Betterment vs M1 Finance

Betterment is a registered investment adviser offering automated, goal-based investing in diversified ETF portfolios, alongside self-directed stock and ETF trading and cash management accounts. Its Digital plan builds and rebalances a portfolio automatically and applies tax-efficient strategies like tax-loss harvesting, while its Premium plan adds ongoing access to a team of licensed financial advisors for accounts with at least $100,000. Betterment also offers Cash Reserve, a high-yield cash account, and a checking account with no foreign transaction or ATM fees, both covered by expanded FDIC insurance through partner banks. The company also supports traditional, Roth, and SEP IRAs, Solo 401(k)s, and limited cryptocurrency exposure through ETFs, and is a member of FINRA and SIPC.

M1 Finance is a self-directed brokerage that lets users build custom portfolios, called Pies, from stocks and ETFs, then automatically invests new deposits and rebalances toward each holding's target allocation. M1 does not charge commissions, trading fees, or account management fees for its self-directed brokerage accounts. Beyond investing, M1 offers a High-Yield Cash Account paying a variable APY, and margin loans that let eligible users borrow against their portfolio's value at rates starting around 5.65%, with a $2,000 minimum invested balance required. M1 is available on web, iOS, and Android, with account syncing across all platforms.

• Low-cost automated investing with tax-loss harvesting built in on taxable accounts
• Clear path to human advisor access for larger balances without switching providers
• Combines investing, retirement, and cash management under one account
• FDIC-insured cash accounts with above-average coverage limits through partner bank network

• No commissions, trading fees, or management fees on core self-directed brokerage accounts
• Pie-based portfolio structure makes custom, rules-based investing easier to set up and maintain
• Competitive margin loan rates for investors who want to borrow against their portfolio
• Fractional shares let smaller balances still be diversified across many holdings

• Premium advisor tier requires a $100,000 minimum, out of reach for many smaller investors
• Flat monthly fee for small balances can be a relatively high percentage cost until the balance grows
• Limited to Betterment's model portfolios and fund selection compared to a fully self-directed brokerage

• Trades execute in scheduled trading windows rather than real-time, limiting precise timing
• No access to live human financial advisors for portfolio guidance
• Margin loans and some account types require minimum invested balances to qualify