Are you pressed for time and seeking investment portfolio management to help lighten your load?
M1 Finance and Betterment are two investing options under the robo-advisor umbrella. Yet, each platform has as many differences as similarities. Look under the hood of M1 Finance vs Betterment fintech robo-advisors to find out which one is right for you.
First, review the side-by-side comparison of M1 Finance vs Betterment.
- Compare Betterment vs M1 Finance
- M1 Finance – Robo-advisor for the Engaged Investor
- Betterment – A Robo-Advisor Plus Human Advisors and More
- M1 Finance vs Betterment – Which is the Best Robo-Advisor for You?
Compare Betterment vs M1 Finance
|Overview||A goals based automated investment advisor. Betterment bills itself as, "Investing Made Better." Offers a variety of human financial planning options.||Free robo-advisor with opportunity to customize investments.|
|Minimum Investment Amount||There is no minimum investment amount required for Betterment Digital, requires a $100,000 minimum.||$100|
|Fee Structure||Digital-0.25% AUM up to $2 million.|
Premium-0.40% AUM up to $2 million
Reduced fees above $2 million.
|Zero fees for investment management. Per service charge for mailed statements, account closure etc.
|Top Features||Goal-based ETF investment portfolio. Rebalancing. Tax-loss harvesting. SRI, smart beta + income portfolios. Human financial advisor access.||Unlimited variety of investment vehicles & strategies. Choose your own investments or pick from pre-made investment portfolios. Access to socially responsible funds. Rebalancing.|
|Free Services||See promotions.||No management fees. Includes free rebalancing + buying and selling securities.|
|Contact & Investing Advice||Phone and email support, 7 days per week.||Phone (M-F) and email, 7 days per week.|
|Investment Funds||Low-cost, commission-free ETFs.||Stocks, bonds, funds, and more.
|Accounts Available||Single + joint taxable brokerage. Roth, traditional, rollover + SEP IRA. Trust.||Single + joint taxable brokerage. Roth, traditional, rollover + SEP IRA. Trust. Business accounts.|
|Promotions||Free management fee promotion in effect (time limited)||Ongoing free investment management.|
Next, get a synopsis of M1 Finance and Betterment’s platforms. Finally, the M1 Finance vs Betterment wrap up helps you decide which robo-advisor is best for you.
M1 Finance – Robo-advisor for the Engaged Investor
M1 Finance is not your typical robo-advisor which asks a few questions and then offers up a pre-made investment portfolio of ETFs in line with your risk profile. M1 Finance is akin to a combination DIY plus robo-advisor investing package.
M1 Finance Features
What makes M1 Finance stand out in the robo-advising arena is its unique take on portfolio creation:
- Investors create pie charts to visually design their investment portfolios. Each slice of pie is represented by an individual stock, bond or fund.
- Investors can create more than one investment pie or portfolio. In total, you can own up to 500 individual assets that include EFTs, stocks, or even other pies.
- An investment pie slice represents a percentage of your portfolio.
- The visual nature of this platform makes it easy to see how your investing style is reflected in the investment options you have chosen.
- M1 borrow, so you don’t need to dip into your investments for extra cash.
For investors not sure where to start, M1 Finance also offers pre-made investment pies to choose from.
The scores of pre-made pies include selections similar to a typical robo-advisor and other more unique choices:
- General Investing
- Fixed Income
- Hedge Fund Replication
- Index Tracking
- Stock/Bond Split
Socially Responsible Investing with M1 Finance
The burgeoning millennial group is living life on their own terms. And that means they want to invest in what they believe in. In fact, the US Bank 2017 Wealth and Worth report found that 76 percent of millennial’s consider their investment choices as a way to state their social, political and environmental values.
M1 Finance recently launched their Socially Responsible Investment Portfolios. This M1 Finance investing offering, in partnership with Nuveen, offers investments screened according to ESG (environmental, social, and governance) factors.
To integrate socially responsible investing into your M1 Finance Portfolio just select from the pre-screened ESG funds and add them in.
M1 Finance Automated Rebalancing Features
You set your own asset allocation (or choose from a pre-made portfolio), and M1 Finance does the rest. The M1 Finance rebalancing uses cash inflows and outflows to automatically rebalance back to your preferred asset percentages. Or you can push an icon to initiate rebalancing. So, you create the portfolio of assets and M1 finance manages and rebalances it.
How Much Does M1 Finance Cost and What is the Minimum Investment Amount?
To get started, the investment minimum is an affordable $100.
Your entire investment is managed for free by M1 Finance. This is a tremendous advantage for a robo-advisor or DIY investment platform with rebalancing and includes zero commission buying and selling.
You can reach the support team Monday through Friday from 9:00 AM to 5:00 PM CT.
New – M1 Borrow
If your account is valued at $10,000 or more, you’re eligible to borrow up to 35% of the value, and pay it back on your terms.
The process is fast and does’t require a credit check. The low interest rate is great if you want to refinance existing high interest rate credit card debt or pay for your wedding or other expense. You can pay for an expense while letting your investments grow.
Read all of the M1 Finance articles
Betterment – A Robo-Advisor Plus Human Advisors and More
Betterment is a legacy robo-advisor that keeps getting better.
Like it’s robo-advisor cousins, Betterment creates a goal-based portfolio of index ETFs based upon your responses to a questionnaire. Depending on your particular goal, time horizon and risk profile your money will be funneled into a group of stock and bond ETFs selected from a base list of 13 ETFs.
The available funds include U.S. and international stock funds and a variety of U.S. and international bond funds.
See a list of Betterment Stock and Bond Funds
- Goal based investing
- Socially Responsible (SRI), smart beta and income stream portfolios
- RetirementGuide calculator
- Tax-loss harvesting
- Access to human financial advisors and financial planning packages
- Global view of all assets, those within and outside your Betterment account.
Betterment’s Socially Responsible Investing, Smart Beta and Income Stream Portfolios
Betterment now offers greater customization. You can choose from options for retirees, active investors and the socially conscious:
- Socially Responsible Investors – The SRI portfolios allow you to invest with your values and choose to put your money in socially responsible firms.
- Goldman Sachs Smart Beta Portfolios – This approach is good for investors who want to attempt to beat the market and are willing to take on a bit higher risk.
- BlackRock Target Income Portfolios – These bond portfolios are designed for conservative investors seeking cash flow.
These three new investment portfolios can be selected in addition to or instead of your traditional Betterment goal-based portfolio.
How Much Does Betterment Cost?
Betterment requires no minimum investment amount and has a simple, two-prong fee system.
With the Betterment Digital plan, the fee is 0.25% (AUM) on all money invested up to $2,000,000 with 0.15% fees above that amount. This plan requires no investment minimum amount. You get all the standard Betterment features including texting access to financial advisors.
Betterment Premium requires a $100,000 minimum investment account and charges 0.40% of AUM. Fees are capped at the $2,000,000 AUM. That means assets above that amount are reduced to 0.30%.
Betterment premium includes:
- All benefits of Betterment Digital
- Human financial advice on all investments, within and outside of Betterment accounts. That includes managing 401(k)s, real estate, stocks and more.
- Unlimited access to CFP® credentialed financial advisors for all life planning decisions that impact your money; retirement, having a child, getting married and more.
New – Betterment a la Carte Financial Planning Packages
Betterment recently launched five specialized advice packages. The programs are designed for specific investors. The Getting Started package is great for newbies who want a quick assessment of their account. The Financial Checkup package is designed for a thorough investment portfolio review. The College Planning package is for parents who want help navigating the college planning (and payment) process. And the two remaining packages, marriage planning and retirement planning are as their names suggest.
The one-time fees for these add-ons range from $149 to$399.
Read all of the Betterment articles
M1 Finance vs Betterment – Which is the Best Robo-Advisor for You?
The decision is simple. M1 Finance and Betterment are each designed for a distinct type of investor. And, we like both M1 Finance and Betterment robo-advisors – a lot.
If you’re looking for a full service, hands off robo-advisor with tax-loss harvesting features and access to human financial advisors, then choose Betterment. You complete a questionnaire, transfer your funds into the platform, and Betterment does the rest. Betterment’s a la carte financial planning services and the ability for all users to text with a financial planner gives you ready investing guidance.
If you want a hand in your own investing and prefer to choose from a wide array of funds, stocks and bonds, then M1 Finance is your best alternative. With roughly 6,000 investments to choose from and pre-made porfolios, M1 Finance is ideal for the intermediate to sophisticated investor. With M1 Finance, you can control your portfolio creation (or not). After that, M1 Finance does the investment management and rebalancing.
If you’re looking for free investment management, and can forego texting access to financial advisors and tax-loss harvesting, then M1 Finance is a bargain.
In the end, it’s about how much hands on control you’re seeking with your investing, what services you’re seeking and whether you’re willing to pay a fee for investment management. DIYers tend to prefer M1 Finance while DIFY (do it for you) investors will be in experienced hands with Betterment.
Which option seems the best for you? Write in and let us know the digital financial advisor that you prefer.
Updated; October 20, 2018