confidence to DIY your investment. 

If you invest in a Brokerage IRA, there’s no annual account maintenance fee if your account holds at least $100,000. There’s also a larger pool of investments to choose from: over 300 mutual fund families, “thousands” of individual mutual funds and stocks, and 1,400 ETFs. 

Investment accounts

If you’re working with Empower, you might also consider their investment accounts. Empower states these are useful for investors who have maxed out other retirement accounts. 

Clients can enroll in an Empower Premier Investment Account (EPIA) or Empower Investment Account. These may sound nearly identical, but the term “premium” hints that the EPIA will provide a more advanced level of service and personalization. Both accounts have no minimum initial investment and no setup fees. 

EPIA customers also receive:

• Free professional account management through My Total Retirement
• On-demand access to professional guidance from a financial advisor
• Commission-free trades of mutual funds

Empower Investment Account offers commission-free online stock and ETF trades (up to 1,000 per calendar year). Past that point, each trade costs $6.95. 

Empower also offers a custodial account for children, allowing you to gift up to $17,000 per year without being subject to the gift tax. 

Empower Personal Dashboard

Those without $100,000 to invest can still access the free Empower Personal Dashboard for a comprehensive view of all of your financial accounts. Other tools that come free of charge on the Empower dashboard include a retirement planner, budget planner, net worth calculator, investment checkup, and other financial calculators to help you figure out goals for saving and retirement. 

Who should get Empower

Empower is a platform that can work for both DIY investors and hands-off investors. Offering a wide range of investment portfolios and its proprietary “Smart Weighting” indexing approach, you can put your confidence in Empower. 

It caters primarily to people with a relatively high net worth and may be a strong middle-ground option, with more detailed service than a true robo advisor and lower costs than a traditional investment advisor. If you like the idea of access to human advisors and have at least $100,000 in assets to be managed by Empower (preferably more like $250,000 or $1 million to get the lowest fees), it’s a good option. 

Who shouldn’t get Empower

Investors who want a very hands-on, personal experience may prefer to work with a traditional financial advisor instead of two advisors (or a team) with Empower. 

Empower’s wealth management tiers tend toward the higher end of the range of investment management fees. Although Empower explains this as an “all-inclusive annual management fee,” it could still prove costly compared to the lower fees of competitors, especially if you have under $1 million to invest and will be subject to the higher fee structure. You can definitely find similar online advisors for a lower cost, as you’ll see below.

Alternatives to Empower

These are some of the best online investment advisory platforms like Empower, which may also provide tax optimization and other financial tools. 

Empower vs. Betterment

Like Empower, Betterment offers an investment portfolio that’s automated yet based on expert financial guidance. It’s a fiduciary, so it must put your best interests first. Unlike Empower, Betterment requires no minimum balance. Betterment charges a base of $4 monthly, which switches automatically to a 0.25% annual fee once you’ve surpassed $20,000 across all Betterment accounts. 

Betterment also has an interest-bearing cash account that earns a variable 4.75% APY (just a smidgen above Empower’s 4.70%). You can get a checking account with cash back rewards and no ATM fees as well. 

Empower vs. Wealthfront

Wealthfront offers automated investment portfolios and high-yield cash accounts. Wealthfront’s automated index investing comprises 17 global asset classes, and the platform works to rebalance your portfolio to maximize returns and minimize taxes. Individual stock investing and fractional shares are also available starting with just $1.

A definite advantage of Wealthfront over it is that you don’t need a huge upfront investment. With only $500, customers can invest in an automated investing account and still take advantage of tax-loss harvesting and periodic rebalancing. Plus, its annual advisory fee is 0.25% versus the 0.49% to 0.89%.

If you want a cash account, Wealthfront’s comes with no minimum balance required to earn 5.00% APY, surpassing both Betterment in that category.

Empower vs. M1 Finance

If you invest with M1 Finance, you have the option of employing it as a true robo-advisor with automated portfolios, or designing your own portfolio including ETFs and equities. M1 Finance offers taxable brokerage accounts, IRAs, and more. There are ready-made portfolios to choose from if you’d like to take a “set it and forget it” approach. 

There’s a much lower barrier to entry at M1 Finance: just a $100 minimum initial deposit for brokerage accounts, and $500 for IRAs and Roth IRAs. 

However, with M1, you’ll need to select “Rebalance” on your pie, or portfolio — it’s not done automatically. Another key difference between M1 and Empower: M1 doesn’t provide access to human financial advisors, which is one of Empower’s main selling points.

M1 Finance pays 5.00% APY on its savings account, but that’s only available to current savings account holders with M1 Plus, so if you don’t qualify, you’ll only earn 1.5% on savings. 

By paying $10 a month for an M1 Plus membership, you can maximize the benefits of M1 Finance. This opens up the opportunity to borrow against your balance for 7.25% and earn up to 10% back on the Owner’s Rewards Card by M1, plus unlocks the higher 5.00% APY on your cash account balance. There’s a three-month free trial membership to test out the features of M1 Plus. 

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