Betterment vs. Wealthfront vs. M1 Finance

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Robo advisors have become an extremely popular alternative to traditional financial advisors, as many investors prefer to minimize fees.

Three of the most popular robo advisor platforms are Betterment, Wealthfront, and M1 Finance. These companies all have something similar to offer, but there are some crucial differences.

Here we’ll delve a little deeper into Betterment vs. Wealthfront vs. M1 Finance to help you to decide the best option for your circumstances.

The M1 Finance Basics


As a popular online investment platform, M1 Finance allows you control over how you manage money. It’s more of an automated investment platform than a robo advisor, but it accomplishes some of the sames things.

What makes M1 Finance unique is the pie investment model. On sign up, you can create a chart to detail how much money you want in each investment. The system will then invest money deposited automatically according to your preferences. M1 offers a wide selection of professionally-crafted pies, or you can create your own (more on that later).

M1 Finance has been specifically designed for long-term investments. There is an Android and iPhone app that offers a clean and appealing user interface. M1 Finance also stands apart from other platforms with no fees on your investments.

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The M1 Finance Experience

When you start using M1 Finance, you will create investment pies. There are more than 60 pre-made pies created by expert investors, and they can be adjusted to your preferences. There is also the option to build your own pie from scratch. The pie dictates how your money is invested. You can use multiple pies or a single pie. Whenever you add new money, all you need to do is make a deposit to M1 Finance and the money will be invested based on your pies.

As you search for the investments of interest, M1 Finance will provide a performance overview and some basic company information. You can even sort for pies and stocks based on particular characteristics such as socially responsible investment. M1 Finance also offers dynamic rebalancing to keep your portfolio on track.

One aspect that is particularly helpful with M1 Finance is the possibility of fractional shares. This provides investors with greater control and flexibility over a portfolio. Rather than buying an entire share, it is possible to invest in a portion, making it easier to invest in any high-value stocks without the need for vast amounts of capital. M1 Finance investments tend to be highly liquid, so you can quickly transfer money without any long processing times.

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M1 Finance also features M1 Borrow, a lending function. M1 Borrow allows borrowing of up to 35 percent of the value of your portfolio to pay it back at a low rate. This is an excellent alternative to bank or other lender borrowing, as the rates are more attractive, and there is no need for wading through a long approval process. You can automatically qualify for M1 Borrow, as long as your taxable brokerage account is over $25,000.

M1 Finance also offers M1 Spend, a platform that essentially provides a debit card and checking account connected to your M1 Finance portfolio, so you can manage more of your finances in one place.

The Wealthfront Basics


Wealthfront has established a reputation as one of the best robo advisors in today’s marketplace. Wealthfront offers automated investment portfolios, guidance tools, and finance education features to help you to plan for the future. What makes Wealthfront popular is the user-friendly investing approach and the myriad of features offered. You can use the online platform or via the Android or iPhone app.

Wealthfront has been designed to make the entire process of investing as simple as possible with lots of automated features. The platform is especially helpful if you’re saving for an important financial milestone such as saving for college, buying a new home or retirement.

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The Wealthfront Experience

Like many robo advisors, Wealthfront requires new users to answer a questionnaire. You will be asked a number of questions about your finances, including your goals, plans, and risk tolerance. Your answers will be used to create an automated investment portfolio specifically for you.

You can also specify investment strategies such as socially responsible investment, so your portfolio reflects your specific needs. Wealthfront portfolios are designed to be highly diverse, with investments in multiple asset classes to maximize growth potential while minimizing risk. As needed, your portfolio will be automatically rebalanced and reinvested to eliminate guesswork.

All of the automated Wealthfront strategies use investment best practices that maximize growth potential. However, because advanced automated strategies are offered, Wealthfront does charge an annual fee of 0.25 percent.

There are several unique portfolios offered, including a Smart Beta, requiring a starting investment of $500,000 and Risk Parity Fund with a minimum of $100,000 and attracts a larger annual fee of 0.50 percent.

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Smart Beta provides a unique investment strategy with a potential for higher returns. Rather than using conventional index-based investments, your portfolio is created based on a complex formula of different factors. The Risk Parity Fund is the first mutual fund offering from Wealthfront, using leverage on some portfolio investments to achieve higher returns.

Like M1 Finance, Wealthfront also offers a variety of other client features. One of the most notable is the financial planning services. These automated services can be accessed online or through your mobile device. By inputting information about your finances and goals, Wealthfront will create a plan to help you to effectively manage your money to reach your goals. These tools are easy to use, making them ideal for younger people who lack financial planning experience.

This platform also provides a high-yield cash savings account with four times the normal FDIC insurance, making it ultra-secure. If you are already using Wealthfront’s financial planning tools and investment services, it’s a simple way to keep all your finances in one place and save for any financial goals.

Wealthfront also offers a line of credit for its clients. You need to have a minimum of $30,000 in your account, and you will be able to borrow up to 30% of the account value at a relatively low-interest rate of between 4.75 and 6%. Just like the M1 program, Wealthfront’s credit is an attractive alternative to a bank loan for those who already have a Wealthfront account. You can enjoy a low-interest rate to pay back the capital on your own timetable. Additionally, since having an account provides pre-approval, you don’t need to have concerns about qualifying for a loan.

The Betterment Basics


Betterment has approximately $15 billion under management and has become a clear leader in the robo advisor niche. There are two service options to tailor your experience with a basic Digital Plan that has a zero minimum balance and fees of 0.25% of the assets under management each year.

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The Betterment Experience

Betterment is one of the few platforms with no minimum deposit and its investment philosophy is based on modern portfolio theory. The platform offers free financial planning tools before you fund your account and portfolio flexibility and coaching to reach your financial goals.

Betterment has also recently launched a high-yield savings plan checking accounts that make it possible to keep all your finances in one place.

The initial sign up process takes you through goal setting, including your current income and age, suggesting a variety of goals based on your answers with a safety net for expenses. Each of the goals comes with recommended targets and allocation of assets, which is adjustable. However, you can also add personalized goals and auto deposits for greater control.