ETRADE is one of the oldest, largest online stock brokers. They've recently slashed fees and commissions to compete with modern platforms like M1 Finance. Here we'll compare the two. I wrote a separate comprehensive review of M1 Finance here if you're interested in seeing the specifics of the platform.
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M1 Finance vs. ETRADE – Summary Comparison
Contents
M1 Finance vs. ETRADE – Commissions and Fees
M1 Finance and ETRADE both offer commission-free trades for stocks and ETF's, and zero account fees, aside from the obvious miscellaneous fees for things like paper statements, outbound account transfers, etc.
ETRADE does have commissions for other securities types:
- Options: $0.65 per contract
- Futures: $1.50 per contract
We're seeing a race to the bottom for brokerage fees and commissions from traditional brokers. ETRADE was previously somewhat prohibitive with its high fees, but the company announced in October 2019 that it would be dropping fees and commissions on stocks and ETF's.
ETRADE does offer a robo-advisor option called Core Portfolios that carries an advisory fee of 0.30% of your invested balance.
M1 Finance is entirely self-directed, but they do offer pre-built “Model Portfolios” that you can invest in for free.
M1 Finance vs. ETRADE – Account Types
M1 Finance offers Individual, Joint, Traditional IRA, Roth IRA, Rollover IRA, SEP IRA, Trust, and Custodial accounts. They currently do not offer SIMPLE IRA, 401(k), Solo 401(k), 529, HSA, or Non-Profit accounts.
Charles ETRADE has basically every account type you can think of. They offer all of M1's account types plus Solo 401(k), SIMPLE IRA, Coverdell, and more specialty accounts.
If you need any of the latter accounts, ETRADE would be the better choice.
Both M1 and ETRADE also offer an FDIC-insured checking account.
M1 Finance vs. ETRADE – Investment Products
M1 Finance offers most ETF's and individual stocks that are traded on major exchanges.
ETRADE offers every investment product except forex and crypto: ETF's, individual stocks, mutual funds, options contracts, futures, and over-the-counter (OTC) stocks aka “penny stocks.”
M1 Finance vs. ETRADE – Margin
M1 Finance wins on margin rates. Margin rates are here.
You can use that cheap margin loan from M1 Finance for whatever you want – major purchases, refinancing higher-interest debt, unexpected expenses, etc.
M1 Finance vs. ETRADE – Mobile App
ETRADE has made recent improvements to their mobile app in 2020. Both M1 Finance and ETRADE have pretty sleek, intuitive, user-friendly, robust mobile apps for both Apple iOS and Android.
ETRADE's apps will be slightly more confusing for novice investors. ETRADE actually has multiple apps, one for everyone and one dedicated to advanced day traders called Power ETRADE. Android users complain of ETRADE's apps being buggy.
Here's M1's app:
Here's ETRADE's main app:
And here's ETRADE's “Power ETRADE” app:
M1 Finance vs. ETRADE – Interface/Usability
While the mobile app seems solid, the ETRADE desktop web interface is less intuitive and not as sleek. Experienced investors will have no problem navigating the features, but it will probably take more time and effort for beginner investors. We should expect this to some degree, as ETRADE have a much more complex offering and a much larger, broader user base. Ironically, the number of tools may very well make this desktop interface overwhelming and more confusing for new, young investors, an audience that ETRADE is trying to attract. If you only plan to use the mobile app, you should be fine.
The ETRADE user interface looks like this:
The M1 Finance interface is modern, simple, and intuitive with its pie-based visualization. With fewer features and tools than ETRADE, it is much easier to navigate, especially for novices. It is great for beginner and experienced investors alike:
M1 Finance vs. ETRADE – Extra Features
ETRADE naturally has much more robust charting, news, education, and analysis tools than M1 Finance. After acquiring OptionsHouse, ETRADE became a serious contender in the options arena for options traders. As such, ETRADE obviously has an all-day trading window and order control. Since M1 Finance is built for long-term, buy-and-hold investing, and not for day trading, M1 has a once-daily trading window and no order control.
M1 Finance features “dynamic rebalancing,” an automatic rebalancing feature that automatically directs new deposits to specific assets to maintain your portfolio's target weights. ETRADE does offer this feature in their robo-advisor service called Core Portfolios at a fee of 0.30% of your invested balance, but this limits you to their simplistic, pre-built ETF portfolios (not unlike Acorns); you cannot select your own investments.
M1 Finance offers fractional shares for all investment products, which allows every dollar to work for you and allows you to buy small pieces of high-share-price stocks. This is especially important for beginner investors with a small amount of capital. ETRADE does not offer fractional shares.
M1 Finance also brings a cool social aspect to investing, allowing you to share your Custom Pies via a hyperlink.
M1 Finance vs. ETRADE – Summary and Conclusion
- Both M1 Finance and ETRADE offer zero-commission trades and zero fees in the context of stocks and ETF's traded on major exchanges. ETRADE does have commissions on things like options, OTC stocks, and futures.
- ETRADE has many more account types than M1 Finance, but I'd imagine most average retail investors won't need or utilize them.
- M1 Finance offers most ETF's and individual stocks. ETRADE offers ETF's, stocks, OTC stocks (“penny stocks”), mutual funds, futures, and options contracts.
- M1 Finance offers much lower margin rates than ETRADE.
- ETRADE has a slightly more confusing desktop user interface that would be more suitable for seasoned investors and traders. This is to be expected, as ETRADE offers a broader range of account types and investment products, and more research tools. M1 Finance has a simple and intuitive desktop interface.
- Both M1 Finance and ETRADE seem to have great mobile apps, though ETRADE's mobile apps seem to be notoriously bad for Android users.
- Both M1 Finance and ETRADE offer FDIC-insured checking accounts.
- M1 Finance offers fractional shares. ETRADE does not.
- M1 Finance has automatic rebalancing. The only way to get automatic rebalancing with ETRADE is via their robo-advising program called Core Portfolios, which carries a fee of 0.30% of your invested balance.
- ETRADE has the typical order control and all-day trading window that we'd expect from a traditional brokerage platform. M1 does not offer order control and only uses one trading window per day.
- ETRADE offers robo-advising and professional advising through their Core Portfolios and higher-fee advising services. M1 Finance does not have a dedicated advising service but offers its pre-built “Model Portfolios” for free. M1 is also probably better if you want to implement a “lazy portfolio” and have it rebalance automatically.
- M1 Finance allows you to share your Custom Pies via a hyperlink.
ETRADE has made leaps and bounds, even in recent months, to update its offerings, but I think it still falls short of M1 for the average retail investor. Your choice between these two platforms should depend on how you want to invest and what account types, products, and features you need. To some degree, it may also depend on your level of investing experience. ETRADE inarguably offers many more options than M1 Finance in terms of account types, investment products, and research tools. But I maintain that this higher number of resources comes at a cost of increased complexity and decreased intuitiveness, making it potentially overwhelming and more difficult for a beginner investor to navigate successfully.
You can have a set-and-forget portfolio with either broker, but with ETRADE it will cost you at least the 0.30% advisory fee for their Core Portfolios program. M1's Model Portfolios (or a lazy portfolio through M1) are accessible for free.
If you need access to things like options contracts, a Solo 401(k) or Coverdell accounts, and/or an all-day trading window, for example, ETRADE is the platform for you out of these two. If you don't need those things and want access to fractional shares, automatic rebalancing on all accounts, and cheaper margin, M1 Finance is clearly the better choice. I wrote a separate comprehensive review of M1 Finance here if you're interested in reading about the nuances of the platform.
I've actually talked to people who have accounts across both brokers – ETRADE for mutual funds and options contracts, and M1 for a taxable account to access extremely cheap margin and “fun” stock picking.
Disclaimer: While I love diving into investing-related data and playing around with backtests, this is not financial advice, investing advice, or tax advice. The information on this website is for informational, educational, and entertainment purposes only. Investment products discussed (ETFs, mutual funds, etc.) are for illustrative purposes only. It is not a research report. It is not a recommendation to buy, sell, or otherwise transact in any of the products mentioned. I always attempt to ensure the accuracy of information presented but that accuracy cannot be guaranteed. Do your own due diligence. I mention M1 Finance a lot around here. M1 does not provide investment advice, and this is not an offer or solicitation of an offer, or advice to buy or sell any security, and you are encouraged to consult your personal investment, legal, and tax advisors. Hypothetical examples used, such as historical backtests, do not reflect any specific investments, are for illustrative purposes only, and should not be considered an offer to buy or sell any products. All investing involves risk, including the risk of losing the money you invest. Past performance does not guarantee future results. Opinions are my own and do not represent those of other parties mentioned. Read my lengthier disclaimer here.
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