Investing Reviews

M1 Finance Review: Free Robo Advisor Platform for Investors

M1 Finance is a leading robo advisor, and they can offer you a lot if you want a semi-automatic investment platform. Here's Our Review
Pinterest LinkedIn Tumblr

M1 Finance is a leading robo advisor, and they can offer you a lot if you want a semi-automatic investment platform.

The concept of getting an in-person financial advisor to help you create a good investment plan is quite common but the idea of doing the same thing with a robo-advisor may be completely unfamiliar if you’ve ever thought about it at all. In fact, robo-advisors have built their reputation since 2008 and the technology is said to be the future of the investment industry.

Over the years, the appearance of big names in investment field like Morningstar, Financial Engines, Betterment, Wealthfront or Acorns along with the techno revolution in every aspect of our life pave the way for the rise of robo-advisor technology.

In this challenging setting, a new platform was launched with the aim of filling the gap in the financial investment market yet bringing a meaningful innovation into the financial services industry – M1 Finance.

Visit M1 Finance

So what is M1 Finance and is it worth a try?

This review will give you a tip-to-toe guide of everything you need to know about M1 Finance, so you can decide if it is the right robo for you.

M1 Finance First Glance

M1 Finance, based in Chicago and in business since April 2015, is best defined as a hybrid robo advisor and traditional investment brokerage service.

With robo-advisor automation combined with full-service online brokerage customization and control, M1 Finance offers a free service for individual investors that is hard to match. M1 Finance is nearly unbeatable if you’re looking to create a diversified investment portfolio, and don’t want to pay much to do it.

M1Finance Website

M1 Finance has managed to draw an unprecedented number of investors despite its comparatively short track record. The financial tool currently holds more than 25,000 accounts and more than $100 million in client funds. The average user’s M1 Finance account has around $4,000 in it.

How M1 Finance Works

M1 Finance stands out compared to other robo advisors through an investment process completely controlled in your portfolio, including security options. M1 Finance helps to make it easier for people who want extra support with their investment selection and management.

With the information you offer (age, financial situation, goals and risk tolerance), the system then incorporates a set of algorithms to build a portfolio that meets your requirements. It then buys the assets needed to construct the portfolio. When you add or remove money from your account, your portfolio is automatically balanced by the M1 Finance robo-advisor.

M1 Finance helps manage your ongoing investment flow but it’s completely under your control of how your money is invested.

M1 Finance Features

Pie Investing

The never-cooling-off debate between traditional brokerage businesses and robo advisors for portfolio management can put modern companies under huge pressure, in order to pick one winner model for the future. It’s easily said that robo-advisors are awesome tools and work quite well under many circumstances.


M1 Finance, however, decided to combine both traditional brokerage accounts and robo advisors, the program was created to manage everything as needed. Once you decide to invest with M1 Finance, the system gets you to create “pies.”

A pie can be understood as a group of chosen investments, which can consist of individual stocks, ETFs (Exchange Traded Funds) or even more. It’s also possible to build your own pie, otherwise, you can go with more than 60 prebuilt ones

The pie is the basic tool to manage your portfolio. From this point, M1 Finance will automatically buy the correct proportions of your assets, both when you directly fund your account and when you create additional funds.

Investment Categories

M1 Finance comes with a range of available Pies, including:

  • General Investing – a distributed portfolio focused on your own risk tolerance
  • Plan for Retirement – invest for your target retirement time
  • Responsible Investing – strategies for socially responsible investors
  • Income Earners – a built portfolio focused on dividends and income gains
  • Hedge Fund Followers – follow/imitate investment strategies from some of the most successful investors
  • Industries and Sectors – a range of specific sectors for you to invest
  • Just Stocks and Bonds – designs a diverse portfolio with two ETFs focused on stocks and bonds
  • Other Strategies – additional investment options to help you figure out what works best for you

There are also variations in each of these general Pie groups. The Just Stocks & Bonds Pie, for instance, provides nine different Pies.

You can choose a combination of 10% stocks and 90% bonds, 20% stocks and 80% bonds, and all combinations up to and including 90% stocks and 10% bonds. The dividend yield, historical performance, and risk level are also included in each Pie mentioned.

Expert Pies

M1 Finance Pricing Model

M1 Finance does not charge any of the services listed below. There are no trading commissions, no account maintenance fees, no deposit or withdrawal charges, the entire platform is basically free to investors.

Unique payments are subject to the only charges possible on the free platform. For example, when you open an M1 Finance retirement account and then decide to close the account, you will be charged a $100 account termination fee (this is common at brokerage firms).

You can opt for another option with M1 Plus account for $100 ($125 a year later), which gives you a second daily trading window as well as an interest rate discount if you take out a loan through M1 Borrow. Users will receive additional advantages across all three M1 pillars with M1 Plus.

Customers will receive 1.5% APY, 1% cashback on all transactions, lower APR on loans using M1 Borrow, a second trading period, early access to M1 Spend, and also more. The major drawback of M1 Plus is that it costs $125 monthly, which for the first year is reduced to $50.

That’s a lot of money-$ 4.16 a month in the first year, up to $10.41 a month in the second year.

M1 Finance Pricing

Setting up Your M1 Finance Account

Opening an account with M1 Finance is simple and the process just takes you a few minutes. Go to the site, create your password, then you’ll be directed to the first part of a three-step process:

1. Building Portfolio
2. Creating a Brokerage Account
3. Funding Your Account

The Building Portfolio section introduces you to the concept of M1 Finance Pie. You will decide your portfolio at that sign-up process as mentioned above. You then complete the application process and fund your account once you have created your portfolio.

M1 Finance Signup

How Does M1 Finance Make Money?

M1 Finance makes money in various ways. M1 Finance makes money through other services like a bank offering a free checking account. M1 Finance lends money to the user’s securities and cash held in their accounts.

Lending Cash in Your Investment Account

Remember the cash in your investment account?

This is the first revenue stream for M1 Finance to make money. Imagine M1 Finance as a bank and once you send your money to this bank account, the bank then uses your money to fund loans and earn interest income from those loans in return.

If you think you can count in a free system to make easy money, you may want to think again, there’s no way to make a great deal with little to no effort put forth.

Depending on your choice of a brokerage, you may or may not be earning additional income on it, and because M1 Finance is a free investing platform, there’s no interest offered in your investment account.

So instead of charging you a fee, M1 Finance lends the cash balance to banks and collect interest in the process.

Lending Shares to Short Sellers

Short selling is a complicated topic and we’re not digging into it, and will save the subject for another article.

The key thing you need to keep in mind that short sellers borrow shares in order to bet against them. Said another way, the concept is: an investor borrows shares and sells them at the current market price, hoping they will fall in value.

If they are correct and the shares fall in value, the investor can buy back the shares at a lower price and profit from the change in value. M1 Finance, however, can lend investor-owned shares to short sellers and profit from doing so.

M1 Finance loans less than 5 percent of the total securities kept on the platform to mitigate risk, according to their page. If shares are lent to short sellers, interest is paid to the borrower who is M1 Finance in this case.

M1 Borrow

M1 Borrow is another feature M1 Finance offers to make money. Investors are allowed to withdraw a line of credit portfolio and in exchange, your M1 Finance account investments serve as collateral. M1 Borrowing allows you to borrow at a varying interest rate up to 35% of your M1 Finance account balance.

M1 Finance simply offers a loan to you, and if you don’t make a repayment, M1 Finance can go straight out and sell your investments to cover the debt.

The risk of loaning money from M1 Finance is relatively low, the current rate for M1 Borrow is 3.50%, which is not too high compared to most mortgages, auto loans or even other types of loans. So it’s easy money for them.

M1 Borrow

This is a tax-favored way of borrowing money; you don’t have to sell any shares or pay taxes on any capital gains you might have. You can also exclude interest payments on your personal taxes against your investment income (check with a tax pro for more information).

The other advantage to consumers is that there is no extra paperwork, credit check, or approval process. Available money on request.

Using M1 Borrow gets you to deal with three major risks: interest rates increase, asset value fall, and force a maintenance call, or losses are magnified as a result of leverage. If you take advantage of this feature, make sure you are aware of these risks.

Directing Order

Brokerage accounts such as M1 Finance may earn commission or payment for issuing orders for execution to various parties. The brokerage provides a small payment from various parties for the funneling of orders.

M1 Spend

M1 Spend is another feature that M1 Finance recently launched. It is a checking account and debit card that is directly compatible with your M1 Finance account. They’re offering a free version of this as well as a premium M1 Plus model. M1 Finance can stimulate income by M1 Spending in two available ways:

M1 Finance earns additional revenue on the cash balance held on the M1 Spend checking account, equivalent to money held on the brokerage account.
When you use your M1 Spend or M1 Plus debit card, M1 Finance collects those charges from merchants, called interchange.

M1 Spend

M1 Finance Pros & Cons

M1 Finance Pros

M1 Finance clearly has a lot to offer to people looking for a robo-advisor to help them manage their investments.

M1 Finance is in charge of investments and management, it will work to take your money management to a new level. M1 Finance can be a confusing concept to new investors. But to make smart investments, you don’t need to be a financial expert.

  •  M1 Finance works to simplify investments.
  • Investors can choose from hundreds of expert pies produced by financial experts.
  • Depending on their risk tolerance, a robo-advisor attempts to maintain a perfect balance for investors.
  • The pie investment approach allows you to monitor your investment strategy and work towards your goals with ease.
  • A custom pie is another option. Custom pies make your investment portfolio and asset allocation more regulated.
  • M1 Finance’s excellently-designed apps offer benefits as well.

No matter you choose the free standard account or the M1 Plus, you can have different features and benefits which meet your own needs.

M1 Finance Cons

You should consider some downsides before deciding whether M1 Finance is the right investment tool for you.

  • Tax-loss harvesting (TLH) is one of the most pressing concerns among investors. Essentially, TLH is a practice used in a portfolio to offset income and earn taxes without any significant shifts. Platforms providing TLH will sell securities that have sustained a loss and replace them with different options to keep a portfolio stable while lowering taxes.
  • Because of TLH’s quality, it is a standard feature provided by many robo-adviser platforms. But with M1 Finance, they do not offer TLH and this fact is a dealbreaker for investors.
  • Another point to consider before giving M1 Finance a go is that its investment options are limited. Although you are allowed to invest in ETFs and individual stocks, you can’t buy any mutual funds. If you expect to manage external investment with M1 Finance platform, you may want to have a second thought since it’s hardly possible.
  • Goal-setting is also a thing to look for as the platform offers little help with this feature.

M1 Finance is not marketing itself as an advisory agency. In reality, M1 is an automated investment system designed to manage the ongoing portfolio you construct, you are expected to know what your goal is and what you’re going to do to achieve it.

M1 Finance Alternatives


Recognized as one of M1 Finance’s strongest rivals, Betterment is another automated platform for investors. M1 Finance and Betterment are both highly rated robo-advisors, however, there are a couple of key features on structure and portfolios which set them apart.

Betterment builds a portfolio based on your specific needs and goals from scratch. That tailor-made service comes at a low annual fee of 0.25%. In comparison to M1, Betterment provides personalized advice based on your interests, risk tolerance, and needs.

If you’re someone who prefers to get help and guidance through a talk to an advisor, Betterment could be a great investment platform for you.

M1 Finance and Betterment have different features that will make them a better fit for different markets. While M1 lets you borrow against your portfolio, which is more appealing to the risk-tolerant crowd, the account opening procedure and goal evaluation at Betterment is clearly aimed at less experienced investors who might benefit from more financial assistance.

Betterment and M1 Finance are both designed to be highly user-friendly and cost-effective. To newcomers and seasoned investors alike, both are good platforms. You probably need to pay a small fee to access Betterment features and it may be worth considering this platform as there’s a lot of useful features for you to try.

Best Robo Advisors

Read: What are Robo Advisors & Which are The Best Ones?


Wealthfront offers entirely digital investors for a very competitive price if you are looking for financial advice and don’t expect to get it from a human.

The target-setting and planning technology from Wealthfront looks great and should create a precedent for other robo-advisors to follow. Plus, getting started with Wealthfront gives you access to Path, the free financial planning tool that integrates your account data and uses data from third parties to better anticipate your financial situation in the future.

Wealthfront is where preparation and monitoring targets shine. Your dashboard shows all your assets and liabilities, giving you a quick visual check-in on the probability that your goals will be achieved.

Automatic deposits are easy to set up with Wealthfront as your bank account is linked in the process of onboarding.

Wealthfront seems to be making a strong push to merge all its money products with its Self-Driving Money model into a single platform where you deposit your pay into the network and manage your finances for you. This service is not yet up and running, but as part of the next major launch, it is a primary focus for the company.

Like many of the low-cost robo-advisors, in terms of customization, Wealthfront doesn’t give you a lot of choices. You’re looking at the wrong option if you want to pick your own stocks.

Wealthfront is more than up for the job, though, if you want to make regular deposits to a portfolio and not think about it. The planning tools are fantastic and definitely worth looking at, even if you have no plan in funding your account.

Is M1 Finance Right For You?

Making investments is not a game for everyone and so investing with a platform like M1 Finance could make a lot of sense.

Many people can benefit from using M1 Finance to set up a portfolio of investments. The tool is a great fit for not only those who want a robo-advisor to handle their investments, but also those who want to have near-complete control over their portfolio.

The platform is a great solution for new and hands-off investors who make their first step in investment and determine to go for a long-term goal. You can still make choices about how the funds are distributed. M1 Finance is doing a lot for a little bit of money and covers what a lot of investors need.

You don’t have to worry about moving investments around your portfolio or changing them all the time. Yet, at the same time, your portfolio is organized and distributed along the lines that suit your investment style.

For individuals interested in a passive investment strategy, M1 Finance is perfect. Unfortunately, for active traders, M1 Finance probably isn’t the best. You may want to look elsewhere if you’re a day trader interested in regular market trading.


M1 Finance is one of the most attractive algorithmic platforms for investment in recent years and could make a big difference in your financial life.

The investments that go into your portfolio can be customized in order to meet your requirements. The platform manages your accounts on a daily basis, including regular rebalancing. Moreover, M1 Finance is basically free to use with no broker charges or commissions.

M1 Finance has some parallels with Motif Investing in a single motif portfolio of up to 30 stocks / ETFs. Motif is looking for more active traders, while M1 is primarily for buy-and-hold investors who prefer to choose their own investments.

At the same time, it allows you control over your assets without the burden of managing the portfolio.

It would be a big improvement if M1 Finance permitted investment in mutual funds, offered tax-loss harvesting and retirement planning tools. But overall, M1 Finance is worthy of consideration apart from those three missing pieces.

Visit M1 Finance

M1 Finance


Ease of Use






Customer Support





  • Free to Use
  • No Minimum Deposit
  • Excellent App
  • No Trading Commissions
  • Fractional Shares


  • No Tax Loss Harvesting
  • No Mutual Funds

Nicholas is an experienced Finance Journalist who has written for a number of prominent online publications. He grew up in Ann Arbor, Michigan with a father that would read him the Wall St. Journal along side of other bed-time fare. He has traveled extensively, and been lucky enough to study a changing global economy in person. Nicholas spent many years in the Southern Cone of South America, sometimes in the middle of the countryside where livestock starts its journey to all points of the globe. Today he is thoroughly bemused with the stance that Central Banks have taken in the wake of the 2008 meltdown. There is no telling what will come out of the global financial system next, but he is glad that he lives somewhere that gold can be bought and sold readily!