What is M1 Finance Robo-Advisor?
- Hybrid robo-advisor – Combines automation with portfolio customization.
- Commission-free investing – No management fees for investment accounts.
- Customizable portfolios – Users create personalized stock and ETF allocations.
- Automated rebalancing – Ensures portfolios stay aligned with target allocations.
- Fractional shares investing – Invests every dollar efficiently, even with small amounts.
What is M1 Finance Robo-Advisor?
M1 Finance is a hybrid robo-advisor that combines automated investing with customizable portfolio management. Unlike traditional robo-advisors that limit users to pre-selected portfolios, M1 Finance offers self-directed investing with automated rebalancing.
This makes it ideal for investors who want more control over their investments while benefiting from automation.
M1 Finance operates on a commission-free model, allowing users to build custom investment portfolios (Pies) or select from pre-built expert portfolios. It also integrates automated deposits, fractional share investing, and tax-efficient strategies to optimize portfolio growth.
The platform is designed to bridge the gap between passive and active investing, making it an attractive option for long-term investors looking for flexibility.
Read Top 8 Robo-Advisors.
Key Features of M1 Finance
M1 Finance provides a flexible and automated investing experience with several unique features:
1. Customizable Portfolio Management (Pies & Slices)
- Users can create custom investment portfolios (Pies) by choosing individual stocks and ETFs.
- Each Pie consists of multiple slices, representing different assets.
- Investors can set allocation percentages for each slice, ensuring a personalized investment strategy.
- Offers pre-built expert portfolios for those who prefer a guided approach.
2. Automated Portfolio Rebalancing
- M1 Finance automatically rebalances portfolios by redirecting deposits to underweight assets.
- Ensures that investments remain aligned with target allocations without manual intervention.
- Helps maintain diversification and risk control, which is essential for long-term investing.
3. Fractional Share Investing
- Enables investors to buy partial shares, ensuring every dollar is fully invested.
- Ideal for those investing with small amounts or dollar-cost averaging.
- Allows investors to diversify their portfolios without needing large capital upfront.
4. Tax-Efficient Investing
- M1 Finance offers Tax Minimization strategies by prioritizing the sale of assets with the lowest tax impact.
- Unlike Wealthfront and Betterment, M1 does not offer tax-loss harvesting.
- Helps investors optimize capital gains strategies over the long term.
5. M1 Borrow: Portfolio Line of Credit
- Users with a $5,000+ account balance can borrow against their portfolio at low interest rates.
- Ideal for investors looking for liquidity without selling investments.
- Allows for flexible borrowing, with competitive rates for M1 Plus members.
6. M1 Plus Membership
- Offers premium features such as two daily trading windows, lower borrowing rates, and cashback rewards on the M1 Spend debit card.
- Costs $125 per year but provides benefits for active users.
- Access to higher interest rates on cash balances and more trading flexibility.
7. Retirement and Custodial Accounts
- It supports traditional IRAs, Roth IRAs, and SEP IRAs for long-term investing.
- Also offers custodial accounts for minors, making it a great choice for family investing.
- Provides automatic rebalancing and recurring contributions to help build retirement wealth.
8. Banking & Cash Management Integration
- M1 Finance includes a high-yield cash account through M1 Spend.
- Offers cashback rewards and a debit card linked to the investment account.
- Provides seamless banking and investing integration for holistic money management.
Read SoFi Automated Investing Robo-Advisor.
Pros of M1 Finance
✅ No management fees – M1 Finance does not charge advisory fees, making it cost-effective.
✅ Customizable investing – Users can create their portfolios with individual stocks and ETFs.
✅ Automated rebalancing – Ensures portfolios remain aligned without manual effort.
✅ Fractional shares investing – Invest with any amount, no need for whole shares.
✅ Portfolio line of credit – Borrow against investments at low rates with M1 Borrow.
✅ Retirement account support – Offers IRAs and custodial accounts for long-term investing.
✅ Seamless banking integration – Combines investing with a high-yield checking account.
✅ Pre-built portfolios available – Provides expert-created Pies for passive investors.
Cons of M1 Finance
❌ No tax-loss harvesting – Unlike Betterment and Wealthfront, M1 Finance does not offer automated tax-saving strategies.
❌ No direct financial advisor access – Investors must manage portfolios without professional guidance.
❌ Limited trading windows – Trades are executed during specific windows, which may not be ideal for active traders.
❌ Not ideal for short-term traders – Best suited for long-term investors due to trading restrictions.
❌ M1 Plus fee – Advanced features require a $125/year subscription.
Who Is M1 Finance Best For?
M1 Finance is ideal for:
| Investor Type | Why It Works |
|---|---|
| DIY Investors | Customizable portfolios with self-directed investing. |
| Long-Term Investors | Automated deposits and rebalancing for passive investing. |
| Cost-Conscious Investors | No management fees and commission-free trading. |
| Hands-Off Investors | Automated rebalancing without manual portfolio management. |
| Investors Seeking Leverage | Borrow against investments with M1 Borrow. |
| Banking & Investing Users | Integration of high-yield banking and investment accounts. |
M1 Finance vs. Other Robo-Advisors
| Feature | M1 Finance | Betterment | Wealthfront |
| Management Fee | $0 | 0.25% | 0.25% |
| Tax-Loss Harvesting | ❌ No | ✅ Yes | ✅ Yes |
| Minimum Investment | $100 | $0 | $500 |
| Investment Approach | Custom Portfolios | Pre-Built ETF Portfolios | ETFs + Direct Indexing (>$100K) |
| Financial Planning Tools | ✅ Yes | ✅ Yes | ✅ Yes |
| Human Advisor Access | ❌ No | ✅ Yes (Premium Plan) | ❌ No |
| Socially Responsible Investing (SRI) | ✅ Yes | ✅ Yes | ✅ Yes |
| Retirement Accounts | ✅ Yes | ✅ Yes | ✅ Yes |
| Banking Integration | ✅ Yes | ❌ No | ❌ No |
Final Thoughts: Is M1 Finance Worth It?
M1 Finance is a great option for self-directed investors who want the benefits of automation without sacrificing control. Its commission-free investing, customizable portfolios, and automated rebalancing make it attractive for those looking to build wealth over time.
Who Should Consider M1 Finance?
- Investors who want customized portfolios without manual trading.
- Long-term investors looking for automated investing and rebalancing.
- Those who want a fee-free investment platform with fractional shares.
- Users who want to borrow against their portfolio at low rates.
- Individuals seeking banking integration alongside investing.
For investors seeking tax-loss harvesting, socially responsible investing, or human advisor access, competitors like Betterment and Wealthfront may be better suited. However, for hands-off investors who want customization with automation, M1 Finance remains one of the best choices available today.
FAQ: M1 Finance Robo-Advisor
How does M1 Finance differ from other robo-advisors?
M1 Finance allows users to create custom portfolios instead of using pre-built options.
Does M1 Finance charge management fees?
No, M1 Finance does not charge management or advisory fees.
What is the minimum investment required?
A minimum investment of $100 is required to start investing.
Does M1 Finance offer tax-loss harvesting?
No, M1 Finance does not provide tax-loss harvesting like Betterment or Wealthfront.
Can I choose individual stocks and ETFs with M1 Finance?
Yes, users can customize their portfolios with individual stocks and ETFs.
Does M1 Finance offer retirement accounts?
Yes, it supports Traditional IRAs, Roth IRAs, and SEP IRAs.
How does M1 Finance rebalance portfolios?
Deposits and dividends are automatically allocated to underweight assets to maintain balance.
Can I borrow money from M1 Finance?
Users with a $5,000+ balance can borrow against their portfolio at low interest rates.
Does M1 Finance offer socially responsible investing (SRI)?
Yes, users can select SRI-focused ETFs and stocks for their portfolios.
How does M1 Finance compare to Betterment and Wealthfront?
M1 Finance offers more customization but lacks tax-loss harvesting and direct financial advisors.
Can I withdraw money at any time?
Yes, but withdrawals may take 1-2 business days to process.
Does M1 Finance provide human financial advisors?
No, M1 Finance is fully automated without human financial advisor support.
What is M1 Plus, and is it worth it?
M1 Plus is a premium membership that costs $125 per year and offers extra trading windows, better borrowing rates, and rewards.
Can I use M1 Finance for short-term trading?
No, M1 Finance is designed for long-term investors and does not support day trading.
Who is M1 Finance best suited for?
It is ideal for DIY investors seeking automated management with customizable portfolios.
