• Skip to main content
  • Skip to secondary menu
  • Skip to primary sidebar
  • Skip to footer

Optimized Portfolio

Investing and Personal Finance

  • Beginners Start Here
  • Investing 101
    • Beginners Start Here – 10 Steps To Start Building Wealth
    • What Is the Stock Market? How It Works & How to Invest in It
    • How To Invest in an Index Fund – The Best Index Funds
    • Portfolio Asset Allocation by Age
    • How To Invest Your Emergency Fund
    • Portfolio Diversification – How To Diversify Your Portfolio
    • Dollar Cost Averaging vs. Lump Sum Investing (DCA vs. LSI)
    • How To Invest Your HSA (Health Savings Account)
    • Factor Investing and Factor ETFs – The Ultimate Guide
    • more…
  • Lazy Portfolios
    • All Weather Portfolio
    • Bogleheads 3 Fund Portfolio
    • HEDGEFUNDIE’s Excellent Adventure
    • Warren Buffett Portfolio
    • Golden Butterfly Portfolio
    • Paul Merriman Ultimate Buy and Hold Portfolio
    • Ben Felix Model Portfolio
    • Permanent Portfolio
    • David Swensen Portfolio
    • 60/40 Portfolio
    • more…
  • Brokerage Reviews
    • The 5 Best Stock Brokers
    • The 4 Best Investing Apps
    • M1 Finance Review
    • Brokers with the Lowest Margin Rates
    • M1 Finance vs. Fidelity
    • M1 Finance vs. Vanguard
    • Webull vs. Robinhood
    • Stash vs. Robinhood
    • M1 Borrow Review (How M1’s Margin Loan Works)
    • more…
  • ETFs
    • VOO vs. VTI – Vanguard S&P 500 or Total Stock Market ETF?
    • The 7 Best International ETFs
    • The 8 Best Small Cap ETFs (4 From Vanguard)
    • The 5 Best REIT ETFs
    • The 5 Best EV ETFs – Electric Vehicles ETFs
    • VIG vs. VYM – Comparing Vanguard’s 2 Popular Dividend ETF’s
    • The Best Vanguard Dividend Funds – 4 Popular ETFs
    • The 5 Best Tech ETFs
    • The 7 Best Small Cap Value ETFs
    • The 6 Best ETFs for Taxable Accounts
    • The 5 Best Emerging Markets ETFs (1 From Vanguard) for 2022
    • more…
  • Leverage
    • What Is a Leveraged ETF and How Do They Work?
    • How To Beat the Market Using Leverage and Index Investing
    • The 9 Best Leveraged ETFs
    • Hedgefundie’s Excellent Adventure
    • Leveraged All Weather Portfolio
    • Leveraged Permanent Portfolio
    • Leveraged Golden Butterfly Portfolio
    • NTSX – Review and Summary
    • TQQQ – Is It A Good Investment?
    • PSLDX – A Review
    • SWAN – A Review
    • RPAR Risk Parity ETF Review
    • more…
  • Dividends
    • The Best M1 Finance Dividend Pie
    • The 11 Best Dividend ETFs
    • The Best Vanguard Dividend Funds – 4 Popular ETFs
    • VIG vs. VYM – Comparing Vanguard’s 2 Popular Dividend ETF’s
    • 8 Reasons Why I’m Not a Dividend Income Investor
    • QYLD – A Harsh Review
    • more…
  • Bonds
    • The Best Vanguard Bond Funds – 11 Popular ETFs
    • The 11 Best Treasury Bond ETFs
    • Treasury Bonds vs. Corporate Bonds
    • The 3 Best TIPS ETFs
    • The 5 Best High Yield Bond Funds for Income
    • The 3 Best Municipal Bond ETFs
    • How To Buy Bonds Online: The Ultimate Guide
    • The Best Bond Funds Out There – 13 ETFs
    • The 3 Best Corporate Bond ETFs
    • more…

M1 Finance vs. Betterment Brokerage Comparison [2022 Review]

Last Updated: March 22, 2022 1 Comment – 6 min. read

m1 finance vs betterment

“Robo-advisors” are surging in popularity recently with low fees, convenience, and modern interfaces. Betterment is perhaps the most popular robo-advisor. Here we’ll compare Betterment and M1 Finance. I wrote a separate comprehensive review of M1 Finance here if you’re interested in that.

Disclosure:  Some of the links on this page are referral links. At no additional cost to you, if you choose to make a purchase or sign up for a service after clicking through those links, I may receive a small commission. This allows me to continue producing high-quality, ad-free content on this site and pays for the occasional cup of coffee. I have first-hand experience with every product or service I recommend, and I recommend them because I genuinely believe they are useful, not because of the commission I get if you decide to purchase through my links. Read more here.

M1 Finance vs. Betterment – Summary Comparison

M1 Finance

Betterment

Commissions

$0

$0

Fees

$0

0.25% of AUM*

0.40% of AUM*

Account Types

3/5
3/5

Investment Products

3/5
1/5

Customer Service

4/5
4/5

Research Tools

3/5
0.5/5

Education

5/5
3.5/5

Margin

5/5
0.5/5

Mobile App

5/5
5/5

Interface/Usability

5/5
5/5

Checking Account

Yes

Yes

Fractional Shares

Yes

Yes

Dynamic Rebalancing

Yes

Yes

Order Control

No

No

Summary Score

4/5

4.2

3/5

3.2

Summary Review

M1 Finance is great for both beginner and seasoned long-term investors who want full portfolio customization options, zero fees, access to cheap margin, the ability to invest in individual stocks, and dynamic rebalancing. Like Betterment, M1 is not a good choice for day traders.  

Betterment is a true robo-advisor and is completely hands-off. This comes at the cost of extremely limited investment options, annual fees, and lack of margin. I truly don't see a reason to choose Betterment over M1 for an investing platform, as you can invest in the exact same funds with M1 or in M1's expert-built "Expert Pies" for free. If you're looking to pay for professional advice on life planning goals outside of investing, that's where Betterment would win out.

Learn More

Learn More

*Betterment’s basic plan charges 0.25% of your annual invested balance. Their Premium plan charges 0.40% of your annual invested balance.

M1 Finance

Commissions
Fees
Account Types
Investment Products
Customer Service
Research Tools
Margin
Mobile App
Interface/Usability
Checking Account
Fractional Shares
Auto Rebalancing
Order Control

Summary

M1 Finance is great for both beginner and seasoned long-term investors who want full portfolio customization options, zero fees, access to cheap margin, the ability to invest in individual stocks, and dynamic rebalancing. Like Betterment, M1 is not a good choice for day traders.  

4.2

Betterment

Commissions
Fees
Account Types
Investment Products
Customer Service
Research Tools
Margin
Mobile App
Interface/Usability
Checking Account
Fractional Shares
Auto Rebalancing
Order Control

Summary

Betterment is a true robo-advisor and is completely hands-off. This comes at the cost of extremely limited investment options, annual fees, and lack of margin. I truly don’t see a reason to choose Betterment over M1 for an investing platform, as you can invest in the exact same funds with M1 or in M1’s expert-built “Expert Pies” for free. If you’re looking to pay for professional advice on life planning goals outside of investing, that’s where Betterment would win out.

3.4

Contents

  • M1 Finance vs. Betterment – Summary Comparison
  • M1 Finance vs. Betterment – Commissions and Fees
  • M1 Finance vs. Betterment – Account Types
  • M1 Finance vs. Betterment – Investment Products
  • M1 Finance vs. Betterment – Customer Service
  • M1 Finance vs. Betterment – Margin
  • M1 Finance vs. Betterment – Mobile App
  • M1 Finance vs. Betterment – Interface/Usability
  • M1 Finance vs. Betterment – Extra Features
  • M1 Finance vs. Betterment – Summary and Conclusion

M1 Finance vs. Betterment – Commissions and Fees

M1 Finance offers fee-free investing; no account fees and zero commissions, plain and simple. There are obviously miscellaneous one-time fees for things like paper statements, outbound account transfers, inactivity, etc.

Betterment carries a 0.25% annual fee for their basic plan and a 0.40% annual fee for their Premium plan. The Premium plan includes professional investing advice and financial planning advice, and requires a minimum invested balance of $100,000.

These annual fees are based on a percentage of your invested balance, also known as assets under management (AUM). For balances above $2M, you receive a 0.10% discount, reducing the basic fee to 0.15% and the Premium fee to 0.30%.

Betterment’s fees look extremely low at first glance, but let’s examine how they affect a portfolio’s value over time:

m1 finance vs betterment - fees
Source: dinkytown.net

Using a starting balance of $100,000, $1,000 contributed monthly over 30 years, and an annualized rate of return of 8%, Betterment’s 0.25% fee costs you $132,700 in fees. The Premium 0.40% fee costs you $208,615 in fees.

Notice how the value differences become more pronounced near the end of the investing horizon when the account value is larger. Such is the power of compound interest, in this case unfortunately working against you.

So obviously M1 wins out on fees. But what if you still want to pay for expert investing? Luckily, you can still access experts via M1’s “Expert Pies” for free. More on that later.

M1 Finance vs. Betterment – Account Types

M1 Finance and Betterment offer all the same account types:

  • Taxable
  • Joint
  • Traditional IRA
  • Roth IRA
  • Rollover IRA
  • SEP IRA
  • Trust

They currently do not offer:

  • SIMPLE IRA
  • Solo 401(k)
  • 529
  • HSA
  • Non-Profit

M1 also offers Custodial accounts for premium members. Betterment does not have Custodial accounts.

It’s important to note too that Betterment does not offer any type of self-directed investment account; you cannot select your own funds.

M1 Finance vs. Betterment – Investment Products

M1 Finance offers most ETF’s and individual stocks traded on major exchanges.

Betterment only offers a small handful of low-cost broad index ETF’s. Specifically, they only use the following indexes in your portfolio:

  • U.S. Total Stock Market
  • U.S. Large Cap Value
  • U.S. Mid Cap Value
  • U.S. Small Cap Value
  • International Developed Markets Stocks
  • International Emerging Markets Stocks
  • U.S. Total Bond Market
  • U.S. Municipal Bonds
  • U.S. Inflation-Protected Bonds (TIPS)
  • U.S. High-Yield Corporate Bonds
  • U.S. Short-Term Treasury Bonds
  • U.S. Short-Term Investment-Grade Bonds
  • International Developed Markets Bonds
  • International Emerging Markets Bonds

You can easily access all these on your own with M1 Finance using low-cost Vanguard funds. I also very much question the use of Value stocks without Growth stocks, the use of corporate bonds (treasury bonds are superior), and the absence of intermediate- or long-term treasury bonds.

Betterment does not offer sector ETF’s or individual stocks. Also note that Betterment does not allow self-directed investment; you cannot select your own funds.

At this time, neither platform offers mutual funds, options, futures, FOREX, or crypto. They are not built for day trading.

M1 Finance vs. Betterment – Customer Service

I’ve seen both positives and negatives for both M1 Finance and Betterment in relation to their customer service. Both are available by phone or email 5 days a week.

M1 Finance vs. Betterment – Margin

Betterment does not offer margin loans. Margin is simply a collateralized loan on your invested securities to provide enhanced exposure for investing.

M1 Finance offers extremely cheap margin rates:

  • M1 Finance – 3.50%
  • M1 Plus – 2.00%

M1 Plus is a $125/year premium membership that gets you access to a 1.5% lower margin rate as shown, and a second trading window.

The margin loan from M1 Finance can be used for whatever you want – refinancing higher-interest debt, major purchases, unexpected expenses, etc.; it’s just a low-interest collateralized loan.

Remember that margin is an additional risk, including the risk of losing more than you invest. Margin is not available for retirement or custodial accounts. Rates may vary.

Since Betterment offers neither margin nor leveraged ETF products, it’s impossible to apply leverage to your Betterment investments.

M1 Finance vs. Betterment – Mobile App

M1 Finance and Betterment both have sleek, modern, intuitive, robust mobile apps for both Apple iOS and Android.

Here are some screenshots of the M1 app:

m1 finance mobile app

Here are some screenshots of the Betterment app:

betterment app screenshots

M1 Finance vs. Betterment – Interface/Usability

Similarly, both M1 Finance and Betterment have intuitive, easy-to-use desktop interfaces.

Here’s M1 with its pie-based visualization:

m1 custom pies
m1 finance research filters screenshot

And here’s Betterment:

betterment user interface screenshot

M1 Finance vs. Betterment – Extra Features

Both M1 Finance and Betterment offer FDIC-insured checking accounts, making them both suites of financial tools instead of just investing platforms. With their premium M1 Plus option, you can earn interest and cash back on M1’s checking account. Betterment’s checking account does not earn interest or cash back.

Neither M1 Finance nor Betterment offer robust charting and analysis tools. M1’s research tools from both are pretty basic – stock and ETF screeners, technical indicators, etc. Betterment doesn’t allow you to choose your own investments, so they have no research tools.

Both M1 Finance and Betterment offer “dynamic rebalancing,” using new deposits to automatically rebalance your portfolio to its target asset allocation, and fractional shares, a feature that allows every penny to work for you.

M1 Finance vs. Betterment – Summary and Conclusion

  • M1 Finance and Betterment are both built for passive, long-term, buy-and-hold investing.
  • M1 Finance offers free investing; plain and simple. Betterment carries a 0.25% fee for their basic plan and a 0.40% fee for their Premium plan. While they may not look like much, these fees shave off a massive amount of money from your portfolio over the long-term.
  • M1 and Betterment offer all the same account types at this time.
  • M1 Finance offers most ETF’s and individual stocks. Betterment only offers a small collection of broad index funds. They do not offer individual stocks, and do not allow self-directed investing.
  • Customer service should be comparable between the two platforms.
  • Betterment does not offer margin. M1 offers some of the lowest margin rates on the market.
  • M1 Finance and Betterment both have sleek, modern, intuitive, robust mobile apps for both Apple iOS and Android, as well as solid desktop user interfaces.
  • Both M1 Finance and Betterment offer FDIC-insured checking accounts.
  • Both M1 and Betterment employ dynamic rebalancing and fractional shares.
  • Betterment offers expert financial advice. M1 offers Expert portfolios that you can invest in for free.

M1 Finance offers the aforementioned expert-built, quantitatively-analyzed and optimized “Expert Pies” that you can invest in for free and be completely hands-off. On Betterment’s website, they claim that “while you could buy the same ETFs from a traditional broker or fund company, you couldn’t get them all from any one place without a fee, so you’d be paying to buy, sell, or trade the ETFs.” This is objectively untrue in this case. M1 allows you to buy the exact same ETF’s commission- and fee-free, thereby avoiding those fees that drag down your portfolio’s returns. You can also simply use M1 to invest in a “lazy portfolio” and have it rebalance automatically.

Moreover, Betterment makes it sound like they’re actively managing your portfolio and employing some secret sauce to boost returns. They’re not. Recall that they’re simply investing your money in a small handful widely-available low-cost index ETF’s, which I would argue you can easily do yourself anyway with M1 Finance. You can buy the exact same funds; they mostly use low-cost Vanguard and iShares ETF’s. For the most part, Betterment appears to invest your money upon initial deposit and then doesn’t do much after that aside from gradually adjusting your asset allocation, so I don’t understand the need for the hefty ongoing annual fees.

Consequently, I don’t see a good reason to choose Betterment over M1 Finance, unless for some reason you absolutely believe you can’t complete the steps of setting up and investing in a portfolio on M1, or if you specifically need and want to pay for professional advice on life planning goals outside of investing. If you’re purely looking for an investing platform, I would suggest that the marginally greater effort of investing with M1 Finance is more than worth the savings on fees over the long-term. Betterment also happens to be one the brokerages that M1 Finance sees transfers from most often:

m1 finance transfers

I wrote a separate comprehensive review of M1 Finance here if you’re interested in seeing the nuances of the platform.

M1 Finance currently has a promotion for up to $250 when initially funding an investment account, as outlined below:

m1 seed promo 2022

They also currently have a transfer bonus promotion for up to $2,500 when transferring an existing account from another brokerage, as outlined below:

m1 transfer bonus 2021
Learn More

Disclaimer:  While I love diving into investing-related data and playing around with backtests, I am in no way a certified expert. I have no formal financial education. I am not a financial advisor, portfolio manager, or accountant. This is not financial advice, investing advice, or tax advice. The information on this website is for informational and recreational purposes only. Investment products discussed (ETFs, mutual funds, etc.) are for illustrative purposes only. It is not a recommendation to buy, sell, or otherwise transact in any of the products mentioned. Do your own due diligence. Past performance does not guarantee future returns. Read my lengthier disclaimer here.

m1 finance get started

Related Posts

  • SPHD vs. SCHD – Invesco Dividend ETF vs. Schwab Dividend ETF
  • The 6 Best ETFs for Taxable Accounts (3 From Vanguard)
  • Investing Risk Explained (My Take on Portfolio Risk & Volatility)
  • The 2 Best Emerging Markets Value ETFs for 2022
  • 6 Best ESG ETFs for Responsible Investing (2 From Vanguard)

About John Williamson

Analytical and entrepreneurial-minded data nerd, usability enthusiast, Boglehead, and Oxford comma advocate. I lead the Paid Search marketing efforts at Gild Group. I'm not a big fan of social media, but you can find me on LinkedIn and Reddit.

Reader Interactions

Comments

  1. Brian B says

    March 30, 2022 at 1:43 pm

    Thank you for this review. I started out with Betterment purely because I was brand new to investing and was worried I would screw something up. I think it was the right decision at the time because I could see how Betterment was investing my money and do my own research as to why they chose those investments. Earlier this year, I switched over to M1 Finance. I am still not totally comfortable choosing my own investments so I particularly like the Expert Pies that M1 has available. They have not too many as to overwhelm me and not to few so I feel like I have a choice. They do a good job at showing the performance of each expert pie as well as the fees. I am happy I switched over.

    Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Primary Sidebar

Sign up to receive email updates when a new post is published.

Don't worry, I hate spam too. No ads.

  • Facebook
  • Instagram
  • Twitter
  • YouTube
  • Reddit

Most Popular

Ray Dalio All Weather Portfolio Review, ETF’s, & Leverage

HEDGEFUNDIE’s Excellent Adventure (UPRO/TMF) – A Summary

Golden Butterfly Portfolio Review and M1 Finance ETF Pie

David Swensen Portfolio (Yale Model) Review and ETFs To Use

Harry Browne Permanent Portfolio Review, ETFs, & Leverage (2022)

Corporate Bonds vs. Government Bonds (Treasuries) – The Showdown

VIG vs. VYM – Vanguard’s 2 Popular Dividend ETFs (Review)

Warren Buffett ETF Portfolio (90/10) Review and ETFs (2022)

The 60/40 Portfolio Review and ETF Pie for M1 Finance

Bogleheads 3 Fund Portfolio Review and Vanguard ETFs To Use

m1 sidebar

Paul Merriman Ultimate Buy and Hold Portfolio Review, M1 Pie (2022)

Lowest Margin Rates Brokers (2022 Comparison)

M1 Finance vs. Vanguard Brokerage Comparison [2022 Review]

M1 Finance vs. Fidelity Brokerage Comparison [2022 Review]

The Best M1 Finance Dividend Pie for FIRE & Income Investors

Portfolio Asset Allocation by Age – Beginners To Retirees

The 5 Best Stock Brokers Online for Investing (2022 Review)

The 4 Best Investing Apps for Beginners (2022 Review)

The 7 Best Small Cap ETFs (3 From Vanguard) for 2022

The 6 Best REIT ETFs To Invest in Real Estate for 2022

The 6 Best Tech ETFs To Buy Tech Stocks in 2022

9 Best Clean Energy ETFs To Go Green in Your Portfolio (2022)

The 12 Best Small Cap Value ETFs (3 From Vanguard) for 2022

Why, How, & Where To Invest Your Emergency Fund To Beat Inflation

VOO vs. VTI – Vanguard’s S&P 500 and Total Stock Market ETFs

9 Best International ETFs To Buy (6 From Vanguard) in 2022

Ben Felix Model Portfolio (Rational Reminder, PWL) ETFs & Review

Factor Investing and Factor ETFs – The Ultimate Guide

Gone Fishin’ Portfolio Review (Alexander Green) & ETFs (2022)

TQQQ – Is It A Good Investment for a Long Term Hold Strategy?

Recent Posts

Tail Risk – What It Is and How To Hedge Against It

I Bonds (U.S. Government Savings Bonds) – The Ultimate Guide

JEPI ETF Review – JPMorgan Equity Premium Income ETF

Sharpe Ratio vs. Sortino vs. Calmar – Risk Adjusted Return

Investing Risk Explained (My Take on Portfolio Risk & Volatility)

HNDL ETF Review – Strategy Shares NASDAQ 7HANDL™ Index ETF

NUSI ETF Review – An Income-Focused Option Collar ETF

3 Best SPAC ETFs To Invest in SPACs in 2022 – But Should You?

VOO vs. VOOV vs. VOOG – Vanguard S&P 500, Value, or Growth?

VXUS vs. VEU – Which Vanguard Total International ETF?

VT vs. VTI – Global Stock Market vs. Total U.S. Stock Market

RPAR Risk Parity ETF Review – An All Weather Portfolio ETF?

PSLDX – A Review of the PIMCO StocksPLUS® Long Duration Fund

The 7 Best Value ETFs To Capture Value Stocks in 2022

SWAN – A Review of the Amplify BlackSwan ETF for Downturns

View All...

Footer

  • Facebook
  • Instagram
  • Twitter
  • YouTube
  • Reddit

Amazon Affiliate Disclosure

OptimizedPortfolio.com is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com.

Email Newsletter

Sign up to receive email updates when a new post is published.

Don't worry, I hate spam too. No ads.

About - My Toolbox - Privacy - Terms - Contact


Copyright © 2022 OptimizedPortfolio.com

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Ok, Got ItReject Read More
Privacy & Cookies Policy

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Non-necessary
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.
SAVE & ACCEPT