Our primary goal at The Tokenist is to simplify the word of financial decision-making, so that investing is not only easy - but also fun. In doing so, we often feature products or services from our partners. However, the opinions and reviews published here are entirely our own.
CloseM1 Finance Review
In this M1 Finance review, we explore how this platform offers automated investing with minimal fees.
![](/wp-content/themes/thetokenist/assets/img/svg/checkmark.svg")
All reviews, research, news and assessments of any kind on The Tokenist are compiled using a strict editorial review process by our editorial team. Neither our writers nor our editors receive direct compensation of any kind to publish information on tokenist.com. Our company, Tokenist Media LLC, is community supported and may receive a small commission when you purchase products or services through links on our website. Click here for a full list of our partners and an in-depth explanation on how we get paid.
Can a legitimate investing platform really be free?
M1 Finance opened its digital doors in 2015. By 2018, the platform celebrated its 100,000th funded account holder. That is some pretty radical growth in just four years’ time!
Offering a premier service with low fees has helped M1 Finance attract 100,000 clients.
M1 Finance is a Securities and Exchange Commission (SEC) registered broker-dealer, and a member of the Financial Industry Regulatory Authority (FINRA). Members can also open a free SIPC protected account, with securities protected up to $500,000, including up to $250,000 in cash.
Still however, according to the platform’s CEO Brian Barnes, M1 is so unique that there’s no “one thing” that sets it apart from competitors. Rather, it’s an aggregate of things that keeps changing and evolving to meet its users own needs and demands.
M1 Finance promotes low fees — but there are some costs to consider.
Let’s dive in.
Investor Warning: Investing with M1 Finance involves risk, including the risk of losing the money you invest, and past performance does not guarantee future performance. Borrowing on margin can add to these risks, and you should learn more before borrowing. Nothing in this informational site is an offer, 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.
What is M1 Finance? 📚
Fast Facts
- Account Minimum: $0
- Fees: $3
- Best for: Low-fee management and customizable portfolios, including options for socially responsible investing
- Highlight: No-cost automated investing
Rating
- Commissions & Fees: 9/10
- Investment Selection: 9/10
- Account Options & Features: 9/10
- Usability: 9/10
- Educational Resources: 8/10
- Customer Service: 6/10
- Overall: 9/10
M1 Finance, LLC does not charge commission, trading, or management fees for self-directed brokerage accounts. You may still be charged other fees such as M1’s platform fee, regulatory fees, account closure fees, or ADR fees. For a complete list of fees M1 may charge visit M1’s Fee Schedule.
To understand the core business model of M1 Finance, we need to go back to 2015. M1 Finance launched as a self-directed investing platform, offering free portfolio management through its proprietary digital tools.
That is where M1 Finance came from. But where is it headed?
M1 Finance doesn’t offer access to tax-loss harvesting or mutual funds, but it’s packed with useful features. The platform is a hybrid of a traditional brokerage and automated portfolio management service.
M1 Finance allows users to create customized portfolios, which the platform calls “Pies.” Each Pie can be filled with stocks and ETFs. You can choose from over 60 pre-built Pies or build your own from scratch. M1 Finance also offers automated rebalancing, ensuring that your investments remain aligned with your financial goals.
Additionally, M1 Finance provides access to M1 Spend, an FDIC-insured checking account, and M1 Borrow, a portfolio-backed loan feature that lets users borrow against their investments.
In other words, M1 Finance is continuing to expand its presence in the self-directed investing and digital banking arena, focusing on offering users control over their portfolios with added automation tools.
This is good news if you’re looking for a stable, all-in-one platform that allows for flexible, automated investing. Now, let’s take a closer look at what independent reviews have to say about M1 Finance’s suite of digital financial services.
M1 Borrow Explained 👨🏫
In the early days, M1 focused on its free, self-directed investing platform that catered to what founder Brian Barnes referred to as the “mass affluent”—investors with anywhere from $10,000 to $500,000+ to invest.
All that is changing now. Don’t get us wrong – the core services are not going anywhere and are still going strong.
In 2018 M1 Finance released a new feature that blows its competitors right out of the water.
The feature is called M1 Borrow. It allows any investor who has at least $25,000 in a funded portfolio borrow against that portfolio.
This “portfolio line of credit” offers M1 Finance users the option to borrow up to 35 percent of the value of their total portfolio. The interest rate for repayment is 7.25 percent and the repayment terms are flexible to say the least, in that currently there are none.
The ultimate vision, as founder Barnes describes, is to position M1 Finance as the all-purpose replacement to both investing and traditional banking services. A hefty proposition to be sure – and a heady one!
But should you trust M1 Finance to replace the tried and true financial tools that have been in use for decades? As with any financial tool, there are both pros and cons to be aware of and that is what we will take a look at next.
M1 Finance Compared
None
$3 or $12/month
$0
$5
- Individual and joint taxable accounts
- Traditional, Roth, SEP & rollover IRA
- Trusts
- Individual non-retirement accounts
- Traditional & roth IRAs
- Low fees
- Socially responsible investors
- Hands-off investing
- Investors who have difficulty saving
None
None
$3 or $12/month
0.25%
$5
$0
- Individual non-retirement accounts
- Traditional & roth IRAs
- Cash account
- Traditional, Roth, SEP, & rollover IRAs
- Joint and individual and non-retirement accounts
- Trusts
- Hands-off investing
- Investors who have difficulty saving
- Hands off investors
- Retirement accounts
None
1 year of free management, with qualifying deposit
Yes, but only with Betterment Premium (0.40% fee)
Management fees
None
$3 or $12/month
0.25%
Account Minimum
$0
$5
$0
Account Types
- Individual and joint taxable accounts
- Traditional, Roth, SEP & rollover IRA
- Trusts
- Individual non-retirement accounts
- Traditional & roth IRAs
- Cash account
- Traditional, Roth, SEP, & rollover IRAs
- Joint and individual and non-retirement accounts
- Trusts
Best for
- Low fees
- Socially responsible investors
- Hands-off investing
- Investors who have difficulty saving
- Hands off investors
- Retirement accounts
Promotion
None
None
1 year of free management, with qualifying deposit
Human advisor?
Yes, but only with Betterment Premium (0.40% fee)
M1 Finance, LLC does not charge commission, trading, or management fees for self-directed brokerage accounts. You may still be charged other fees such as M1’s platform fee, regulatory fees, account closure fees, or ADR fees. For a complete list of fees M1 may charge visit M1’s Fee Schedule.
Is M1 Finance Really Free? 🤔
One independent review site has suggested that M1 Finance represents the future of self-directed investing platforms, blending automation with full control over investment choices.
This is an interesting assertion and, it turns out, M1 Finance can back it up.
For starters, M1 Finance offers key features common to many digital investment platforms:
- ☑️ $100 minimum investment requirement for taxable accounts
- ☑️ No management fees
- ☑️ Automated periodic rebalancing of the investment portfolio to account for “drift”
- ☑️ iOs/Android app plus desktop portal options
- ☑️ Phone and email support
- ☑️ Integration with tax reporting software (H&R Block, Turbo Tax)
- ☑️ Socially responsible investment options
- ☑️ No commissions on trades
M1 Finance takes its offerings further with additional features:
- ☑️ M1 Spend and M1 Borrow
- ☑️ Fractional shares option (option to purchase less than one full share)
- ☑️ SIPC (Securities Investor Protection Corporation) protected up to $500,000
- ☑️ Highly liquid funds for accounts over $2,000
- ☑️ Unique application of the Modern Portfolio Theory (MPT) – more on this here shortly
Where M1 Finance May Fall Short 🚧
While M1 Finance definitely has a great deal to offer, it is also definitely not a perfect offering. The bigger question then becomes, is M1 Finance the perfect platform for you personally?
The only fair way to answer this question is to take a look not just at the pros of what M1 Finance is offering but also at the cons. And even with all this platform serves up, there are definitely some important elements missing that you need to be aware of.
While there’s no tax loss harvesting, there is tax minimization.
Like many “free” online digital robo advisor platforms that are essentially targeting investors of less means, M1 Finance does not currently practice tax loss harvesting.
If you are not clear what this term means, tax loss harvesting is basically a way to use securities losses to offset securities gains within a single calendar tax year. While it won’t matter so much if you don’t have a lot to invest, as your portfolio begins to grow you will likely begin to feel its absence keenly.
However, M1 Finance deserves full credit for at least attempting to meet you in the middle to provide some form of tax-time investment portfolio support. The way M1 Finance does this is called “tax minimization.”
Tax minimization ensures that the sale of any securities prior to the tax year cut-off automatically proceeds in a set order as follows:
- ☑️ First, sell securities that do not create tax liability.
- ☑️ Next, sell securities that deliver long-term gains.
- ☑️ Finally, sell securities that deliver short-term gains.
Reviews state that this triage method isn’t as reliable as the preferred tax loss harvesting, but it is certainly better than nothing at all (which is what most robo advisors in M1 Finance’s class tend to provide).
M1 Finance’s leadership makes much of the option to include fractional shares – less than one full share of equity – in your portfolio.
In fact, it is not even possible to purchase fractional shares from the general marketplace. These partial shares most frequently happen when a stock splits unevenly and are not always viewed as desirable in that context.
For young investors or investors of limited means, being able to purchase a portion of a share of a highly valued or desirable security can be exciting. Fractional shares of stock do have value and they can appreciate just like full shares do. Fractional shares is a major way M1 Finance is different from Wealthfront — along with other competition.
But what often goes unsaid is that fractional shares can be difficult to work with and, ultimately, to sell when and if that time comes.
M1 Finance is also not built for day traders. The platform only offers one trading window per day, which may frustrate those who want to make frequent trades. Additionally, the lack of mutual funds may not appeal to more traditional investors.
Mutual Funds Are Not Available 🤨
For investors with low to moderate risk tolerance, which frankly represents the majority of investors today, the glaring lack of mutual funds as an investment option may come as an unwelcome surprise.
M1 Finance focuses on stocks and EFTs (exchange-traded funds). So if you are keen to invest in mutual funds, M1 Finance may not be the right choice for you.
You won’t get a big picture investment perspective.
This isn’t unusual for a self-directed investing platform, but M1 Finance does not factor in any outside investment accounts or securities, including an IRA (individual retirement account) or employer-sponsored 401k, 403b or similar retirement account.
So it will be up to you to keep your eye on the full spectrum of your retirement and investment holdings over the long-term.
You really need to trust the algorithm.
M1 Finance may be long on trusting that you, the investor, know what you want to do and how to do it. But where reviews underline that it falls short is in providing any type of expert guidance on either.
Aside from the extensive use of a series of investment Pies (more on that here shortly) designed to help guide your investing choices, you aren’t going to find a lot of – or really any – hand-holding here.
So you also need to check in with yourself about your level of confidence and your personal tolerance for risk before you choose a hands-off robo advisor platform like M1 Finance.
🤓 Do you like the idea of investing from an app? See how M1 Finance compares to Robinhood.
M1 Finance Investment Pies 📈
Earlier here we mentioned the Modern Portfolio Theory (MPT). Financial advisors sometimes call this theory of investing “Pies.”
Rest assured we are not trying to make you hungry!
The Pies is a vastly simplistic way of explaining how MPT works in terms of M1 Finance’s digital algorithm.
Remember — all of the best robo advisor platforms have their own super-secret, in-house, proprietary digital algorithm. In other words, this algorithm is an advanced formula used to help investors allocate their funds appropriately to their investment needs and goals.
While each algorithm is a little different to set the robo advisor apart from competitors, all rely at some level on MPT and the use of “Pies.”
Pies are basically investment templates. There are eight major categories of templates that are designed to speak to the interests and needs of different categories of investors:
- ☑️ General Pie: a build-your-own risk tolerance Pie.
- ☑️ Retirement Pie: a Pie based on your target retirement date.
- ☑️ Socially Responsible Investing Pie: for the investor concerned with SRI.
- ☑️ Income Pie: a build-your-own income-generating Pie.
- ☑️ Hedge Fund Pie: a guided Pie based on investment best practices.
- ☑️ Sector Pie: Pies based on specific sectors or industries.
- ☑️ EFTs Pie: a build-your-own Pie comprised of stocks and bonds EFTs.
- ☑️ Other Pies: additional customizable Pie categories.
While most Pies use risk as one of the key determinants of asset allocation, M1 takes away that control and gives you, the user, complete autonomy over how you use the Pies (or not) to build your portfolio.
However, when you work with a Pie template in part or in whole, you will be able to view the estimated and historical data associated with that Pie template, including risk, yield and overall performance.
You can use one of the more than 60 pre-built Pies as-is, customize part of a Pie, or assemble your own custom Pie piece-meal — all while enjoying no management or trading fees, though other platform fees may apply.
A Pie may have up to 100 segments, or slices. Each slice represents an investment decision. When you populate your Pie, M1 Finance’s digital algorithm will use your choices to allocate your funds accordingly.
If you are a highly visual person, you will likely love M1 Finance’s Pie-building tool. A display pops up showing you all the funds or securities or EFTs or bonds or stocks, etc. and you just check them off to add them to your Pie.
You can construct one Pie or many depending on how you want to use M1 Finance. For example, if you have twin goals to save for a downpayment on a house and save for your child’s college education, you may elect to populate two different investment Pies to achieve these savings goals.
🧐 How does M1 Finance stack-up to the competition? Inform yourself by taking a look at M1 Finance vs Betterment comparison.
Final Thoughts 🏁
If we had to sum up the experience of using M1 Finance in just a few words, it would be these: you will get as much responsibility as you can handle.
So the question then becomes, how much responsibility for your own investing can you handle?
How you answer this question will determine whether M1 Finance could be the right platform for your investment needs.
Disclosure: For details on M1 Finance’s terms and fees, see their social disclosures.
M1 Finance: FAQs
-
Does M1 Finance Have Hidden Fees?
There aren’t necessarily “hidden fees”, but there are a few potential — albeit rare — rares that you should be aware of.
As of September 2024, M1 charges a $3 monthly platform fee for clients with less than $10,000 in M1 assets or without an active Personal Loan. This fee will be waived if your M1 Invest or Earn accounts’ settled aggregate balance equals or exceeds $10,000 for at least one day during the previous 30 days. The monthly platform fee is also waived for all clients with an active M1 Personal Loan.
In addition to the platform fee, accounts that have less than $20 and show no activity for 90 days will be charged a $20 inactivity fee. While there are no maintenance fees, accounts with less than $10 that haven’t been used for trading in over 6 months will be automatically closed.
As far as direct account transfers go, there is no fee associated with incoming account transfers, but outgoing transfers will incur a $100 fee. Escheatment processing incurs a $75 fee per account, and TOD account transfers cost $200 per transfer.
Overnight mail costs $125 per request for domestic deliveries and $100 per request for international deliveries and deliveries to Canada.
Domestic wire transfers will incur a $25 fee, and so will check requests. Returned checks, ACH, and wire transfers incur a $30 fee.
The broker’s IRA termination fee is $100 per event, and the IRA conversion fee is $25. Mutual fund sales will incur a $20 fee, and liquidating securities that are traded on foreign exchanges will incur a $50 fee.
-
How Does M1 Finance Make Money?
M1 Finance makes money in the same ways that most commission-free brokers do. So what exactly does this entail?
M1 Finance will lend out idle cash, and the interest that they charge for those loans is kept as profit. M1 Finance mostly lends cash to banks on an overnight basis. Apart from this, M1 Finance also lends out securities for short selling – although less than 5% of the securities owned on M1 are lent out.
M1 has recently shifted away from its paid membership model, M1 Plus, which previously granted paying members access to premium features for $125 per year. Now, M1 provides these premium features to all clients. To support this elevated experience, M1 introduced a $3 monthly platform fee that applies unless specific requirements are met to waive the fee. The brokerage also offers portfolio margin loans via M1 Borrow and earns money on interest rates. On top of that, M1 Spend, the company’s checking account and debit card program also nets it interchange fees, as well as additional interest from cash balances.
Like other commission-free brokers, M1 Finance receives payments for directing order flow towards certain market makers.
You can find in-depth guide on how robo-advisors make money, here.
-
Can You Day Trade on M1 Finance?
No, you can’t. There is only one trading window available per day, and trades do not execute immediately. To give you a simple example, if you input an order in the afternoon, it won’t be executed until the next morning, as all orders are executed at 10.00AM EST.
If you’re an M1+ subscriber, you will get access to two trading windows per day, but that is still far too few, and the analysis tools that the platform offers are quite rudimentary. On top of that, M1 uses market orders – it doesn’t support advanced orders.
M1 Finance itself has made it clear that day trading isn’t anywhere near a priority – this is a platform designed for buy-and-hold investing, and it should be treated as such.
-
Is M1 Finance Better than Robinhood?
If you’re interested in how M1 Finance vs Robinhood compare, the answer will largely depend on your specific needs and goals. While both of these brokerages are known far and wide for commission-free trading, there are a couple of stark differences between them.
In general, M1 Finance is a better choice for intermediate investors looking to focus on stocks and ETFs, and those that are looking to retire, as Robinhood’s retirement offerings may not include the same level of portfolio customization.
While Robinhood is often compared to a robo-advisor due to its ease of use, it isn’t one – and neither is M1 Finance. However, Robinhood does offer a slightly wider array of investment options compared to M1 Finance
-
Is M1 Finance Safe?
Yes – M1 Finance is registered with both the SEC and FINRA, meaning that they have to comply with strict regulations. The brokerage has an A+ rating from the Better Business Bureau and carries SIPC insurance, protecting clients’ accounts for up to $500,000, with a maximum of $250,000 in cash.
Additionally, cash balances in your account are eligible for FDIC insurance up to $3.75 million once swept to partner banks. Until the cash is swept, it remains in your brokerage account under SIPC protection. FDIC insurance applies only after funds leave your brokerage account and are transferred to the partner banks.
-
How do I Contact M1 Finance’s Customer Support?
M1 Finance’s customer support team can be reached by email, at support@m1finance.com, or you can call them at 312-600-2883. If you opt to reach out to them via phone, keep in mind that they’re available from 9.30AM to 4PM EST from Monday to Friday.
Compare M1 Finance
Find out how M1 Finance stacks up against the competition.
All reviews, research, news and assessments of any kind on The Tokenist are compiled using a strict editorial review process by our editorial team. Neither our writers nor our editors receive direct compensation of any kind to publish information on tokenist.com. Our company, Tokenist Media LLC, is community supported and may receive a small commission when you purchase products or services through links on our website. Click here for a full list of our partners and an in-depth explanation on how we get paid.
Back to 
