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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.
- 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. For accounts with at least $2 million, there is a fee discount of 0.10%.
Key Takeaways of Betterment
- Provides excellent goal-setting and tracking, plus integration with outside investment accounts
- May be ideal for clients seeking digital investment management and financial planning guidance
- Four sustainable ESG portfolio options, a smart-beta portfolio, a value tilt portfolio, and an income portfolio provide strategies for different types of customers
- No account minimum ($10 to start investing)
- Account Minimum: $100 ($500 minimum for retirement accounts)
- Fee: A $3 monthly platform fee for clients without an M1 Personal Loan or clients with minimum balances of less than $10,000 in their total aggregated M1 accounts.
Key Takeaways of M1 Finance
- Many prebuilt portfolios offer a range of strategies for investors with various goals including retirement, income, and hedge-fund investing
- Savings account and lending are available
- Higher yields and lower borrowing rates for M1 Plus clients
- Screeners enable targeted stock and ETF selection
- No tax-loss harvesting or financial advisor access makes M1 better for knowledgeable investors
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 1.0% 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 cashback 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 is only available to clients of Betterment LLC, which is not a bank, and cash transfers to program banks are conducted through clients’ brokerage accounts at Betterment Securities. For Cash Reserve (“CR”), Betterment LLC only receives compensation from our program banks. Betterment LLC and Betterment Securities do not charge fees on your CR balance.
Checking accounts and the Betterment Visa Debit Card provided and issued by nbkc bank, Member FDIC. Checking is made available through Betterment Financial LLC. Neither Betterment Financial LLC, nor any of its affiliates, is a bank. Betterment Financial LLC reimburses ATM fees and the Visa® 1% foreign transaction fee worldwide, everywhere Visa is accepted.
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 four 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
| Betterment | M1 Finance | |
| Individual Stocks | No | Yes |
| Fixed Income | ETFs | No |
| REITs | Yes | Yes |
| Socially Responsible or ESG Options | Yes | Yes |
| ETFs | Yes | Yes |
| Non-Proprietary ETFs | Yes | Yes |
| Mutual Funds | No | No |
| Forex | No | No |
| Crypto | Yes | Yes |
Portfolio Customization
Betterment
Betterment users can adjust their asset allocations if they don’t agree with the allocations they’re offered. The Flexible portfolio option opens up more asset classes, although the investing is still done through funds. That said, Betterment doesn’t offer the ability to add additional ETFs or other assets to its existing options to the same extent as M1 Finance does.
M1 Finance
M1 Finance is one of the most customizable digital wealth management platforms that we reviewed. In addition to accessing the customized prebuilt portfolios, users can modify their Pies by adding individual stocks and ETFs. You choose the percentages for each investment in accordance with your personal risk tolerance and goals. This does, of course, require investment knowledge to ensure that your choices aren’t overly conservative or aggressive.
Portfolio Customization Verdict: M1 Finance
Overall, M1 Finance provides much more in terms of portfolio customization.
Portfolio Management
Betterment
At Betterment, rebalancing occurs automatically when assets deviate above or below the desired asset allocation percentage and your account meets the minimum balance threshold. You can also link outside financial accounts to view and analyze your investments holistically. Betterment will offer suggestions based on all linked accounts, but the portfolio asset allocation is crafted without considering the outside assets.
M1 Finance
After setting up your asset allocation at M1 Finance, the platform will rebalance your Pie when funds are deposited or withdrawn. You can also initiate a rebalance manually. In addition, M1 Basic supports one trading window in the morning. M1 Plus members with over $25,000 can place trades during a morning and an afternoon trading window.
Portfolio Management Verdict: Betterment
While both M1 Finance and Betterment offer automated rebalancing, Betterment’s is initiated on rules-based movements while M1 Finance only rebalances when funds are added or removed from the portfolio (unless you conduct a manual rebalancing). Betterment also adjusts the portfolio over time as a goal approaches to ensure that you are in a more conservative position when you need the money.
Tax-Advantaged Investing
Both Betterment and M1 Finance offer tax-advantaged retirement accounts, but the support for taxable accounts is different.
Betterment
Betterment offers tax-loss harvesting to customers who meet certain criteria. This strategy offsets capital gains with losses to minimize tax payments. Betterment’s tax-loss harvesting methodology seeks to maximize tax savings by constantly monitoring for tax-saving opportunities.
Customers who choose to enable Betterment’s Tax Loss Harvesting+™ feature will have a powerful, fully automated tool at their disposal. One way this feature works is by utilizing dividend reinvestments and regular rebalancing activities. The other, in a process that is also part of Betterment’s tax minimization strategy, is to use any withdrawals made by its customers as opportunities to sell off any losses. The subsequent rebalancing will position the portfolio through substitutions to further lessen the tax burden.
M1 Finance
M1 Finance doesn’t have a tax-loss harvesting feature but does strive to minimize taxes when withdrawals are made. The platform does this by prioritizing sales in order of the lowest tax burden to the highest and selling in that order. This is similar to Betterment’s user-triggered tax-loss harvesting, but not backed up by seeking ongoing tax-loss harvesting opportunities.
Tax-Advantaged Investing Verdict: Betterment
Betterment has a clear edge in tax-advantaged investing thanks to its tax-loss harvesting methodology.
Betterment is not a licensed tax advisor. Tax Loss Harvesting+ (TLH+) is not suitable for all investors and is subject to certain conditions. Read more at https://www.betterment.com/legal/tax-loss-harvesting and consider your personal circumstances before deciding whether to utilize Betterment’s TLH+ feature. Investing involves risk. Performance not guaranteed.
Key Portfolio Management Features
| Betterment | M1 Finance | |
|---|---|---|
| Automatic Rebalancing | When allocation deviates from target and when the account meets the minimum balance threshold | When funds are added to or withdrawn from the account or at user’s discretion |
| Reporting Features | Monthly and tax statements available; goal progress viewable online | Monthly and tax statements available |
| Tax-Loss Harvesting | Yes | No |
| External Account Syncing/Consolidation | Yes, automatically updated after syncing (only for accounts connected via Plaid, not for manually-added accounts); not included in asset allocation, only for analysis | Limited; only bank accounts |
Security
When it comes to security, Betterment and M1 Finance are evenly matched. Both enable top-level financial institution-grade security protocols. They provide two-factor authentication, Securities Investor Protection Corporation (SIPC) insurance for securities, and Federal Deposit Insurance Corporation (FDIC) insurance for cash accounts through program banks.
Security Verdict: Tie
Your money is safe at either of these investment platforms. It is important to note that insurance and security features protect against company failure and infiltration attempts. They do not protect against market volatility which can result in lower account values.
User Experience
Desktop
Betterment and M1 Finance offer user-friendly websites and easy access to most platform screens. You can typically find what you’re seeking within a click or two from the home page. Betterment clients also can monitor and adjust planning goals from the dashboard.
Mobile App
Betterment and M1 Finance mobile apps provide functionality nearly identical to their respective websites. In general, users report favorable experiences on each, with the occasional technical problem such as difficulty linking accounts. Each of these well-regarded platforms enables users to do nearly anything on mobile that they can accomplish on the desktop version.
Customer Service
Access to customer service is nearly identical at Betterment and M1 Finance. The exception is the later weekday phone hours at Betterment. This additional phone consultation time from 4 p.m. to 6 p.m. makes it easier for customers to contact the firm after work.
Customer Service Verdict: Betterment
We give Betterment the edge in customer service based solely on the longer window you can reach them during.
| Betterment | M1 Finance | |
| Phone & email available | Yes, 718-400-6898, weekdays, 9 a.m. to 6 p.m. ET | Yes, 312-600-2883, weekdays from 9 a.m. to 4 p.m. ET |
| Pre-funding phone consultation with a certified advisor | No | No |
| Online chat available | Chatbot only | Yes—AI chatbot |
| Website FAQ section | Yes | Yes—easy to access and comprehensive |
Fees
Betterment
Betterment charges a flat 0.25% AUM for all Investing plan clients or $4 per month for accounts under $20,000 that do not set up a monthly deposit of at least $250. Premium users with more than $100,000 can opt to pay 0.65% for more features or stick to basic. The Premium fee covers unlimited financial advisor access. For accounts with at least $2 million, there is a fee discount of 0.10%.
M1 Finance
M1 Finance Basic is free. You get all of the features with no management fee or trading fees. M1 Plus costs $36 per year and offers upgraded trading, lower borrowing rates, and higher savings account interest rates.
Fees Verdict: M1 Finance
Those looking for a fee-free investment platform might start with M1 Basic. Even the M1 Plus account is reasonably priced. That being said, investors may feel that the 0.25% management fee at Betterment is affordable and worth paying if they seek tax-loss harvesting and more robust goal-planning support.
| Category | Betterment | M1 Finance |
|---|---|---|
| Management Fees for $5,000 Account | $48 ($12.50 if depositing $250 per month) | Basic: $0; M1 Plus: $36 |
| Management Fees for $25,000 Account | $62.50 | Basic: $0; M1 Plus: $36 |
| Management Fees for $100,000 Account | Investing: $250; Premium: $650 | Basic: $0; M1 Plus: $36 |
| Termination Fees | $0 | $100 for outgoing transfers and IRA closures |
| Expense Ratios | Low-cost funds chosen (0.05% to 0.13%) | Varies by investment |
| Mutual Funds | N/A | N/A |
The Bottom Line
M1 Finance and Betterment are well-regarded digital investment managers suitable for different types of investors. Investors seeking quality automated investment management and access to financial planners for reasonable fees will find that Betterment has a lot to offer. It is designed for beginning or hands-off investors who want well-constructed and well-managed portfolios. It has options for ESG, income, and factor-based smart beta investing and offers tax-loss harvesting. Betterment’s two cash accounts round out the platform and make it competitive with full-fledged financial institutions. Betterment can benefit any investor who wants an investment portfolio that runs itself.
M1 Finance is for hands-on investors who know what they want. Investors select a prebuilt portfolio that can achieve their investment goals. In addition, they have access to more than 6,000 ETFs and stocks to customize their portfolios. M1 Finance’s screener, margin accounts, savings account, and lending options make it competitive with some full-service investment brokers. Overall, an M1 Finance account may be ideal for cost-conscious investors seeking a DIY portfolio without the headache of ongoing portfolio maintenance.
What Services Do Betterment and M1 Finance Offer?
Betterment and M1 Finance both provide automated or semi-automated investment tools. Users set investment preferences, and the platforms create personalized investment portfolios. M1 Finance allows for more customization and is less hands-off than Betterment.
How Do Betterment and M1 Finance Work?
Account creation is quick and easy for both Betterment and M1 Finance. After entering personal information, Betterment provides a questionnaire used to formulate a personalized portfolio. M1 Finance requires users to create their own portfolios from a variety of stocks, ETFs, and prebuilt portfolios called Pies. Both services provide planning tools, automatic deposits to fund accounts, and more.
Who Should Use Betterment vs. M1 Finance?
Betterment may be the right choice for investors who desire help with financial planning and a choice of already-constructed portfolios to meet their investment goals. M1 Finance may be better for more experienced investors who can handle their own planning and want more flexibility in choosing their investments.
How We Picked the Best Robo-Advisors
Providing readers with unbiased, comprehensive reviews of digital wealth management companies, more commonly known as robo-advisors, is a top priority of Investopedia. To collect data for our 2024 best robo-advisor awards and rankings, we sent a digital survey with 64 questions directly to each of the 21 companies we included in our rubric. Our team of researchers verified the survey responses and collected any missing data points through online research and conversations with each company directly. The data collection process took place from Jan. 8 to Feb. 9, 2024.
We then developed a quantitative model that scored each company to rate its performance across nine major categories and 59 criteria to find the best robo-advisors. The score for each company’s overall star rating is a weighted average of the criteria:
- Goal Planning – 21.00%
- Portfolio Contents – 17.00%
- Portfolio Management – 17.00%
- Fees – 15.00%
- Account Services – 10.00%
- Account Setup – 5.00%
- Customer Service – 5.00%
- Security & Education – 5.00%
- User Experience – 5.00%
Many of the companies we review for our projects grant our team of expert writers and editors access to live accounts so they can perform hands-on testing. Robo-advisor companies allowed us to do this, as well.
Through this all-encompassing data collection and review process, Investopedia has provided you with an unbiased and thorough review of the top robo-advisors. Read more about how we research and review robo-advisors.
The above material and content should not be considered to be a recommendation. Investing in digital assets is highly speculative and volatile, and only suitable for investors who are able to bear the risk of potential loss and experience sharp drawdowns. Digital assets are not legal tender and are not backed by the U.S. government. Digital assets are not subject to FDIC insurance or SIPC protections.
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