By Adam Hayes | March 20, 2018
M1 Finance is an online broker and investment manager that combines the best of self-directed and robo-advised investing.
Based in Chicago, M1 Finance is an online investing platform that offers the best features of robo-advising - such as automatic rebalancing, recurring deposits, and tax efficiency - with the ability to self-direct your own, personalized investment strategy. Build your own portfolio, copy a portfolio designed by Wall Street experts, or set-it-and-forget-it with a robo-advised model portfolio. You can even combine these strategies by taking slices from expert "pies," adding self-selected stocks and ETFs, and then putting everything on automatic. M1 will do all this at no charge, as long as you open an account with a minimum of $100 (or $500 for a retirement account).
M1 is built for long-term strategic investors and does not cater to the active trader. Its platform helps people invest and put their money to work - with no fees or much time commitment.
Since late 2017, M1 has charged zero fees. There are no commissions or mark-ups either, as long as you open a taxable account with a minimum of $100 or a retirement account with a minimum of $500. For that low, low price, you have access to thousands of individual stocks and ETFs to select yourself or take on as part of a prepackaged portfolio based on your risk preference, investment horizon, or personal outlook toward a particular sector or type of investing (for instance, socially responsible investing).
In case you're wondering, M1 makes its money through a combination of payments for directed order flow, cash management, and lending securities to short-sellers.
M1 is transparent in its processes for protecting customers' privacy and funds. It never stores your data on any device, and any information is encrypted in transit (between your computer and M1) and at rest (on the servers at M1). M1 also does not store your bank credentials. When you establish the connection to your bank, it is given a token (electronic key) to access your account. You'll also find features such as two-factor authentication and fingerprint unlocking on the mobile app.
M1's platform focuses on making it as easy as possible (and free) to construct a portfolio and then automate it. For that reason, most of the tools and features on the platform are geared toward creating your personalized "pie" of investments. These pies are made up of various "slices," each representing an investment such as an individual stock, an ETF, or even another whole pie. The pie, with all its slices, then becomes the focus for managing your portfolio. M1 has more than 60 professionally designed pies crafted to meet specific goals, such as retirement. You can also create custom pies from scratch, selecting securities from the universe of U.S.-listed stocks and ETFs.
Pie investing takes advantage of the strengths of automated robo-advising along with personalized asset selection and portfolio strategy. Perhaps the most appealing feature of M1 Finance is that you get all this free, as long as you start with the already low account minimums.
M1's platform relies on a nice-looking, single web page experience with easy navigation on a single menu bar. The clean and intuitive interface makes it easy to select your pie slices, bring them together, and then fund them.
With just one web page controlling everything, as well as sensible menu options, you won't get lost on the site. It's also easy to use the platform to find and build investment pies and to screen stocks or ETFs that you might be interested in. The web pages load quickly, and sessions are automatically logged out after a short period of inactivity.
What you won't find on M1's platform are charting tools for technical analysis or data and research resources for conducting fundamental analysis. While the platform is clearly built for long-term investors, as opposed to active traders, some investors may miss the tools and calculators found at other self-directed brokerages.
M1 Finance's mobile app is available free for iOS or Android devices. The app features much of the same functionality and many of the design elements found on the desktop web version. It also applies functions unique to mobile devices, such as push notifications and fingerprint unlock.
The M1 app has much of the same functionality as the web version, so you can manage all of your accounts and investments from your device. The app has received high user ratings - 4.7 stars (out of 5) in the iTunes app store and 4.6 in Google Play.
The cons for the app are similar to those for the desktop experience: There are no interactive charts or research tools. It also lacks an alerts feature.
M1's customer support seems to be receptive and helpful. There are three ways to get in touch with M1: Click on Help in the lower right corner of the page once you've logged into your account, email the support team, or call a toll-free number. M1 support is available from 9 a.m. to 5 p.m. Central time, Monday through Friday except for holidays. M1 says it tries to handle inquiries as soon as possible and no later than the next business day.
M1's customer support receives positive scores from users who have taken the time to leave reviews. It provides easy access to help whether you are an existing customer or just thinking about opening an account. However, it has no dedicated TTY line for hearing-impaired customers and no live chat option. It does have an extensive set of frequently asked questions (FAQs) that you can consult.
M1 provides very little in the way of research or insights for a self-directed platform. While there is some basic market and stock-specific news, and a cursory overview of each stock or ETF available to you, that's about it. You'll need to come into M1 knowing what you want to do if you're not following a prebuilt pie.
You can screen for prebuilt investment pies that match your goals, as well as search for individual stocks and ETFs.
M1 provides no real research or planning tools. You're on your own to do your investing research elsewhere.
For a platform that seeks to court young or first-time investors, M1 offers only meager educational resources. These are largely confined to a set of video tutorials on how to use the platform, along with a small but well-written series of blog posts called "Taking Stock."
M1 users won't find much in the way of formal financial education - there are no online courses, webinars, or e-books. But its well-written blog does provide some investing basics and market insights. If you don't want to educate yourself or lack the time to do your own research, you can always select one or more pre-made "pies" built by financial experts, covering a range of investment strategies and goals.
M1 Finance does not offer any banking services of its own. It is worth mentioning, however, that M1 uses a trusted third-party system to perform external bank account authentication and identity verification, so that the account opening and funding process can be done seamlessly and quickly online without piles of paperwork.
M1 Finance uses fractional shares so that their customers can spend as little as $0.01 in any security. It's important to be aware that the minimum exchange fee for selling a security is $0.02.
M1 Finance can rebalance your portfolio but will not initiate this process without explicit instruction from the account holder. If you would like the holdings of your portfolio to match your target portfolio, then you must initiate this process.
M1 Finance never stores customer data on any device and information is encrypted. Of course, these days nothing is a total guarentee on the internet, but this is the same with any broker.
With M1 Finance the user can create their own custom pie where they choose up to 100 stocks, ETFs, or other pies that are similar to ETFs. This allows for highly customized investing and portfolio building.
With M1 Finance you can open up to 10 additional accounts under the same login. These additional accounts can be created at any time.
Adam's expertise lies in the social studies of finance and technology. He writes about the influence of FinTech on society, including innovations such as Bitcoin & blockchains, RoboAdvisors, and InsureTech. Adam has also written on topics such as behavioral finance, personal investing, financial risk, and derivatives. His past expertise includes more than a decade of professional work on Wall Street as a derivatives trader and private wealth manager. Adam is currently pursuing a PhD in sociology where I study economic sociology and the social studies of finance.
Adam received his Bachelors from Cornell University, his Masters from The New School for Social Research (MA in economics) and is currently attending University of Wisconsin-Madison for his PhD in Sociology.
"Too many people are scared of 'finance' for whatever reason. Finance needs to be de-mystified so that this fear is turned into the ability to recognize and take advantage of economic opportunities through investment, saving, and smart spending."
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