Empower Review: Paid vs. Free Financial Tools

However, with a high minimum balance and high fees compared to its competitors, Empower won’t be the best digital wealth manager for everyone. 

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Overview of Empower

Formerly known as Personal Capital, Empower functions in two primary ways: as a wealth management platform, which you pay for, and as a free financial planning guide.

Other tools for budgeting, net worth tracking, and an interest-bearing cash account are also available. 

Note that you'll need to maintain a minimum balance of at least $100,000 to be eligible for Empower’s wealth management tools.

Empower Products

Wealth Management 

Empower’s Wealth Management stands out for personalized guidance, tax optimization strategies, and ongoing portfolio rebalancing. You'll have an initial sign-up consultation to 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 it helps investors to optimize their tax bill in several ways:

• Empower doesn't invest in mutual funds, citing them as being “extremely tax-inefficient.”
• Empower emphasizes asset allocation (placing different investments such as stocks or REITs in the best types of accounts) is another facet of their strategy.
• Empower uses tax-loss harvesting, which means offsetting capital gains on some securities with losses from other securities. 

Empower Personal Cash

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, 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 options exist thus far, though. 

IRAs

Empower offers two IRA options: Premier and Brokerage.

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

You 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.

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. 

Both accounts have no minimum initial investment and no setup fees. 

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

If you don't have $100,000 to invest, you can still access the free Empower Personal Dashboard for a comprehensive view 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. 

READ MORE: Choosing the Right Savings Goals: Short-Term vs. Long-Term Financial Goals

Who Should Get Empower?

One of the nice things about Empower is that it can work for both DIY investors and hands-off investors. It offers a wide range of investment portfolios and a proprietary “Smart Weighting” indexing approach. 

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 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?

If you want a very hands-on, personal experience, you 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.

Alternatives to Empower

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 5.00% APY. You can get a checking account with cashback rewards and no ATM fees as well. 

Wealthfront

Wealthfront offers automated investment portfolios and high-yield cash accounts. Its 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 is that you don’t need a huge upfront investment. With only $500, you can invest in an automated investing account and still take advantage of tax-loss harvesting and periodic rebalancing.

Plus, its annual advisory fee is only 0.25%.

If you want a cash account, Wealthfront’s comes with no minimum balance required to earn 4.50% APY.

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. 

However, with M1, you’ll need to select “Rebalance” on your pie, or portfolio — it’s not done automatically. Another key difference: 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. 

The Bottom Line: Is Empower Worth It?

If you've got at least $100,000 to invest, Empower has a lot to offer. Perhaps its best feature is that you get access to human financial advisors — something that's not offered by a lot of the online brokerages and robo-advisors out there.

But since Empower is targeted to high-net-worth individuals, it's not a suitable wealth management tool for everyone.

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