M1 Finance Review – Is M1 Finance the Best Robo Advisor in 2021?

If you have experience investing but want the convenience of a Robo-advisor managing your portfolio, check out M1 Finance. This low-cost advisor manages your portfolios but gives you complete control of its setup and selection, which is great for advanced investors. You don’t answer the traditional questionnaire most Robo-advisors require to assess your risk tolerance and goals. Instead, you choose from a collection of ‘pies’ whether pre-built or you can build your custom pie based on your own knowledge and expertise. Is M1 finance right for you? Check out our M1 Finance Review to see.

What is M1 Finance?

M1 Finance is a robo-advisor with a twist. Investors have 100 percent control over their portfolio, and can even make changes at any time. This differs from traditional robo-advisors that are more of a set-it-and-forget-it model.

Once you’re set up, M1 manages your investments, rebalancing your portfolio as needed. So it works like a robo-advisor as it provides automatic rebalancing and monitoring, but unlike traditional robo-advisors, they don’t pick your investments for you. That’s where your knowledge and expertise in investing comes in handy.

M1 Finance Referral Bonus

Portfolio Structures

M1 uses the Modern Portfolio Theory as most Robo-advisors use, but rather than portfolios, they create ‘pies.’ You can choose from more than 80 expert or prebuilt pies and leave it as is, or customize it with your own choices of stocks and ETFs.

If you like setting your own assets and allocations, you can also set up a completely custom pie of your choosing. M1 has more than 2,000 ETFs to choose from, as well as any stocks you want to be added that’s listed on the New York Stock Exchange or NASDAQ. It will maintain the allocations, rebalancing your portfolio as needed as your portfolio changes.

M1 Investment Categories

General investingA generally diversified portfolio that takes into account your risk tolerance
Target date fundsA portfolio for your targeted retirement date
Socially responsibleA portfolio for those that prefer investing in socially responsible companies
DividendsA portfolio based on dividend-earning assets
Hedge funds A portfolio that follows successful hedge funds
IndustriesA portfolio that invests in industries that interest you
Stocks & bondsA portfolio that invests in diversified stocks and bonds in various allocations

Who Should Use It?

M1 isn’t for the beginning investor. It’s a low-cost Robo-advisor/online broker for the experienced investor looking for a hands-off experience. You have much more control over your portfolio than you would at competitors, such as Webull or Robinhood. If you’ve never traded securities or don’t know how to build a portfolio, you’ll want to look elsewhere.

M1 Features

Types of AccountsM1 Finance offers individual and joint accounts. Open a taxable account, or retirement account, such as traditional or Roth IRAs, rollover IRAs, SEP IRA, or trusts.
Fractional SharesInvest in any stock you wish in the amount you have available. This opens up the ability to invest in more stocks; even those you couldn’t afford to buy a full share of, but can buy a prorated amount.
SecurityM1 is a member of the SIPC, which provides coverage on up to $500,000 in assets under management and up to $250,000 in cash.
GoalsM1 works a little differently than other robo-advisors in this department. They don’t have goals ‘buckets’ but you can have as many pies as you want. That’s why it’s a platform for advanced investors. You should know what you want and how you want to get it when using M1 Finance.
Portfolio ManagementThis is where the ‘robo-advisor’ component occurs. M1 monitors your portfolios and rebalances them as needed. They mostly rebalance your account when you deposit or withdraw funds to avoid portfolio drift.
Customer ServiceLike most robo-advisors, M1’s customer service is online. They encourage the use of their FAQs which are detailed and helpful in most cases before contacting customer service. There aren’t financial advisors to consult with, but you can send a message between 9:30 AM and 4 PM ET Monday – Friday to ask your questions.
EducationWhile they don’t provide a lot in the way of research, there are plenty of educational articles and videos on the site to help you. Whether you want to learn more about saving for retirement, trusts, or about individual types of taxable investments, you’ll find a series of articles on M1’s website available to anyone.
BorrowAs long as you have at least $10,000 invested, you can borrow a portfolio line of credit with interest rates as low as 3.5 percent (or as low as 2 percent with M1 Plus).
SpendGet access to your funds with an M1 checking account that integrates with your investment account. If you have M1 Plus, you’ll earn 1% cashback on your purchase and 1% APY on money you save.

M1 Finance Pros and cons

ProsCons
  • There are no commissions
  • You’re in charge of your trades and portfolio choices
  • All dividend income is reinvested in your portfolio when you have at least $10 in dividend income
  • You can buy fractional shares
  • You can mimic more than 80 expert pies if you don’t want the responsibility yourself
  • Taxable accounts need a minimum balance of $100 and retirement accounts $500
  • There’s a $20 inactivity fee if you don’t have activity for 90 days
  • M1 doesn’t offer tax loss harvesting
  • You may only buy stocks or ETFs

Commissions and Fees

For the most part, M1 is free. There aren’t any platform fees or trading commissions. But they do have miscellaneous fees including:

  • IRA termination fee $100

  • Wire transfer $25

  • Inactivity fee $20

  • Paper statement fee $5

M1 Finance Referral Program

M1 Finance Referral Bonus

M1 thrives on referrals. They reward each current investor with a funded M1 account with a $30 referral fee for every person they refer using their unique link from their dashboard. Once your referrals sign up and fund their account, you’ll receive your $30 bonus 14 days later. Visit our M1 Finance Referral page to learn how you can receive $30 when you open an M1 Finance account.

How it Compares

M1 Finance vs Webull

Webull is another commission-free trading platform and is great for active investors. It is more technical than M1 and trades only stocks and ETFs. Webull is research-rich and offers many tools for active investors. Like M1, Webull is for the advanced trader with experience in investing and who prefers a more technical approach to invest.

M1 Finance vs Robinhood

Robinhood was one of the first commission-free trading apps, but many soon followed. Investors may invest in stocks, ETFs, options, and cryptocurrency on Robinhood and has a $0 balance requirement. Like M1, you can buy fractional shares, but Robinhood doesn’t offer retirement accounts. Robinhood is great for beginning investors that want a lot of hand-holding whereas M1 is better for experienced investors that can make their own investing decisions.

M1 Finance vs Fidelity

Fidelity also joined the $0 trading commission bandwagon. You can trade stocks, options, and ETFs. Fidelity’s Robo-advisor, Fidelity Go, has a 0.35% of assets under management charge and also has full-service brokerage options (for high fees). Fidelity builds your portfolio based on your risk tolerance and goals, rather than having you select from predetermined pies.

Bottom Line

Is M1 Finance for everyone? No, it’s not. We like to think it’s best for advanced investors – those that have been in the market, know what they like and don’t like, and can choose their own investments. It’s a risk you take choosing your own allocations, but you may also use the prebuilt pies built by experts to start. The key is knowing what you’re saving for, what your timeline is, and how much risk you can take. In this M1 Finance Review, you have known that M1 is a great way to invest, save money on fees (a lot of money), and enjoy someone else watching over your portfolio.