M1 Finance vs Wealthfront

Investing is one of the best ways to grow your wealth and save for retirement. However, when it comes to choosing an investment platform, there are so many options that things can get a bit overwhelming.

A recent trend in the finance industry has been online investment services, or robo-advisors, many of which are accessible via a cell phone app as well. Two of the most popular robo-advisors right now are M1 Finance and Wealthfront. These two platforms target similar financial demographics, but there are some key differences to be aware of. In this article, we will take an in-depth look at these two investment platforms to help you decide which is the best option for you.

What is M1 Finance?

M1 Finance is an online investment platform that gives you control over the way you spend your money. What makes them unique is their pie chart investment model. When you sign up, you will create a pie chart detailing how much of your money you want to go to each investment. M1 Finance will then automatically invest any money you deposit proportionally based on your preferences.

M1 Finance is designed specifically for long-term investments. It has both iPhone and Android apps available and is known for its clean, aesthetically appealing user interface. M1 Finance also differentiates themselves from their competitors by offering no commission fees on their investments.

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What is Wealthfront?

Wealthfront has made a name for itself as one of the best robo-advisors on the market. They offer automated investment portfolios as well as financial education and guidance tools to help you save and plan for the future.

What has made Wealthfront such a popular choice is the myriad of features they offer, as well as their user-friendly approach to investing. You can access their tools online as well as through their iPhone and Android apps.

Wealthfront is designed to make the entire investment process as simple as possible, since many of their features are automated. They are focused on helping their clients save for important financial milestones like retiring, buying a home, or saving for college.

Wealthfront portfolio


M1 Finance Features and Experience

When you sign up for M1 Finance, the first thing you will need to do is create your investment pies. You can choose from over 60 pre-made pies by expert investors, and you can adjust them as you would like. You can also opt to build your own pie from scratch. You can search for the investments you are interested in, and M1 Finance will give you an overview of their performance and some basic information on the company. You can even sort for stocks and pre-built pies based on certain characteristics, like socially responsible investing or sector specific investing, for example.

Once you have created your pie, any money you invest into your account will be automatically invested according to your pre-set proportions. M1 Finance will automatically rebalance your portfolios to account for value changes in your investments.

One thing that is helpful about M1 Finance is that they offer fractional shares. This offers investors more flexibility and control over their portfolios. Instead of needing to buy an entire share, you can invest in a portion of the stock. This makes it easier to invest in high value stocks without a huge amount of capital. M1 Finance investments also tend to be very liquid, meaning that you can transfer money in and out of your account quickly, without long processing times.

M1 Finance Pies


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M1 Finance also offers a lending feature called M1 Borrow. This allows you to borrow up to 35% of your portfolio value and pay it back at a very low rate. It is an excellent alternative to borrowing from a bank or other lender, because the rates are much lower and you don’t have to go through a long approval process or any other red tape. As long as you have a taxable brokerage account with over $25,000, you are automatically qualified for M1 Borrow. M1 Finance is also working on a platform called M1 Spend, which essentially gives users a checking account and debit card that are connected to their M1 Finance portfolio. This allows customers to manage more of their finances in one place.

M1 Borrow

Wealthfront Features and Experience

Like most robo-advisors, the first thing you will do when you sign up with Wealthfront is answer a questionnaire about your finances. You’ll be asked questions about your financial goals and plans as well as your risk tolerance.

The results of this questionnaire will then be used to build an automated investment portfolio for you. You can specify certain investment strategies, like socially responsible investing, to ensure that your portfolio reflects your needs. Your portfolio will be very diverse, with investments in many different asset classes to minimize risk while maximizing your potential for growth. Your portfolio is automatically rebalanced and reinvested as needed, which takes the guesswork out of investing.

All of Wealthfront’s automated strategies use investment best practices to maximize the potential for growth. Because Wealthfront offers advanced automated investment strategies that many other robo-advisors don’t, they charge a yearly fee of 0.25%.

There are a few unique portfolio options that Wealthfront offers that may be appealing to you.

The first is their smart beta portfolio, which requires $500,000 to get started with. This portfolio uses a unique investment strategy that has the potential for higher returns. Instead of using traditional index-based investing, it selects your portfolio based on a complex variety of different factors.

The other specialized portfolio that Wealthfront offers is their Wealthfront Risk Parity Fund. This is actually Wealthfront’s first mutual fund offering, which uses leverage on some investments in the portfolio. It requires a minimum of $100,000 and charges a larger yearly fee of 0.50%. This portfolio is designed with the idea of achieving higher returns in mind.

Wealthfront Fees

Wealthfront offers a variety of other features for their clients. One of their most notable is their financial planning services. These services are completely automated and can be accessed through your phone or online. You can input information about your current financial status and your financial goals, and they will help you create a plan to manage your money effectively and reach your goals. Their financial planning tools are very easy to use, and are ideal for young people or those who don’t have much experience with financial planning.

Wealthfront also offers a cash savings account with 2.51% APY interest. They have four times the normal FDIC insurance on these accounts, making them ultra-secure. If you already use Wealthfront’s investment services and financial planning tools, this is an easy way to keep your finances all in one place and save for your financial goals.

Wealthfront Graph

Additionally, Wealthfront offers a line of credit for clients who have at least $30,000 in their accounts. You can borrow up to 30 percent of your account value, and you’ll get a relatively low rate of 4.75 to 6 percent in interest. Like the M1 Borrow program, this is a great alternative to bank loans for those who already have Wealthfront accounts. You get a low interest rate, and you can pay it back on your own timetable. You also won’t have to worry about qualifying for the loan, since you are already approved if you have an account.

Who is M1 Finance for?

M1 Finance is designed for people who want control over their investments, but still want managing their portfolio to be relatively simple. M1 Finance has a platform that is very easy to understand and use, so you won’t need to spend much time on your portfolio to keep it up-to-date.

M1 Finance gives you more customization options than most other investment platforms, and is best for those who have some basic investment experience already. It’s also designed specifically for long-term and retirement investing. It’s not ideal for those who want to use a short-term investment strategy or for day traders. 

Who is Wealthfront for?

Wealthfront is an excellent option for clients who have a decent amount of capital and want to start investing, but don’t have much experience. Since the entire experience is automated, you don’t need to have much prior knowledge of investing to get started. They also have plenty of financial education tools to help beginners. Wealthfront is designed for people who are saving for long term goals. It’s not ideal for short term trades or day trades.


Comparing Fees

A big concern for many investors, especially investors that are just starting out, is the fee structure associated with their investment platform. Even though it’s usually worth it in the long run, building your first investment portfolio can feel expensive, and fees can raise that financial burden even more.

M1 Makes Money

M1 Finance appeals to new investors or investors who don’t have a lot of capital by offering no commission fees on their trades. The company makes money through other financial products that they offer, so they are able to offer trades without fees for their customers. M1 Finance also has a very low minimum deposit fee of $100. This makes investing much more accessible for people of broader financial backgrounds.

Wealthfront, on the other hand, charges an 0.25% annual fee for service. They offer more in-depth financial advising services, which is why they charge this high fee. They also have a minimum deposit of $500 to get started with their services.

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Comparing Customer Service

M1 Finance and Wealthfront are similar in terms of the types of customer service that they offer for their customers. They both offer phone support and email support for their customers. It’s important to note that their customer service is only available on weekdays during normal business hours. Another important thing to consider before signing up is that neither service offers access to human financial advisors.

While customer service representatives can help you with the platform itself, they are not licensed as financial advisors and are not able to provide guidance regarding what investments to make. Wealthfront offers automated guidance to create a portfolio for you, while M1 Finance is a better choice for those who already have some investment experience.


Comparing Investments Offered

You’ll have a few different types of investments to choose from with both M1 Finance and with Wealthfront. M1 Finance has a large selection of stocks and ETFs available with fractional shares. However, they are missing some other investment categories that you may be interested in, such as mutual funds, options, and more. You can link a traditional taxable brokerage account or use an IRA account, depending on your personal preferences.

Wealthfront offers a slightly broader selection of stocks, bonds, and ETFs for your portfolio. They also offer investments in real estate and natural resources. However, since Wealthfront is a much more automated service, you won’t have as much control over which items you are investing in. Wealthfront also allows you to connect an individual or joint taxable brokerage account or any type of IRA. They also support trust and 529 college plans.

M1 Finance Investments

Comparing Financial Features

There are some key financial features where M1 Finance and Wealthfront differ. One of these features is tax loss harvesting. Wealthfront offers this feature, which sells stocks that have sustained a loss and purchases similar options to minimize your tax burden. M1 Finance offers tax efficient investing, which essentially controls the order in which they buy and sell your investments to minimize taxes. However, they don’t offer tax loss harvesting.

An area where M1 Finance stands out is that they offer fractional shares. This gives you more control over exactly how much you choose to invest in your portfolio. Wealthfront does not offer this option, so you will only be able to purchase full share through their portfolio.

Wealthfront Features

The Bottom Line

Although Wealthfront and M1 Finance are very similar, there isn’t one clear winner between the two. Instead, it depends entirely on what your investment goals are and how you like to spend your money.

If you like to have control over where your money goes and adjust your investments easily, M1 Finance is a great option. If you would prefer to have your investment service do all the work for you, you will likely feel more comfortable with Wealthfront. Both services give you the tools you need to save for retirement and achieve your future goals.

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