M1 Finance Review: The ultimate Robo-Advisor

M1 Finance is a financial company that makes it easy to get started investing. The company launched in 2015.

I recently started using M1 Finance for our Roth IRA accounts, and I love it so far!

Throughout this article, I have several links to M1 Finance that use my referral code. I get a small kickback when you sign up and fund your M1 Finance account, but it doesn't cost you anything extra. I personally use this service, and I would not recommend it unless I believed in their product.

What is M1 Finance

I found out about M1 Finance 3-4 months ago. Since then, I've spent quite a bit of time researching their system, and I recently set up two Roth IRA accounts that we will be funding every month going forward.

Below is a break down in the different services provided by M1 Finance.

M1 Invest

The main focus of M1 Finance is to make it simple to start investing. M1 Finance is a robo-advisor that handles automatic selling and buying of stocks and funds. You sign up for an account, and either select from a pre-configured pie based on risk tolerance, or create your own custom pie.

If you create your own custom pie, you can select from many ETF's or individual stocks. You can even use a pre-configured pie and customize it (known as expert pies). You define the percentages to use for each investment in your pie.

What separates M1 Finance from other Robo advisors?

  • No management fees. The only fees you will pay are the expense fees for the investments in your pie. As your account grows, this could save you thousands of dollars.
  • You have much more flexibility in deciding which funds or stocks to invest in.

With that said, there is a $100 termination fee when you close a retirement account. But that is pretty standard among most brokerage accounts.

In addition to their investment product, they have a few additional offerings.

M1 Borrow

M1 Borrow allows you to borrow against your investments, also known as borrowing on margin. In other words, M1 Borrow gives you access to a line of credit account.

You can borrow up to 35% of your taxable investment portfolio using M1 Borrow. Rates range from 4.25% to 4.0% (if you have an M1 Plus account). You need to have a taxable investment account with at least $25,000 to tap into this feature.

You can use these funds however you want. Pay down other debts, use an emergency fund, or invest the money back into M1 Finance. I haven't used this service, but it does look powerful.

Just keep in mind that this does open yourself up to some risks in accruing debt that might be hard to pay back, especially during a market downturn.

M1 Spend

M1 Spend is an FDIC-insured checking account that has a few unique features. The main benefits require an M1 Plus membership (see below).

  • 1.5% APY
  • 1% cash back on purchases
  • $0 minimum account balance
  • ATM Reimbursement: 4 times per month

There is a free option, but it doesn't include earning interest, cash back, and you only get one ATM reimbursement per month.

Considering this is a checking account, this appears to be an excellent option. This feature looks more like the benefits you would get from a credit card account or savings acount, without the risks of going into credit card debt.

As of the writing of this article, M1 Spend is still marked as “coming soon”. I couldn't find any information on exactly when M1 Spend will launch.

M1 Plus

As of writing this article, an M1 Plus membership costs $100 for the first year, and then $125 per year after that.

The M1 Plus membership gives you access to the premium features of M1 Spend, which include earning interest and cash back. But you also currently get a lower rate (-0.25%) with M1 Borrow.

In addition to the above, you also get access to a second trading window.

From my end, the main benefit of M1 Plus comes with their M1 Spend service. You can easily cover the annual fee if you have a significant balance in your checking account and spend money using their debit card. You also get access to a premium quality card.

How does M1 Finance make money?

Especially considering M1 Finance does not charge any fees for investing, a big question is how does M1 Finance generate revenue?

From what I can tell, these are the main ways M1 Finance makes money:

  • Interest on loans provided by M1 Borrow
  • Once the M1 Spend service launches, they will make money on the M1 Plus membership (annual fee)
  • Interest on cash balances

They argue that most brokerages only make about 10-30% of their revenue from commission and management fees. They figure they can focus on the primary moneymakers and pass on the savings to their consumers.

Getting Started with M1 Finance

Signing up for an M1 Finance account is easy, and you don't have to deposit funds to get started.

To fund an account, your initial deposit needs to be $100, or $500 for a retirement account.

Connecting your bank account is a simple process. M1 Finance uses a 3rd party tool to authenticate you directly into your bank (which is 100% encrypted) and speeds up the account verification process.

The most complicated part of getting things set up is figuring out which expert pie you will use, or creating your own. If you want to go with the easiest setup option, you can select from different expert pie categories. This is how the General Investing category looks:

M1 Finance: Expert Pies

Unless you want to get into the weeds, or if you're going to go with an ultra-simple structure, the expert pies are a great option.

This M1 Finance Review is a great resource that covers more details on the full signup process.

Benefits of M1 Finance

Outside of the other account types (M1 Borrow and M1 Spend), their investing platform seems to have most of the benefits of the other robo-advisors, with additional flexibility in where you can invest and NO MANAGEMENT FEES.

M1 Finance Account Types

You can have multiple investing accounts in your M1 Finance account. These accounts include:

  • Individual Brokerage Accounts (taxable)
  • Roth IRA
  • Traditional IRA (which can include rollovers from a 401k)
  • Other accounts

The only major account I noticed that was missing was not having access to a 529 account. But outside of that, they have the main account types covered.

Fully Configurable Pies

M1 Finance gives you a ton of control on how to invest your money for each account. They do this by giving you the ability to create a “pie” for each account.

M1 Finance: Pie

You can define the percentage each stock or fund takes up in each pie.

Each “slice” of the pie can be individual stocks/funds or other pies! This offers an extreme level of customization that is intuitive to create and manage.

But this customization is only optional. You also have access to 100 expert pies that range in being aggressive, to more risk-averse.

Once you create a pie, you can easily change the funds and allocations:

M1 Finance: Change Allocation

When I created my Roth IRA account, at first, I had it split between the Vanguard Total Bond Market ETF (BND) at 10% and Vanguard Total Stock Market (VTI) at 90%. I decided that since I won't be touching this account for a while, that I would prefer a more aggressive allocation. So I switched it to 100% VTI. It took some time to get used to their interface, but it makes sense once I figured it out.

I've used Betterment, and I do think there service and interface are top-notch. But I felt restricted. This is not the case with M1 Finance.

In my case, I am only using index ETF funds. But you have the option in creating your own custom pies, made up of whatever individual stocks or funds you want.

The amount of flexibility M1 Finance provides, as an option, is insane. You can create your own custom pies, and integrate them as “slices” in other pies. Take a look at this custom pie someone made as an example.

I could see myself dedicating a portion in certain accounts to individual stocks. I wouldn't want to go crazy with this, but it might be a fun option in the future!

Fractional Shares

Some brokerages where you buy ETF funds, you need to buy full shares.

This is not a restriction with M1 Finance. You can deposit how much money you want, and know that the full amount is getting invested. They do have some settings that allow you to control when M1 Finance should transfer from cash to your pie (default setting is to do this automatically when there is at least $10 cash).

M1 Finance: Cash Balance Control

This is a great feature as you don't need to have cash sitting around waiting to be invested until you can buy a whole share. Your money gets into the market earlier and allows everything to be 100% automated. Their settings also provide a way in setting up a system where you auto-withdrawal every month, which can include cash from dividends.

Part of the reason I had gone with Vanguard in the past was the ability in setting up auto deposits into a mutual fund. But now I don't have to worry about that!

You also know that your pie configuration will be matched 100% as you deposit funds since they don't have to buy full shares.

Automatic Deposits

With M1 Finance, you can easily define a schedule to deposit funds into any of your accounts automatically.

This feature is excellent news, especially when you want to put your finances on autopilot. It is a great way to pay yourself first and saves time managing your accounts.

As deposits are made into your M1 Finance account, it will auto re-balance in trying to get the allocation to match your pie (which is a setting I brought up above). If you are investing regularly, you can rest easy knowing that M1 Finance is working towards keeping your set risk tolerance defined in your pie.

We set up two Roth IRA accounts: one for myself and one for Andrea. We created an automatic deposit of $500 for each account that will get triggered on the 1st of each month.

M1 Finance: Automatic Transfer

Having the flexibility in depositing funds on your schedule is a great benefit. However, this is pretty common with most of the robo-advisors I've used and is not unique to M1 Finance.

When you make a deposit, it will buy the stocks/funds in a way that matches your pie allocation. So as they go up and down, if you are making auto deposits, that will help keep things balanced.


In addition to the security you would expect from a financial company, you also have the option to enable two-factor authentication.

When enabled, you will need to get the generated time-sensitive code either from Google Authenticator, Authy, or a similar app on your phone to log in. Two-factor authentication is much more secure than just logging in with a username and password. And the two-factor authentication works great with Personal Capital.

I'm bothered by every financial account I have that doesn't have two-factor authentication, and I was thrilled to see this feature included with M1 Finance.

Mobile App and Website

The M1 Finance mobile app and website is top-notch. I found everything to be incredibly user-friendly and sleek. Especially when you compare their interface to Vanguard.

Their mobile application supports logging in with face recognition (on my iPhone). From what I can tell, most of the features that exist on the website are present in their mobile application.

Negatives of M1 Finance

M1 Finance has a ton of benefits to their service. But it does have some downsides.

Tax Loss Harvesting

If you have an after-tax investment account with M1 Finance, you will not have access to automatic tax-loss harvesting.

However, their system is set up for tax efficiency. Tax efficiency means they try to make trades that benefit your tax situation the most: selling losses that offset future gains and selling funds that are considered long-term capital gains (which means fewer taxes) when you do withdraw.

Tax-loss harvesting will be a non-issue if you only have retirement accounts in M1 Finance (Traditional, Roth IRA, etc.). However, if you do have an after-tax investment account, and are going to be investing for an extended period, you might lose on some tax benefits. With that said, you can always manually sell your funds to trigger a tax-loss, but you will have to be careful in avoiding the wash sale rule.

Personally, if I find myself having a sizeable after-tax investment account, and notice that the market is significantly low, I plan on manually selling the assets and buying another fund that avoids the wash sale rule, with something relatively close to what I had. It does require some manual effort, but I don't think this will be a common occurrence.

Since this is a fairly significant feature lacking in M1 Finance, know that you are also saving money by not having to pay any management fees. As your account balance grows, this becomes a more significant issue and covers some of the downsides of not being able to harvest your losses.

No Mutual Funds

You have access to more than 6,000 stocks, funds, and bonds, but you do not have access to mutual funds. I don't think this is a huge negative, but if you are dedicated to investing only in mutual funds, M1 Finance is probably not for you.

If you do have a list of funds you are sure you want to use, I would suggest creating an M1 Finance account. Before you deposit any funds, click on the Research tab and make sure they have your fund. In most cases, they should have what you are already using.

No Insights Outside of M1 Finance Accounts

M1 Finance does not provide a way to link up your other investment and retirement accounts.

However, I have connected my M1 Finance account to Personal Capital, which gives me an extensive view of my overall allocations. I find this suits my purpose, but if you are looking for an all-in-one solution, you might want to look at other options.

No 529 Accounts

You won't be able to save for your child's future education (or your education) by opening up a 529 account.

Best for Passive Investors

If you are looking for a system that makes it easy to day trade, M1 Finance is probably not the best option.

Their tools and systems are meant to give passive investors control over their allocation, and make it simple in setting up automatic transfers. You can change your pies at any timeā€”it just isn't as intuitive if you are going to be making changes daily.

M1 Finance is Only Available to the U.S.

If you live in another country, unfortunately, you can't use M1 Finance. If you are a U.S. citizen, with a U.S. mailing address, and are at least 18-years old, you can create an account.

M1 Finance is a New Company

Considering how new M1 Finance is, there is a risk that the company could go under.

Or what I consider the most likely scenario is they start charging a fee for investing with their service. Until the company has been around for a few more years, we won't know for sure if their business model is sustainable. But given the popularity of their service (they currently manage over $500 million in assets), and how fast they are growing, I'm hopeful they will continue to grow.

It is worth mentioning that M1 Finance did launch by charging a fee for investing (0.25%), but they removed that fee in December of 2017.

They aren't nearly as popular as Betterment or Wealthfront yet, but I could see this changing over time.


M1 Finance is an excellent option if you are focused on being a somewhat passive investor. Their no-fees platform will save you money and partially makes up for their lack of automatic tax-loss harvesting.

The ability to being able to choose your stocks and investment funds sets their service apart from the other robo-advisors.

Is their service a little more difficult to use compared to Betterment? Yes, but not by a considerable margin. You can easily select from their expert pies if you want to set up something quickly.

At this stage, I plan to primarily focus on investing using M1 Finance (outside of my 401k).

Have you used M1 Finance? How have you liked their service?

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