M1 Finance vs Betterment

Nowadays, you don’t need years of experience working as a stockbroker or a stockpile of cash to get into the investing game.

Robo-advisors and automated investing tools allow normal people to invest money and make returns.

Two robo-advisors that stand out among the crowd are M1 Finance and Betterment.

They both offer automated investing for no-to-low fees.

If you’re deciding which to tool to invest your money with, there are several things to consider. Here, we dive into each platform’s advantages and drawbacks, so you can make an informed decision on where to park your cash.

M1 Finance Overview

M1 Finance is a platform you can use to manage investments. It combines an investment manager hybrid and online broker.

M1 Finance is unique in that it allows users to pick and choose their investments, forming customized “pies.”

Betterment Overview

Similar to M1 Finance, Betterment is a goals-based investment advisor. Having launched in 2010, it’s one of the original robo-advisors to have entered the market.

Because of its ability to offer automatic investing and user-friendly interface, Betterment bills itself as the “simplest, smartest way to invest.” 

m1 finance portfolio

M1 Finance Fees

M1 Finance is truly a no-fee robo-advisor. They don’t charge any management fees or commissions on investment transactions.

The app’s no-fee feature comes with a catch: it requires users to maintain a higher-than-average minimum account balances.

In order to keep using M1 Finance, you’ll need to maintain a $100 balance in your account. Users with a retirement savings account need to carry a minimum $500 balance.

The app requires that you deposit this amount in order to open up your account, dissuading some potential investors from getting started.

As with any other digital investment platform, M1 Finance users will be charged standard SEC trading fees on investment transactions.

Sign Up to M1 Finance Free

Betterment Fees

Betterment offers two plans, which each come with their own fee schedule.

Betterment Digital charges a fee of 0.25% of your account balance annually up to $2,000,000 invested, after which they charge 0.15% fees above that amount. They don’t require a mimimum investment amount. 

Betterment Premium requires a $100,000 minimum investment amount and charges 0.4% of AUM. The fees are reduced to 0.3% on any amount above $2,000,000. 

You may be thinking that the fees for Betterment Premium are unreasonable. But, this account includes human financial advice on all investments, including assets outside of Betterment.

You also get unlimited access to CFP® credentialed financial advisors that you can use for any life planning decisions. 

Betterment app

M1 Finance Features

Investment ‘Pies’ and portfolios

With M1 Finance, investors have the option to base their portfolio off of one of 60 expert-designed investment portfolios, which they refer to as “pies.”

These pre-built templates come in a variety of categories, including retirement planning, socially responsible investing, and risk tolerance-based portfolios, to name a few. 

For users who desire a bit more flexibility, there is also the option to create a customized pie, picking and choosing from over 6,000 individual stocks and exchange-traded funds (ETFs). 

Investors can create more than one investment pie, and can even form a portfolio out of other pies. 

M1 Finance Pie

Fractional Shares

While traditional investing tools and many robo-advisors only allow investors to buy whole shares, M1 Finance allows users to invest in part of a share or a stock.

This is what allows your investment “pie” to remain proportional, no matter how much you add to or subtract from it (as long as the balance is over $100). 

Try M1 Finance Free

M1 Borrow

M1 Borrow offers you an extremely flexible credit line for borrowing close to 35% payback and portfolio on your schedule. It’s an easy way to borrow money without a high cost.

Keep in mind that you need to have $25,000 in your taxable brokerage account to be eligible for M1 Finance’s borrowing feature.

M1 Borrow

Portfolio Rebalancing

M1 Finance automatically rebalances and corrects your portfolio if your investments start fluctuating alongside your portfolio’s growth.

M1 Finance maintains your asset allocation by selling overweight assets if you withdraw some assets from the investment portfolio.

Betterment Features

Goasl-Based Saving

Betterment puts a strong emphasis on setting a goal for your investments. When you set up your account, the platform will ask you what you’re saving and investing for.

Using the information you provide, the platform then offers risk-optimized portfolios of stocks and bonds to align with your goal timelines.


Betterment’s retirement planning feature is as robust as they come.

RetireGuide allows you to link to non-Betterment accounts, including 401(k)s, giving you a way to see the full picture of your savings and retirement accounts.

The tool also takes the information from all of your accounts to give you comprehensive retirement planning advice.

The calculator tool takes into account your age, how much you’re saving and earning, and tells you exactly how much you need to save each year to retire by your goal retirement age.

Betterment Retirement

Tax-Loss Harvesting

Selling your investments for a loss is essentially the essence of what tax-loss harvesting means.

It’s a strategic move to offset your taxes by paying for gains you receive from sold shares with increased value.

Incorrect tax-loss harvesting takes you down a tricky slope, which might even make you pay tax penalties to the government. Luckily, Betterment takes care of tax-loss harvesting for you.

It purchases and sells our assets at the most opportune times, essentially reducing as much tax impact as it can.

Access to Human Financial Advisors

With Betterment Premium, users have unlimited access to human financial advisors.

Users of Betterment Digital also have the option to pay for financial advice packages for specific life events, such as college planning, marriage, and retirement. 

M1 Finance Pros & Cons

M1 Finance’s biggest advantage is the flexibility and ease of use of its investment pies.

The pre-built pie templates offer beginner investors a guided way to design their portfolio, while the customizability allows experienced investors a visually appealing and flexible way to diversify their funds. 

Another big benefit of M1 Finance is that it stays true to its no-fee business model.

They don’t charge any commissions or mark-ups on transactions, and don’t charge anything to rebalance your account or if you want to reinvest dividends. 

One of M1 Finance’s drawbacks is that it doesn’t connect to 401(k) or other employer-sponsored retirement accounts.

Retirement is a big goal for robo-advisor users, and this shortcoming may push investors to look elsewhere. 

Another possible barrier for users to set up an M1 Finance account is its $100 account minimum.

While certain robo-advisors allow investors to open an account and monitor stocks from day 1, M1 Finance’s account minimum may dissuade some users from setting up their account.

Try M1 Finance Now

Betterment Pros & Cons 

Betterment’s most unique and advantageous feature is its goals-based investing algorithm.

Taking into account information such as your age, annual income, and life goals, the platform will create a personalized investing plan.

This makes Betterment perfect for people who are looking for a disciplined way to achieve their financial goals. 

Another advantage is that Betterment doesn’t require an account minimum (for Betterment Digital).

One of Betterment’s drawbacks is the 0.25% fee for Betterment Digital.

While some users would argue that the fee is well worth it for the platform’s advanced goal-setting tools, other investors would rather go with a completely free investment platform.  

The Bottom Line

As our comparative analysis makes clear, M1 Finance and Betterment are two very different investment platforms for two very different types of investors.

Which robo-advisor you should choose comes down to your investing preferences and financial goals. 

Are you looking for a hands-off robo-advisor with strong goal-setting and tax-loss harvesting features?

Then Betterment would be the better choice for you.

If your main financial goal is retirement, then Betterment’s customized RetirementGuide feature and ability to connect with outside retirement accounts would make it the obvious winner over M1 Finance in this department as well. 

If you’re looking for a flexible, visually appealing platform to set up your portfolio with, then M1 Finance is the way to go.

Whether you’re a novice or sophisticated investor, M1 Finance’s auto-rebalancing portfolio options allow for a customizable level of guidance.  

Whichever investment platform you choose, both M1 Finance and Betterment have the robust features and support to help you invest for your financial future.

P.s. If you are still on the fence, i’d suggest you try M1 Finance first. It free AND one of the best options out there. 

Try M1 Finance 

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