Is M1 Finance a Scam?

As an investor looking for a platform to manage and grow your investments, one of the most important factors to consider is trustworthiness. The last thing you want is to put your hard-earned money into a platform that turns out to be a scam or a fraudulent service.

In this comprehensive and well-researched article, we will deep dive into M1 Finance, its background, features, pros/cons, level of security, etc., to help you determine whether M1 Finance is a scam, or a legitimate platform for your investment needs.

Negative Customer Review:

Let’s get started with understanding the background of M1 Finance and then we will dissect and address the claims made in the negative customer review.

For an in-depth look into The M1 Finance check out our full review.

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Company Background

M1 Finance, founded in 2015 by Brian Barnes, is a financial technology company based in Chicago. The company has rapidly gained popularity in the world of investment platforms, with its primary offering to investors being a robo-advisor hybrid that combines automated investing with a customizable interface that allows users to build and manage their portfolios.

M1 Finance is registered with the U.S Securities and Exchange Commission (SEC) and is a member of the Financial Industry Regulatory Authority (FINRA) and the Securities Investor Protection Corporation (SIPC). These organizations ensure that M1 Finance adheres to specific standards for investor protection and transparency.

Investment Features

M1 Invest

M1 Invest is the primary offering of the M1 Finance platform, allowing investors to create their custom portfolio, referred to as “Pies,” consisting of stocks, ETFs, or a combination of both. M1 Invest provides automatic rebalancing, fractional share investing, and no-fee trading, making it an excellent platform for both beginner and experienced investors.

M1 Borrow

M1 Borrow allows investors to borrow against their M1 Invest account at low-interest rates, providing an additional source of funding for personal or investment needs. This feature is available for users with an account balance of at least $10,000.

M1 Spend

M1 Spend is a checking account and debit card offering integrated with the M1 Finance platform. This feature allows users to earn interest on their cash balances and offers cashback rewards on the M1 Visa debit card. In addition, M1 Finance provides free ATM access and other banking features to M1 Spend account holders.

Model Portfolios

Model Portfolios are pre-built portfolios created by M1 Finance to cater to various investment goals and risk tolerances. These portfolios provide investors with a starting point, allowing them to tweak and customize their investments as needed.

Addressing Negative Review Claims

Now, let’s address the claims made in the negative customer review to give a balanced perspective on M1 Finance:

1. Hidden fees: M1 Finance operates on a “freemium” model, providing M1 Invest services with no cost for trading, account management, or rebalancing. However, M1, their premium offering, comes with a $125 annual fee. M1 Finance clearly states its fees and pricing structure on their website, making the claim of hidden fees questionable.
2. Withdrawal issues: Although there are no direct fees for withdrawals, transfers can take up to 5 business days to complete as per their website. This timeframe may seem longer compared to other platforms, but M1 Finance follows standard ACH processes, and withdrawal issues may not be as widespread as the review suggests.

Security and Privacy

M1 Finance takes significant measures to ensure the security and privacy of its users:

• Encryption: The platform uses 4096-bit SSL encryption to secure data transmission between your device and M1 Finance’s servers.
• Two-Factor Authentication (2FA): Users can enable 2FA to add an extra layer of security to their accounts.
• SIPC Protection: As a member of SIPC, M1 Finance accounts are protected up to $500,000, including $250,000 for cash claims.

Pros and Cons of M1 Finance

Pros

• Customizable portfolio building with fractional shares
• No fees for trading or portfolio management
• Automatic rebalancing
• Wide range of investment offerings, including Model Portfolios for beginner investors
• High level of transparency and comprehensive information about fees

Cons

• No tax-loss harvesting
• Platform may not be suitable for active or high-frequency traders
• Withdrawals can take up to 5 business days

Final Verdict: Is M1 Finance a Scam?

After an in-depth examination of M1 Finance’s background, features, pros/cons, and security measures, we can confidently conclude that M1 Finance is not a scam. It is a legitimate platform offering customizable, low-cost, and user-friendly investment options for a wide range of investors, beginner or experienced.

Click here to get started with M1 Finance, and if you’re still unsure if M1 Finance is a scam, you might want to check out SoFi Invest.

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