M1 Finance vs. Betterment: Which Should You Choose?

Paid non-client of Betterment. Views may not be representative, see more reviews at the App Store and Google Play Store. Learn More about this relationship.

Betterment and M1 Finance digital investment advisors have more differences than similarities, which may simplify the decision of which investing platform is best for you. Both are among our top picks, with Betterment winning the categories best for beginners, best for cash management, best for tax-loss harvesting, and best for crypto, and M1 Finance winning best for sophisticated investors.

Betterment is one of the oldest robo-advisors and follows the index fund investment approach with rebalancing and tax-loss harvesting. Betterment Premium adds unlimited financial planner meetings. M1 Finance, in contrast, assumes a degree of investor knowledge and provides dozens of prebuilt investment portfolios along with individual stocks and ETFs. M1 Finance sees itself more as an automated investing solution than a true robo-advisor. We'll look at these two very different digital investment solutions and help you decide which one is a better fit for your portfolio needs.

Open an Account

• Account Minimum: $0, $10 minimum to start investing. $50 minimum for rebalancing.
• Fees: 0.25% (annual) for investing plan accounts with at least $20,000 or at least $250 per month in recurring account deposits. Otherwise, the fee is $4/month. 0.65% (annual) fee on accounts with at least $100,000 in assets for Betterment Premium account holders with unlimited access to certified financial planners. There are no management fees for Betterment Checking or Cash Reserve. Balances over $1 million automatically receive progressive fee discounts.

Read full review

Open an Account

Open an Account

• Account Minimum: $100 ($500 minimum for retirement accounts)
• Fee: A $3 monthly platform fee for clients with minimum balances of less than $10,000 in their total aggregated M1 accounts.

Read full review

Open an Account

Account Setup

Betterment

Betterment is a breeze to launch. Simply create a login and password, then add personal details like address and Social Security number. Next, complete the brief initial questionnaire which considers goals, time frame, and risk level. Based on the questionnaire responses, you’ll receive a personalized asset allocation within your chosen portfolio strategy, comprised of U.S. and international stock and bond ETFs. You must create an account before you can view your portfolio.

Users select their desired portfolio from a variety of options, including fixed income, smart beta, and ESG-focused portfolios. They can also adjust the recommended asset allocation Betterment provides.

With $10 to start, small investors can begin investing immediately. The opportunity to view investment choices before funding is an advantage, although you need to create an account first.

Those with $100,000 or more can choose Betterment Premium, which includes unlimited access to certified financial planners (CFPs). Phone representatives, available on weekdays, can also assist with basic questions but are not licensed to provide investment or tax advice.

M1 Finance

M1 Finance has a quicker setup than Betterment because there’s no initial questionnaire. Create a username and password to begin the onboarding process.

M1 Finance assumes that you understand the type of portfolio you’re seeking. So the crafting of a portfolio is in your hands. You’ll have the opportunity to choose from thousands of stocks and ETFs along with many prebuilt and customized portfolio options. Portfolios are called “Pies” and can include up to 100 slices of individual stocks, ETFs, and customized portfolios.

Potential M1 Finance clients can explore the platform without funding an account. You need $100 to open a brokerage, custodial, or trust account, and $500 for individual retirement accounts (IRAs). M1 Finance doesn’t offer financial advisors.

M1 Finance combines self-directed brokerage features with pre-built portfolios and automated portfolio management capabilities. M1 Finance does not provide advisory services and therefore is not considered a traditional robo-advisor.

Account Setup Verdict: Betterment

Overall, the account setup is painless with either Betterment or M1 Finance. We are giving Betterment the edge on account setup solely because you can start investing with very little capital.

Account Types

Betterment

• Individual taxable
• Joint taxable 
• Traditional IRA 
• Roth IRA
• 401(k) rollover IRA
• Simplified employee pension (SEP) IRA 
• Trust
• 529 plan (through Betterment at Work)
• High-yield cash account
• Checking account

M1 Finance

• Individual taxable
• Joint taxable 
• Traditional IRA 
• Roth IRA
• 401(k) rollover IRA
• SEP IRA 
• Custodial (available to M1 Plus users)
• Trust
• High-interest savings (higher yields for M1 Plus users)
  

Account Types Verdict: Tie

Both Betterment and M1 Finance offer the most commonly used account types. That said, if you’re a parent seeking a custodial account, then M1 Finance is the only option. M1 Finance also offers an IRA concierge for onboarding help. Retirement investors with less than $500 to invest may prefer Betterment, however, as it requires just $10 to start investing.

Account Services

Both Betterment and M1 Finance offer auto deposits and free withdrawals, as well as cash management services. Both platforms also offer a premium level with added services for an additional fee, although the services are distinct.

Betterment

Betterment Premium customers with $100,000 or more in assets have unlimited access to CFPs for a fee of 0.65% of assets under management (AUM). This management fee is lower than the average 1.00% fee charged by traditional financial advisors.

Betterment offers two cash accounts. This stands out among digital investment managers, which typically offer only one cash management option. The Cash Reserve cash account and checking accounts are available separately from the Betterment investment accounts. The checking account, offered through nbkc bank, includes an ATM and Visa debit card, while the high-yield Cash Reserve account provides higher-than-average interest rates. Users also can set up automatic funds transfers for specific goals from their checking account, as well as direct deposits.

M1 Finance

M1 Borrow is the loan option available at M1 Finance. Betterment does not provide margin or other lending features. The M1 Plus premium service costs $36 per year and includes additional benefits. For example, Plus users can access an additional daily trading window, higher savings account interest, and lower-margin interest rates. The Owners Reward card is available to all users and provides up to 10% cash back for spending with companies whose stock they own.

Account Services Verdict: Betterment

Which platform you prefer depends upon the account services you’re seeking. If you want access to margin and a credit card, then M1 Finance can do the job. However, If you’re seeking a complete cash management option and checking integrated with your investment account, then Betterment is the better option.

Cash Reserve offered by Betterment LLC and requires a Betterment Securities brokerage account. Betterment is not a bank. Learn More.

The Betterment Visa Debit Card is issued by nbkc bank, Member FDIC. Betterment is not a bank. Account is FDIC insured up to $250K through nbkc bank, Member FDIC. FDIC insurance only covers the failure of an insured bank.

Goal Planning

Betterment

Betterment is a top firm in the digital investment management space, offering flexible goal-planning features. Clients can set multiple goals and choose separate asset allocations for each goal type and timeframe. For example, your retirement will usually have a longer time horizon and more aggressive asset allocation than your home down payment or upcoming vacation goals. Betterment also auto adjusts allocations to portfolios that become more conservative as you near the time when you will need the money.

Moreover, the Goal Forecaster tool helps you calculate approximately when you’ll achieve the goal and guides you to adjust the portfolio to increase your likelihood of success.

M1 Finance

M1 Finance assumes that you can handle goal planning on your own. Its nod to goal planning is the wide variety of articles on the M1 Finance blog, which spans a range of financial education investing topics. Beyond that, M1 Finance lacks any specific goal-planning features.

Goal Planning Verdict: Betterment

When it comes to goal planning, there’s no comparison between Betterment and M1 Finance. Goal planning is Betterment’s forté, while M1 Finance leaves this aspect of investing to the user.

Portfolio Construction

Betterment

Betterment's portfolios include Core, ESG/Socially Responsible, Smart Beta, Innovative Technology, and Income Portfolios. The Core portfolio provides typical market-cap weight diversified U.S. and international stock and bond ETFs. It includes value and small-cap equity funds which outperform the broad stock market index during long time periods, according to factor research. Betterment also includes an international bond ETF in its fixed-income holdings.

Betterment investors looking for alternate investment style options might consider the Goldman Sachs Smart Beta, BlackRock Target Income, Flexible, or three ESG portfolios. In addition, similar to full-service investment platforms, Betterment Cash accounts offer the opportunity to save for emergencies and short-term goals.

Some customization is allowed through Flexible portfolios. These enable you to tweak asset class weightings and access other asset classes that aren’t in the Core portfolio, including commodities and REITs.

Betterment offers one crypto ETF portfolio. On top of this, Betterment has also introduced a Value Tilt portfolio in 2024 that looks for undervalued companies in the U.S. to try and outperform over the long term, bringing yet another option for investors.

M1 Finance

Although we consider M1 Finance a member of the digital investment advisory space, it also has features common to self-directed brokerage accounts. Investors can choose from different prebuilt Expert Pies with multiple investment strategies including, hedge fund-like styles, socially responsible investing, income portfolios, and more.

M1 Finance users also can choose from over 6,000 stocks and ETFs to invest in, for a Custom Pie or to add to an Expert Pie. The screening tool helps investors find securities that meet specific criteria. M1 Finance will rebalance your Pie to keep the allocation percentages consistent as funds are added or withdrawn.

Available Assets