Betterment vs. Wealthfront vs. M1 Finance Robo-Advisor Comparison

Betterment vs. Wealthfront vs. M1 Finance – What Are the Differences Between These Robo-Advisors?

Sometimes it seems like robo-advisors are all just variations of one another: there are multiple free robo-advisors on the market, and many offer affordable minimum balances. So how do you choose from a list of three similar robo-advisors – Betterment vs. Wealthfront vs. M1 Finance Robo-Advisor?

Instead of drawing names out of a hat, this comparison of Betterment vs Wealthfront vs M1 Finance will help you see the differences between these three robo-advisors so you can make an educated choice.

Overview

These three robo-advisors are all low-fee, relatively low-minimum investment robos. Actually, M1 Finance is free.

They’re also all highly ranked robo-advisors on Robo-Advisor Pros and show up frequently on lists like best robo-advisors for millennials. They do have some differences, however, and one of the ways they differ is in what they choose to emphasize for their clients.

Betterment is a goals-based robo-advisor. Investors can set up multiple goals depending on their financial needs (such as retirement, a wedding, or sending a child to college). Betterment also offers different account levels; Digital clients get basic robo-advisor services, while Premium clients are able to meet with human financial advisors.

M1 Finance is a customizable robo-advisor that makes it easy for investors to curate their investment portfolios. This free robo-advisor offers pre-made portfolios for those who want to go with a simpler option; however, investors who want full control of their investments will find that M1 Finance offers over 5,000 stocks and diversified ETFs.

Wealthfront focuses on ensuring its clients are making the most of their money through daily tax-loss harvesting and portfolio review. This robo-advisor makes use of automated investment management,  and artificial intelligence powered advice.

Of course, all three robo-advisors are secure and offer regular investment rebalancing.

Betterment vs. Wealthfront vs. M1 Finance Top Features

In the Betterment vs. Wealthfront vs. M1 Finance debate, it’s easy to see that each robo is a good value for investors. However, they differ in some of their top features.

Betterment:

• Goals-based investing strategies
• Tax-loss harvesting
• Access to human financial planners (with Betterment Premium)
• Smart beta, income and socially responsible investing
• Betterment Savings Account – High Yield Cash Management
• Zero account minimum.

Wealthfront:

• Digital Path Financial Advisor to help with life changes and future planning
• Tax-optimized direct investing (for investors with over $100k)
• Daily tax-loss harvesting
• For investors with company stock, simple selling plan
• Wealthfront Borrow – line of Credit
• Wealthfront high yield cash account

M1 Finance:

• Free investment management
• Pre-made portfolios for investing, retirement, income, hedge fund model and more
• Portfolio customization-can design own portfolio and choose from 1000’s of stocks and ETFS
• Borrowing and cash management for customers
• M1 Plus offers more features for investors (for $125 per year)

Bonus: M1 Finance Promo Codes

Betterment vs. Wealthfront vs. M1 Finance Who Benefits?

M1 Finance is best for:

• Investors looking for a hybrid investment model.
• Pre-made investment portfolio and individual stock and fund investing.
• Fee-free investment management.
• Lending available.

M1 Finance is an ideal robo-advisor for individuals who want access to both pre-made investment portfolios and the ability to customize their portfolios. Users can make their portfolios as personalized or simple as they’d like! This is the only robo-advisor which allows investors to buy individual stocks and funds. Like Wealthfront, M1 Finance also offers a loan feature.

Betterment is best for:

• Investors seeking diversified, goal based investment portfolios.
• Access to financial advisors.

Betterment will benefit users who want a clear indication of whether they are on-track to meet their financial goals. Betterment makes it easy for investors to visualize their path to their goals, and offers human financial planner access to keep clients feeling secure. Betterment is also the best choice for investors seeking a human financial planner. They offer both on-call financial planners and short-term financial planning packages. Additionally, all levels of Betterment clients can text with a financial advisor. If you’re just getting started, Betterment has no investment minimum.

Wealthfront is best for:

• Investors seeking an all digital platform with a risk parity fund and individual stocks for higher account values.
• Lending is available
• 529 college planning account

Wealthfront markets themselves to millennials, and it’s easy to see why. This robo-advisor boasts low fees, and emphasizes helping users save on taxes through tax-optimization strategies and tax-loss harvesting. The Path digital financial planner is quite comprehensive and ideal for the tech-savvy investor who’s happy with an all-digital investment manager. The Wealthfront portfolio line of credit is handy if you need cash and don’t want to sell investments. M1 Finance also offers a loan feature.

Wealthfront Investors get $5,000 managed for free – for sign ups through this link.

Fees and Minimums

Fees

Winner: M1 Finance.

All three of these robo-advisors are in the top four robo-advisors with the lowest fees, which is great news for investors who want to use Betterment, Wealthfront, or M1 Finance for their investment needs.

M1 Finance is the leader in terms of fees; this robo-advisor offers zero account management fees!

Wealthfront and Betterment Digital aren’t too far behind, charging only 0.25% AUM on their accounts.

Betterment charges 0.25% AUM for their Digital accounts, but this amount jumps up to 0.40% for users who would prefer the Premium account with access to financial advisors. However, Betterment might be a better deal for larger investors; clients with over $2mil in their accounts get a discount on their fees and will pay only 0.15% and 0.30% for Digital and Premium, respectively.

Minimum Investment Amounts

Winner: Betterment, with M1 Finance a close second.

When it comes to minimum investment amounts, Betterment doesn’t have a minimum investment amount.

M1 Finance investors need a $100 minimum balance.

Wealthfront investors will need $500 to start a portfolio,

Since these three robos vary so much in terms of fees and minimum balance requirements, it is difficult to rank them in terms of value; each brings something unique to the table while still offering affordable service.

Although if you’re seeking free investment management, and have $100, then M1 Finance might be for you.

Betterment vs. Wealthfront vs. M1 Finance Deep Dive

Three things set these robo-advisors apart: access to socially-responsible investment options, tax optimization strategies, and the types of accounts offered.

Socially-Responsible Investments

Winners: Betterment and M1 Finance.

M1 Finance really emphasizes their commitment to giving clients socially-conscious investment options. They’re not alone, however; Betterment also offers clients options to invest in impact portfolios. Wealthfront, though it may have investment options that meet these criteria, does not emphasize this point.

Tax Optimization

Winners: Wealthfront and Betterment

Wealthfront acknowledges that investors with large accounts need to save money on taxes whenever possible. For that reason, this robo-advisor goes beyond basic tax-loss harvesting offered by other robos; Wealthfront offers tax-optimized services that help their clients with portfolios valued over $100,000 increase their returns by saving on taxes.

If you’re seeking tax loss havesting, then Wealthfront and Betterment are your best choices.

College Savings Plans

Winner: Wealthfront.

Wealthfront is the only one of these robo-advisors to offer College 529 accounts. While Betterment and M1 Finance certainly offer a large spread of account types (including business accounts, IRAs, and trusts), investors who want to help put their children through college will be drawn to this unique offering.

FAQ

Betterment vs. Wealthfront vs. M1 Finance Comparison: The Takeaway

These three robo-advisors are much different than they seem on the surface. Each one is affordable, with low (or no!) management fees and minimum required investments of no more than $500.

However, each robo-advisor has a unique emphasis that makes them appealing to diverse groups of investors:

• M1 Finance offers over 5,000 stocks and ETFS, along with both customizable portfolios and pre-made options.
• Betterment has no minimum balances and offers access to financial planners for an increased fee; investors with large portfolios are eligible for reduced management fees.
• Wealthfront has a slightly higher minimum balance, but focuses heavily on tax-optimization for clients with larger accounts.

Both M1 Finance vs Wealthfront are appropriate for investors who are comfortable with all-digital platforms.

Before choosing Betterment vs. M1 Finance vs. Wealthfront for your financial needs, it’s crucial to look closely at these differences to determine which of the three robo-advisors is most likely to help you reach your goals.

In sum, we like each of these robo-advisors and the best way to make your decision is to consider what you are seeking in an investment manager.

Read the expert robo-advisor reviews or go directly to the individual websites:

For Free Investment Management:

Read the Complete Betterment Review

Read the Complete M1 Finance Review

Read the Complete Wealthfront Review

Related

M1 Finance vs Robinhood

Wealthfront vs Schwab

Betterment vs Wealthfront vs M1 Finance

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