M1 Finance vs. Wealthsimple Brokerage Comparison (2022)

“Robo-advisors” like Wealthsimple are surging in popularity recently with low fees, convenience, and modern apps and interfaces. Here we’ll compare Wealthsimple and M1 Finance. I wrote a separate comprehensive review of M1 Finance here if you’re interested in that.

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M1 Finance vs. Wealthsimple – Summary Comparison

*Wealthsimple’s Basic plan charges 0.50% of your annual invested balance. Their Black and Generation plans have a reduced 0.40% fee of your annual invested balance.

*Wealthsimple’s Basic plan charges 0.50% of your annual invested balance. Their Black and Generation plans have a reduced 0.40% fee of your annual invested balance.

M1 Finance vs. Wealthsimple – 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.

Wealthsimple carries a 0.50% annual fee for their Basic plan. Upon reaching an invested balance of $100k, you qualify for their mid-level “Black” plan that has a reduced 0.40% annual fee and a financial planning session. Once you reach a $500k invested balance, their premium “Generation” plan includes dedicated advisors, in-depth financial planning, and a personalized portfolio made just for you.

These annual fees from Wealthsimple are based on a percentage of your invested balance, also known as assets under management (AUM). These fees may look extremely low at first glance, but let’s examine how they affect a portfolio’s value over time:

Using a starting balance of $100,000, $1,000 contributed monthly over 30 years, and an annualized rate of return of 8%, Wealthsimple’s reduced 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. Wealthsimple – Investment Products

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

Wealthsimple only offers a small handful of low-cost broad index ETF’s that are assembled in their pre-built portfolios based on the investor’s risk tolerance, much like Betterment and Acorns. As with most robo-advisors, these pre-built portfolios seem to be based on modern portfolio theory.

You can easily access all these on your own with M1 Finance using low-cost Vanguard funds. You can also use M1’s “Expert Pies” for free. M1’s Expert Pies include target date funds with different risk tolerances, sustainable investing (ESG) portfolios, dividend-focused pies, and more. Wealthsimple include themed portfolios such as socially responsible investing and Halal investing.

As an aside, I question Wealthsimple’s comparatively large allocation to municipal bonds in its low-risk portfolios; it just seems odd when they could use treasury bonds instead.

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

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

M1 Finance vs. Wealthsimple – Margin

Wealthsimple 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.

Since Wealthsimple offers neither margin nor leveraged ETF products, it’s not possible to apply leverage to your Wealthsimple investments.

M1 Finance vs. Wealthsimple – Mobile App

M1 Finance has a sleek, modern, intuitive, robust mobile app for both Apple iOS and Android. Wealthsimple has a good app too, but Android users specifically seem to complain of problems with the app.

Here are some screenshots of the M1 app:

Here are some screenshots of the Wealthsimple app:

M1 Finance vs. Wealthsimple – Interface/Usability

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

Here’s M1 with its pie-based visualization:

And here’s Wealthsimple:

M1 Finance vs. Wealthsimple – Extra Features

M1 Finance offers an FDIC-insured checking account, making it a suite of financial tools instead of just an investing platform. With their premium M1 Plus option, you can earn interest and cash back on M1’s checking account. Wealthsimple has a “savings” account that is still invested in ETF’s and is not FDIC-insured but is SIPC-insured as an investing account.

Neither M1 Finance nor Wealthsimple offer robust charting and analysis tools but both do have educational articles and regular tips via their blogs. M1’s research tools are pretty basic – stock and ETF screeners, technical indicators, etc. Wealthsimple doesn’t allow you to choose your own investments, so they have no research tools.

Both M1 Finance and Wealthsimple offer “dynamic rebalancing,” an automatic rebalancing feature that uses new deposits to keep your portfolio at its target asset allocation.

M1 Finance offers fractional shares, a feature that allows every penny to work for you. This means you can buy a fraction of a single share of a stock or ETF. This is especially important for young investors with a small amount of capital. Wealthsimple does not support fractional shares.

M1 Finance vs. Wealthsimple – Summary and Conclusion

• M1 Finance and Wealthsimple are both built for passive, long-term, buy-and-hold investing.
• M1 Finance offers free investing; plain and simple. Wealthsimple carries a 0.50% fee for their Basic plan and a reduced 0.40% fee for their premium plans after you reach a $100k invested balance. 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 Wealthsimple offer all the same account types at this time in the U.S. Wealthsimple offers a broader range of accounts in Canada, where it’s based.
• Wealthsimple is available to U.S., Canadian, and U.K. investors. M1 Finance is only available in the U.S.
• M1 Finance offers most ETF’s and individual stocks. Wealthsimple only offers a small collection of broad index funds inside their pre-built portfolios. Wealthsimple do not offer individual stocks, and do not allow self-directed investing.
• Wealthsimple does not offer margin. M1 offers some of the lowest margin rates on the market.
• M1 Finance and Wealthsimple both have sleek, modern, intuitive, robust mobile apps and desktop web interfaces. Android users seem to have some complaints about the Wealthsimple app.
• M1 Finance has an optional FDIC-insured checking account. Wealthsimple does not.
• Both M1 and Wealthsimple employ automatic rebalancing.
• M1 Finance supports fractional shares. Wealthsimple does not.
• Wealthsimple 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. Wealthsimple obviously has the pre-built portfolios ready to go, but 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, Wealthsimple makes it sound like they’re actively managing your portfolio. They’re not. Recall that they’re simply investing your money in a small handful widely-available low-cost index ETF’s and shifting the allocations based on risk tolerance, 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, Wealthsimple 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 Wealthsimple over M1 Finance in the U.S., 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 financial planning advice within the platform. 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.

Obviously, if you’re in Canada or the U.K., you’d have to go with Wealthsimple over M1.

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

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.