M1 Finance Review

Some of the links included in this post are from our sponsors. Read our disclosure policy.

One of the biggest innovations in investing in recent years has been the emergence of robo-advisors. These robo-advisors have grown in popularity due to their easy-to-use online platforms and their ability to keep expenses low.

Robo-advisors allow individuals to invest with a hands-off approach. Instead of you having to research individual investments and make all the decisions, complex software and algorithms make investment choices for you based on pre-set objectives and risk tolerances.

M1 Finance is one robo-advisor that has taken off in the last year after a decision at the end of 2017 to end trading fees on its platform. The Chicago-based company has about 20 employees, more than 25,000 users and more than $100 million assets under management. It has been registered with the Securities and Exchange Commission since 2016.

M1 Finance technically markets itself as a hybrid robo-advisor and traditional investment broker. It differs from some competitors in that it offers a mix of automated investments with customization options.

With M1 Finance, you can:

  • Open a taxable investment account or IRA.
  • Access more than 4,000 stocks and nearly 2,000 exchange-traded funds (ETFs).
  • Invest according to a pre-set portfolio created by experts, or create your own portfolio.
  • Potentially save money on fees compared to traditional brokerages.
  • Potentially save money on taxes.
  • Avoid the work of periodic rebalancing yourself.
  • Buy fractional shares.
  • Access a line of credit with a low interest rate once your balance reaches $10,000.

M1 is a simple and elegant service that could help many investors achieve their goals and perhaps save money compared to traditional brokerages. But there are some limitations to the service and it may be helpful to have some knowledge of investments before opening an account.



Given that M1 Finance is free, there is little risk to testing out the service, aside from the money you’re investing.

Opening an Account

Getting started with M1 Finance is quite simple. All you need to do is enter an email address and create a password, then enter some personal identifying information.

You will also be asked a series of questions about your financial situation and investment approach. Requested information includes: net worth, liquid net worth (how much cash you have on hand), risk tolerance (low, medium or high), liquidity needs, investment time horizon, and level of investment experience.

The answers to these questions help guide M1 Finance to create the proper portfolio for you.

Funding an Account

Putting money in an M1 Finance account is simply a matter of linking a valid bank account. In my case, I was able to link my main bank account simply by entering my login and password information for the bank.

Once the account is linked, you can enter the amount of money you want transferred. It’s possible to do one-time transfers or set up automatic transfers on a weekly or monthly basis. If you set up weekly or monthly transfers, you have the ability to select the specific day the money will move over.

M1 Finance has a handy calendar view that lets you see when money is scheduled to be transferred in the future. These automatic cash transfers can be adjusted at any time.

Types of Accounts

M1 Finance offers taxable brokerage accounts, plus traditional IRAs, Roth IRAs, SEP IRAs, Rollover IRAs, joint accounts and trusts.

M1 Finance does not offer traditional banking products, such as savings or checking accounts. There are no 401k or 529 savings accounts. Thus, if you have these types of accounts elsewhere, there’s no way to incorporate them into your M1 portfolios.

The Platform

You can access M1 Finance and your portfolios in two ways: the M1 Finance website and mobile app. The mobile app is available for iOs and Android platforms via the Apple Store and Google Play.

Both the website and mobile app are easy to use, with a clean design that is free of clutter. All of your investments can be viewed on a personal dashboard, and it’s possible to make buy or sell transactions on either platform.

Creating “Pies”

The essence of M1 Finance is the creation of investment “pies” designed for specific goals. Each pie can have dozens of “slices” consisting of individual stocks or ETFs.

With M1 Finance, you can select the investments you want for each slice, and determine their size. Each individual holding represents a slice of the pie. So for example, you can create a pie and select “slices” as follows:

Apple stock — 15%

Google stock — 10%

Walmart — 10%

Vanguard Total Stock Market ETF — 50%

iShares Core MSCI Emerging Markets ETF — 15%

With M1 Finance, you are not directly selecting the number of shares of stock or ETFs. Rather, you are setting target weights for each security, and M1 automatically works to maintain that weighting as you invest more money.

It’s possible to add, subtract or adjust slices of your pie at any time.

M1 Finance offers two types of pies: Expert Pies and Custom Pies.

Expert Pies

With an expert pie, you select a pre-set mix of investments based on your risk tolerances and investment horizon. The pies are professionally designed based on proven strategies. So for example, you can select a pie that is designed for a specific retirement date, or a pie devoted to a single industry or sector. The categories of expert pies include:

  • General investing offers pies based on general risk tolerances, ranging from ultra conservative to ultra aggressive. There are seven choices of pies, with between seven and 10 holdings (or “slices”) each.
  • Plan for Retirement focuses on retirement, with target dates in mind. There are 26 pie choices, each with between 16 and 19 holdings.
  • Responsible Investing is for the investor who wants to focus on companies or industries deemed socially responsible. There are two options. The domestic fund has five holdings and an internationally-focused pie has seven.
  • Income Earners has a focus on dividend production and income. There are six pies to choose from in this category, each comprising three to five holdings.
  • Hedge Fund Followers is designed to mirror the performance of some of the nation’s largest hedge funds, including Berkshire Hathaway and Icahn Capital. There are eight pies with seven to 33 holdings each.
  • Industries and Sectors allows you to invest in specific groups of companies, such as aerospace, biotech, financials and real estate. There are 17 different pies to choose from, with five to 17 holdings each.
  • Just Stocks and Bonds is a selection of nine pies, each with just two ETFs. One of the ETFs is focused on bonds, the other on stocks. Allocations for each range from 90 percent bonds and 10 percent stocks, to 10 percent bonds and 90 percent stocks.
  • Other Strategies containssix additional pies that don’t fit into the above categories, including Domestic Growth, Dow Jones, and Global Value.

It’s possible to test out the performance of a pie before adding it to your portfolio. If you create a custom pie, you can view and adjust it as often as you like in the “My Pies” section before adding it to your active investment mix.

It’s also possible to track the performance of individual stocks and ETFs on the Watch List section of the website and app.

Additionally, if you’ve created a pie and want to share it with a friend via email or on social media, you can do so by clicking on the “share” button under the pie. M1 is currently offering a $25 referral fee if someone signs up and funds their account using your pie.

Investment Choices

With M1 Finance, you do not have access to every publicly-traded security. Individual stocks are plentiful, but there is no access to mutual funds. The ETF selection includes those from Vanguard, iShares, SPDR, Charles Schwab and a handful of others

As of January 2019, M1 offered access to 4,242 stocks, which comprises the bulk of companies traded on the major U.S. exchanges. There were,1,948 ETF choices, out of more than 2,200 in existence.

All stocks are listed according to market cap alongside their dividend yield; 1-, 3-, and 5-year returns; and their price-to-earnings ratio.

ETFs are listed with similar information as well as assets under management and expense ratios.

It’s possible to search for stocks and ETFs based on performance, expense ratio, dividend yield, market cap and sector.

All securities available on M1 include comprehensive description pages, as well as a downloaded prospectus from Morningstar.

Buying and Selling

If you want to make a change to a slice of a pie, you can do so by selecting the pie, then choosing Buy/Sell, and then confirming the order details. The interface on the website differs slightly from the one on the app, but the buy/sell process is easy on both platforms.

Orders are not completed right away. Instead, M1 begins processing orders each weekday beginning at 9 a.m. Central Time, and processes them until all are complete. After an order is placed and completed, you will see the trade in the Activity section of your dashboard.

Controlling Your Cash Balance

All deposits and dividends will add to the cash balance of your account. If you have a cash balance in your M1 account, you can control how it’s used. One option is to have M1 automatically reinvest your cash if the balance exceeds $10. Or, you can reinvest if the balance exceeds another amount you set. You can also direct M1 not to reinvest cash at all. You can make changes to your cash balance settings at any time.

M1 Borrow

With typical brokerage accounts, there’s no straightforward way to borrow against your invested money. With M1 Borrow, you are instantly provided access to a line of credit once your balance in a taxable account reaches $10,000 or more. The rate as of January 2019 was 4.25 percent, which is far lower than current rates on mortgages, auto loans, home equity lines of credit, and credit cards.

There is no paperwork to fill out and there are no other requirements (credit score, etc.). You are only charged interest at the end of the month for what you use.

To pay back the loan, all you need to do is click the “Pay back” button and transfer funds from your cash reserve or bank account.

M1 Borrow does come with some risks, aside from the usual warning about borrowing costs cutting into your investment gains. For one thing, if you try to pay back a loan and your cash balance isn’t high enough, M1 will increase your borrowed amount or sell from your portfolio.

Additionally, if you are using the line of credit and your account value falls quickly, you may be subject to a maintenance call. This happens when your equity balance drops to somewhere around 30 percent (though it is not automatic.) When a maintenance call occurs, your account will be frozen and you will be asked to add cash or sell securities.

M1 Borrow has a handy tool to let you know how close you are to a maintenance call by displaying your current equity balance and providing a warning if you are getting close.

M1 Spend

There have long been rumors of M1 creating a bank to go along with its investment service. The company confirmed that an online bank, M1 Spend, is planned. M1 Spend will accept direct deposits, allow you to pay bills, and there will be an M1 credit card. Any “idle” money in your account will go into your investment portfolio.

The company said credit will be lent at lower interest rates than major credit card firms. A launch date for M1 Spend has not yet been announced.

Taxes and M1

Like in any brokerage account, securities sold in a taxable account will be subject to the appropriate capital gains taxes. Dividends will also be taxed.

M1 works to minimize your tax liability through a lot allocation strategy. If you decide to sell from your M1 account, the company will make choices as to which securities to sell first. Using an algorithm, it prioritizes sales in this way:

  • First: Losses that offset future gains.
  • Second: Groups of shares that result in long-term gains.
  • Third: Groups of shares that result in short-term gains.

M1 Finance does not offer automatic tax-loss harvesting. With tax-loss harvesting, it’s possible to save on capital gains taxes by selling securities at a loss to offset those that were sold at a profit, then replacing them with similar securities.

Note: M1 Finance integrates directly with many popular tax software programs, such as TurboTax and H&R Block.


There are no commissions to trade on M1, and the account is free. The company eliminated trading fees from its platform in December 2017. However, all ETFs have expense ratios, usually under 1 percent.

Most investors will not encounter fees, but could see some fees for specific requests. For example, you will be charged $5 for a paper statement. You’ll be charged $20 if you’ve been inactive and your account balance drops below $20 for more than 180 days.

There are also small mandated expenses such as SEC transaction fees and trading activity fees. See the full schedule of fees.

How M1 Makes Money

You might ask yourself how M1 operates as a business if it is not collecting fees from its users. The company makes money in a few ways behind the scenes. First, it loans shares held by investors to short sellers and collects a small fee for doing so.

Second, it collects fees when it distributes certain funds to customers. In addition, it collects interest on any cash holdings you have in your account. It also collects interest from the M1 Borrow accounts.


M1 has a limit of 10 accounts per user. This can be any combination of taxable, individual retirement, or trust accounts.


When opening any kind of account online, there is always risk of personal data being stolen. To protect against this, M1 encrypts all data when it is in transit and when it is on M1’s servers using military-grade, 4096-bit encryption. No data is stored on any devices or computers.

M1 also offers the option of two-factor authentication, in which you log in using a username and password that are sent to you on a separate device.

M1 will automatically log you out after a short period of inactivity. I found the account logged out automatically sooner than many other accounts.

It’s worth noting that you can’t immediately open an account if your credit is locked or frozen. I learned this because I keep my credit locked to protect against identity theft. To proceed with opening an account, M1 requested that I send a copy of an identification card and a piece of current mail.

Because M1 Financial is not a bank, money is not FDIC-insured. Instead, the Securities Investor Protection Corporation protects against the loss of cash and securities up to $500,000. (There’s a $250,000 limit for cash.) However, the SIPC does not protect you for any decline in the value of securities.

Customer Support and Advice

M1 has a comprehensive section with answers to frequently asked questions, and offers support via email and phone. Customer service agents are available from 9 a.m. to 5 p.m. Central Time.

It’s important to note, however, that M1 does not offer investment advice. It’s up to you as an investor to determine how to best allocate your money.

Unlike other brokerages and robo-advisors, there is no algorithm or human advisor letting you know whether you are on track to meet your investing goals. Thus, the service is perhaps not ideal for investors with limited experience and knowledge.


As we stated above, there are a number of robo-advisors that have come onto the investing scene in recent years. Many of them operate under similar principals but have some distinct differences. Key competitors to M1 Finance in the robo-advisor space include:

  • Betterment. Charges a 0.25 percent annual fee and builds customized portfolios based on your risk tolerances and investment goals. It automates tax saving strategies, including tax-loss harvesting. It has more than $13 billion assets under management. (See our full review of Betterment for more information.)
  • WealthFront. This is one of the largest robo-advisors, with more than $10 billion in assets under management. It builds a diversified portfolio of low-cost index funds and uses tax-loss harvesting and other strategies.
  • Personal Capital. While technically not a robo-advisor, it is a paid wealth management service that uses human portfolio managers aided by software.

Pros and Cons

Let’s break down in clear terms the key advantages and drawbacks of M1 Finance.


  • It’s free. You will pay no commissions on trades in M1 Finance, unlike traditional online brokerages. They charge $4.95 or more for every transaction. This means you keep more of your money.
  • Simple, with a clean interface. It’s very easy to get started with M1, and both the website and mobile app platforms are free of noise.
  • You can purchase fractional shares. M1 doesn’t wait until you have enough funds to purchase whole shares. If there is cash in the account, it will be used to buy fractions of shares. This can allow for greater returns over time and makes it a good option for people who aren’t able to invest a lot of money at once.
  • You can choose what to invest in. Traditional robo-advisors remove a lot of the control you have over the securities you buy. So in a sense, you are at the mercy of the advisor to make the right decisions. With M1, you can maintain some control over what goes into your portfolio
  • M1 Borrow. A line of credit is made available to anyone with a balance of $10,000 or more in a taxable account. There are no additional requirements.


  • Limited investment choices. With M1, you don’t have access to the full set of securities available on public exchanges. There are no mutual funds, for example, and the ETF selection is not exhaustive. While the selections are plentiful, this does place a limit on the level of portfolio diversification you can achieve.
  • Not good for active traders. Because M1 executes all trades at the same time once a day, it is not a good solution for those who like to trade more frequently (i.e., day traders).
  • No investment advice. Traditional brokerages might offer the ability to speak with one of their advisors to get some guidance on your investments. M1 has no access to experts. It does publish a blog with information on things like retirement planning, dealing with taxes, or navigating through challenging markets. Much of the content is helpful, but some of it is more promotional. Overall, the investment education and resources at your disposal through M1 are limited.


M1 Finance is a solid choice for anyone looking to invest using a robo-advisor service. Investing with M1 has the potential to allow for long-term portfolio growth with low costs. It also can save investors the time of rebalancing, and there are some tax-savings mechanisms that could help boost your overall returns. However, because M1 Finance is a relatively new company, it’s hard to make a full assessment of how its strategies may fare in the long term.

The use of investment “pies” is a creative way to visualize how assets are allocated in portfolios, and users may like the hybrid approach to robo-advising that offers more control than some competitors.

M1 is not ideal for active traders and those who wish to buy and sell individual shares of stock, and it does not offer access to the full universe of investments. That said, there are plenty of investments available to satisfy the needs of most users.

Newer investors may find there to be a dearth of good investment advice, and may prefer to invest with a company that offers access to a personal advisor.

Given that M1 Finance is free, there is little risk to testing out the service, aside from the money you’re investing.

Have you thought about using a robo-advisor like M1 Finance? If you have invested with one, what were your experiences? Let us know on our Facebook account.


Leave a Reply

Your email address will not be published. Required fields are marked *

Lets connect!

Well Kept Wallet in the press