M1 Finance is an online financial service and investment management platform.
Due to the company’s success, it managed to rise up in ranks and attract thousands of clients over the years.
If you’re looking for a comprehensive review of the platform, you’re in for a treat.
Disclosure: This post may contain affiliate links. If you make a purchase through the links, I may receive a commission at no cost to you. Please read my disclaimer for further details.
Read on, if you want to learn everything about M1 Finance, so you can decide if it’s the right one for you!
What Is M1 Finance?
Before diving into the details of this review, let’s have an overview of M1 Finance and how it works. This will help you draw a clear picture of the capabilities of the company.
As of 2019, the company’s assets under management (AUM) broke the $1 billion mark.
This staggering number is funded by 150,000 accounts and clients with an average of $4,000 of assets per user. Clearly, M1 finance must be doing something right!
One of the things that make M1 Finance special is its availability. The online platform is currently available on all modern devices.
You can use M1 through its web-based trading platform.
However, the M1 Finance app is also available as a mobile app in both iOS and Android devices, so you can download them and invest anywhere.
How M1 Finance Works
Since it’s a registered broker-dealer, M1 Finance is simply a company where you can deposit your assets for investment.
The unique thing that M1 Finance brings to the table is its flexibility.
M1 Finance combines the convenience of automated investing with an outstanding level of customization. The idea is based on a strategy that the company calls “pie investing”.
When you create an account with the company, you get your own portfolio. The company allows its clients to develop a portfolio that’s custom made for their exact needs.
Besides creating your own, you can also choose from 1 of 80 different expert portfolios. Each expert portfolio pie is made up of different stocks, exchange-traded funds (ETF), or both.
M1 Finance targets customers that have long-term online investment plans.
Also, you require basic experience with the online brokerage to invest in ETFs and stocks, as the company will only teach you how to use its tools.
In other words, you can consider M1 Finance a “stock trade on autopilot mode”. If that’s what you’re looking for, M1 is a great option to go for.
About M1 Finance Background and Company History
In many cases, learning about the history of a company and how it started can give you insight into its legitimacy, current state, and even the future.
At the end of the day, if a company isn’t providing a decent level of quality when it comes to its services, it won’t last for years to come.
The company was founded in 2016 by Brian Barnes, who remains the company’s CEO to this day.
Barnes started investing when he was in the fifth grade due to a mock-investing project in his school.
As he grew up, he wanted to invest his earnings from his first job in an investing platform. However, he wasn’t able to find a company that offers the features he wanted.
So, he decided to create his own.
When the company first launched, Barnes’ idea was to create a more straightforward investment platform that suits the newer generations.
He wanted a platform that can automate the monthly deposits and keep a preset portfolio allocation.
All the while, the investors should be able to withdraw their funds without complications.
As of today, the company’s headquarters is in Chicago, Illinois. M1 Finance is registered as a broker-dealer with the Securities and Exchange Commission.
Also, the company is a member of the Securities Investor Protection Corporation (SIPC) and the Financial Industry Regulatory Authority (FINRA).
What Are the Pros and Cons of Joining M1 Finance?
If you’re in a hurry, or you want to quickly understand the benefits of M1 Finance, this section will come in handy.
In the following list, I’ll name some of the best features of the investing platform. Additionally, I’ll state some of the points where M1 Finance is lacking or could use some improvement.
Pros
- Doesn’t have trading fees
- Doesn’t have asset management fees
- The pie investment system is visually appealing and intuitive
- Offered in mobile apps with full functionality
- Trades using fractional shares
- Tailored portfolio building with up to 80 expert presets
- Automated portfolio management
- You can place individual trade orders
Cons
- Relatively fewer investment options
- Doesn’t have access to mutual funds
- Poor customer service
- Only offers a basic tool education
What Are the Features of M1 Finance?
Now that you have a better idea about M1 finance and what it does, it’s time to dive deeper into the platform’s features and highlights.
In the following section, I’ll provide you with a detailed rundown of the experience of M1 Finance. Also, I’ll review some of the essential services that the online investment platform offers.
Getting Started
Getting started with M1 Finance is characterized by being easy and pretty straightforward.
Similar to most Robo-investment tools on the market, all you have to do is simply enter your email address and password.
Unlike some other competitors, M1 Finance doesn’t have a risk assessment questionnaire.
Also, you should know that M1 Finance won’t ask you to pay any registrations fees while signing up.
Not only that, but you also don’t have to transfer any money into your account to advance to the portfolio customization section.
Once the registration process is out of the way, you’ll be taken to the pie creating section.
Portfolio Building with M1 Finance
In this section, you get to choose the portfolio building option that suits you the most, which is one of M1 Finance’s best features.
You won’t feel confused at this point on where to go. The reason behind that is that M1 Finance adds tutorials on the site to guide you through this process.
While choosing your portfolio preferences, you’ll get introduced to the “pie” concept. You’ll find the expert pies near the bottom of your screen.
You have a few options to choose from at this point:
- Create your own portfolio by choosing your own investments
- Choose one of M1 Finance’s 80 expert templates
- Pick a template and customize it by adding and removing specific slices
Once you’re done with your portfolio customization, you’re ready to finalize your signing up.
At this point, you’ll get to enter all your personal information.
Finally, you get to link your bank account, so you can start funding your brokerage account by adding an initial deposit.
However, you can open the account without adding money at all in the beginning and start investing once it reaches $100.
M1 Finance offers different types of accounts that you can open. These types include:
- Taxable Investment Accounts
- Traditional individual retirement account (IRA)
- Roth IRA
- SEP IRA
- Rollover IRA
- Trust Accounts
Setting Goals
Many Robo-advisor platforms compete on offering the best goal setting and tracking tools. However, these features aren’t M1 Finance’s best suit.
The reason behind that is that M1 doesn’t brand itself as a Robo-advisor.
Instead, it counts as an automated investing platform that manages the portfolio you’ve created.
In other words, M1 Finance expects its users to have basic knowledge of what they do before using the platform.
This requirement makes it a bit problematic for investors who prefer guidance. Yet, it’s ideal for investors who appreciate the lack of “distractions” when they know what they want.
Guidance and Tutorials
As you already know, M1 Finance doesn’t have enough tutorials on how to invest.
However, the website offers multiple articles that you can read to learn about retirement planning.
This doesn’t mean that M1 Finance doesn’t have enough guidance for using the platform.
In fact, there’s a vast selection of videos that shows you how to use it.
Customer Service
Customer support is one of the things you have to experience with any platform to use. For a unique service like M1 Finance, having customer support to reply to your inquiries is crucial.
M1 Finance has comprehensive FAQ sections where you’ll find answers to all the common questions that you might have regarding the platform.
The company also provides customer support through email, which is a normal thing among other financial platforms.
What’s good about M1 Finance is that it also has phone support.
However, they’re geared towards answering your question regarding technical issues only rather than financial inquiries.
But again, the company doesn’t brand itself as a financial advisor in the first place.
A Deeper Insight into M1 Finance’s Best Highlights
Online investing platforms are flooding the market with each one having its own set of features and perks.
However, some features make M1 Finance stand out among the crowd. Let’s have a quick look at some of the best selling points that M1 Finance offers.
Great Long-Term Revenue
Since the company doesn’t charge fees for keeping or managing assets, M1 is geared towards long term users and investors.
The design of the platform makes it more profitable for users who invest patiently. If that’s what you’re looking for, the M1 Finance is an excellent option for you.
If you already invest in individual stock and ETFs, then M1 is one of the best options for you. It’s quite affordable and has $0 commissions.
Keep in mind that M1 Finance trades once a day, so it’s a perfect platform for long term traders. If you’re a frequent trader or a day trader you may want to avoid M1 Finance, as you might not be able to make good profits.
Here are some additional benefits that investors get while using M1 Finance:
- Automated deposits
- You can customize everything about your portfolio or leave it fully-automated
- Free IRAs of all kinds
- Free trading with zero commissions or fees
Pie Investment
As I previously mentioned, M1 Finance lets you create a portfolio based on the investment diversification you desire. They call these investments “pies”.
Pies are the basis of investment in M1 Finance, where each pie is made of different slices.
Each one of these slices represents an investment you choose to make. It can range from a single stock or ETF all the way to another pie.
You control the percentage of your slices that will show up in the form of a pie chart. As you know, you primarily get a suggested pie with previously chosen investment categories. You can easily adjust or delete this one to start from scratch.
However, these expert pies are proven to work quite well for many investors. In fact, up until recently, M1 Finance had about 60 templates only. M1 cranked them up to 80 to add more variety to its options.
Once you’ve created your pie selections, M1 Finance will start buying your investments automatically with the proportions you’ve set.
Here are some of the most popular expert pies available:
- General Investment
- Income earnings
- Plan for retirement
- Responsible investing
- Hedge fund followers, which replicates strategies used by reputable investors
Excellent Level of Security
Of course, security is one of the most critical assets that you need to check when you’re putting your savings on the line.
Fortunately, security is second to none. The website uses 4096-bit encryption, which is one of the highest available ones for data transfers.
They also provide an option for two-factor authentication through your mobile or browser. The mobile apps support fingerprint and face recognition.
Moreover, all the investments are covered with SIPC insurance, and the FDIC also insures any cash balance.
M1 Borrow and M1 Spend
Besides being an investing platform, M1 Finance works as a “simplified bank”. As of 2018, they released a new feature called M1 Borrow.
Through this feature, M1 can lend you money at a low rate of about 4% only.
Later this year, M1 will also release M1 Spend, which is going to be a form of a digital debit card that’s integrated with your M1 Accounts!
No Commission or Management Fees
The zero-fee policy is the real reason why M1 Finance rises head and shoulders above the competition.
While most financial platforms charge some fees for management or commissions, M1 Finance doesn’t charge any.
However, you need to know that you might still have to pay for some regulatory fees, such as IRA conversion fees.
Also, there’s a premium subscription system called “M1 Plus”. This one will set you back $100 for the first year ($125 for every other year).
M1 Plus gives you a second daily window for trading (basic M1 Finance has one trading window only).
Additionally, it gives you a discount on loans from M1 Borrow and additional interests through M1 Spend.
What Are the Best Alternatives to M1 Finance?
M1 Finance is an excellent investing platform that offers a wide variety of features. But, how does it compare to other investment platforms in the market? Here are some competitors that you can have similar qualities to M1 Finance.
Robinhood
Robinhood is one of the closest platforms to M1 Finance in terms of brokerage. They both don’t charge a commission on trading and management.
Similar to M1 Finance, Robinhood allows you to trade individual stocks or ETFs. However, it doesn’t offer phone support like M1 Finance.
Betterment
Betterment is one of the most popular Robo-advisors on the market. It’s more beginner-friendly than M1 Finance, as it provides a lot of tutorials and guides for investing. Both platforms don’t need a minimum value for investment.
Also, it gives you the option to contact a live financial advisor while keeping everything automated for you.
Unlike M1, it charges an annual fee of about 0.25% based on the assets it manages for you. Also, it doesn’t offer the level of flexibility in choosing your slices like M1 Finance or buying individual stocks.
Acorns
While M1 Finance is geared towards investors with a medium to high experience, Acorns is made for beginning investors.
It works by investing your spare funds and keeps them in various portfolios. This feature makes it ideal for those who have trouble saving their money.
Unlike M1, it has monthly fees, and it doesn’t let you purchase individual stocks.
Read our review of Acorns.
WealthFront
WealthFront is another Robo-advisor that has a lot of guidance and hand-holding while investing. It doesn’t have a minimum for a deposit, which is a feature it shares with M1 Finance.
However, they charge an annual 0.25% of your assets under management like Betterment.
In general, M1 Finance feels like a much better platform because it offers much better features, including fractional shares and purchasing individual stocks.
Related:
Best Investment Apps for Growing Wealth
Best Personal Finance and Budgeting Apps
Wrap Up
There you have it. A complete M1 Finance review with everything you need to know about the platform.
Being an online investing platform, M1 Finance isn’t for everyone.
Using it requires some knowledge about investing in general, as the platform doesn’t offer these kinds of tutorials.
As a result, it’s not an ideal option for beginners and investors with no experience at all.
However, it’s one of the best options around for an experienced or a semi-experienced investor.
