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M1 Finance vs. Betterment

Consider how much portfolio customization you want when you compare these two robo-advisors.

Kimberly Ellis
Kimberly Ellis

Updated

Fact checked

Both M1 Finance and Betterment use an algorithm to manage and allocate funds. But one gives you more control over your portfolio.

Which one is better?

  • Choose M1 Finance if you want to create your own portfolio.
  • Choose Betterment if you want an expert-curated portfolio and prefer a hands-off approach.

M1 Finance and Betterment offer similar offerings — account rebalancing, commission-free trades and a well-stocked financial library. The better platform depends on the type of investor you are.

M1 Finance lets you build your own portfolio from scratch. While Betterment allows for some customization, you still need to start from a recommended prebuilt portfolio before making adjustments. For self-directed investors that know what they want, M1 Finance may be a good choice. You’ll need a $100 minimum deposit to use the free platform.

But if you want some professional guidance, go with Betterment. You’ll start with an expert-curated portfolio that’s tailored to your situation. But, it’ll cost you an annual advisory fee, which is lower than the industry’s going rate. And you’ll get extra perks like tax-loss harvesting and financial planning tools that let you see how your portfolio stacks up against your financial goals.

How do M1 Finance and Betterment compare?

M1 FinanceBetterment
M1 Finance logo
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Betterment logo
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OverviewM1 Finance is a robo-advisor that puts you in the driver’s seat with fully-customizable portfolios. It strikes a balance between automated investing and personalization, making it a good fit for hands-on, long-term investors.Betterment is an online financial advisor that makes investing easy by creating a portfolio just for you, based on your preferences and financial goals. It’s a solid choice for those new to investing.
Annual fee0%0.25%
Minimum deposit to open$100$0
Benefits
  • Zero commissions. There are no fees to use the platform. And you can trade almost any security, except mutual funds, for free.
  • Customizable portfolios. Unlike other robo-advisors that force you to choose prebuilt portfolios, M1 Finance gives you the choice to build your own or choose from 80 preset options.
  • Dynamic rebalancing. As you deposit money into your account, M1 allocates the funds towards more underweighted items to help keep your investment targets on track.
  • Low minimum deposit. Start investing with an initial deposit of $100, which is relatively low compared to other robo-advisors. Retirement accounts have a $500 minimum.
  • Tax benefits. A fully automated service that scans your portfolio daily for losses that you can then sell to realize a capital loss, potentially reducing your tax exposure.
  • Customizable portfolios. Choose from a set of recommended portfolios and make adjustments that better fit your investment goals.
  • Automatic rebalancing. Your portfolio adjusts daily so that it is never more than 3% off its target ratios (or 5% off if your portfolio has mutual funds). Your risk level stays the same, whether you deposit or withdraw cash or reinvest dividends.
  • No minimum deposit. No minimum balance to open a Betterment Digital account. But its premium plan requires a balance of at least $100,000.
Drawbacks
  • No tax-loss harvesting. No feature to help you minimize taxes on capital gains or taxable income by selling investments that have experienced a loss.
  • Limited customer service. Support is only available by email or phone, and limited to weekdays from 9:30 a.m. to 4 p.m. ET.
  • Lacks financial goals. Most robo-advisors ask a series of questions to determine your risk tolerance and the timeline to reach your financial goals. M1 Finance doesn’t offer any financial planning or guidance.
  • Withdrawal fee. While it’s free to put money into your account, it’ll cost you $100 to transfer your money out.
  • Advisory fee. While Betterment charges only 0.25% in commissions, which is lower than the industry standard of 1%, M1 Finance doesn’t charge any advisory fees.
  • No direct indexing. Although Betterment uses tax-loss harvesting to help offset taxes on gains and income, it doesn’t offer direct indexing.
Tools and research
  • Trade windows. M1 makes trades on your account once or twice a day, depending on your service tier. Only M1 Plus members can make changes to their account two times per day to take advantage of another trading opportunity.
  • Stock quotes. When the market is open, M1 displays quote information that’s 15 minutes delayed.
  • Article library. Its website has a financial glossary and other educational financial articles on investing.
  • Online financial planning tools. When you sign up, you’ll choose a financial goal, such as saving for retirement or general investing. Betterment will then ask you a series of questions to match you to a recommended portfolio to achieve your goal.
  • Certified financial planners. Get personalized, one-on-one advice from a financial advisor on Betterment’s premium plan or buy a one-time advice package.
  • Educational resources. Betterment has a rich collection of free financial articles, interactive quizzes and financial planning calculators for its customers.
Reputation and customer reviews
  • Reviews are mixed.
  • Customers praise its low fees and the ability to customize their portfolio.
  • Customers complain about the lack of customer service, which can take a few days to get a response.
  • Reviews are mostly negative.
  • Customers praise its user interface and tax-loss harvesting feature.
  • Customers complain about delays withdrawing funds from their accounts.
Apple App Store reviews

★★★★★ 4.6/5

★★★★★ 4.8/5

Google Play Store reviews

★★★★★ 4.4/5

★★★★★ 4.3/5

Support
  • Phone. Call 312-600-2883
  • Email. Fill out the request form on its website
  • Phone. Call 646-600-8263
  • Email. Send a request to Betterment’s customer service Monday through Friday, 9 a.m. to 6 p.m
  • Live chat: Available Saturday and Sunday, 11 a.m. to 6 p.m. ET.
Learn more

Read our review

Read our review

Bottom line

M1 Finance and Betterment provide expert-created portfolios with different levels of risk. M1 Finance is better suited for investors that want more control over their investments. But you might have a hard time getting customer support.

Betterment is geared towards passive, set-it-and-forget-it investors that want the robo-advisor to handle their portfolio. It’ll handle buying and selling securities for a small advisory fee and even help reduce your tax exposure. And if you need help, customer service is available seven days a week.

If neither of these robo-advisors fit the bill, take a look at a few other platform options.

Go to M1 Finance
Go to Betterment

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