M1 Finance vs Betterment 2024

Jeremy Biberdorf
By: Jeremy Biberdorf


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Robo-advisors might be the future of investment portfolios. With their cheap management fees and low account minimums, robo-advisors are a perfect entry point for investors who want to benefit from a low-cost, well-diversified account.

When it comes to robo-advisor investing platforms, two of the better ones are M1 Finance and Betterment. Keep reading to learn which is better when it comes to M1 Finance vs Betterment.

For more detailed analysis of M1 Finance check out our full M1 Finance review.

What is M1 Finance?

m1.com website

M1 Finance is a robo-advisory platform that allows users to build automated accounts optimized for their risk tolerance and investment choices. It offers a 0% management fee structure and supports trading of individual stocks, ETFs, and bonds.

M1 Finance is best suited for active investors, those who make occasional account transfers and withdrawals, and users with lower net worth balances. The platform requires a minimum deposit of $100 to open an account.


What is Betterment?

betterment.com website

Betterment is a robo-advisory platform known for its automated portfolio rebalancing and tax-loss harvesting features. With a management fee starting at 0.25% of assets under management (AUM), it offers pre-made diversified portfolios based on users’ risk tolerance.

Betterment is geared towards passive investors and those who want access to human advisory services. It has no minimum deposit requirement for most accounts, but a high-yield cash account requires a minimum of $10.

M1 Finance LLC is Better for:Betterment LLC is Better for:
Active investorsPassive investors
Occasional account transfersFrequent transfers
Occasional withdrawalsMore withdrawals
Multiple account typesGetting human advisory services
Lower net worth balanceshigher net worth balances

Let’s look at some comparisons:

M1 Finance Betterment
Management Fees (AUM)


0.25% (0.15% for balances > $2 million)

Premium Subscription


0.40% AUM (0.30% for balances > 2 million)

Other Fees

Withdrawal, transfer, sale, inactivity, mail, etc.


Security Types

Individual stocks, ETFs, bonds

ETFs, bonds

Pay for Order Flow



Active or Passive

Active, Passive, or Expert-chosen “Pies”


Traditional Advisors?


Yes, you get access to human advisors with a Premium subscription or by paying $199/$299

Minimum Deposit


$0 ($10 for high-yield cash)

Tax-Loss Harvesting



Supported Accounts

Traditional, Roth, Inherited SEP IRA

Individual and joint taxable accounts Trusts

Checking Credit

Minor Custodial

Traditional, Roth, SEP, Inherited IRA

Individual and joint taxable accounts

Joint taxable accounts with rights of survivorship

Trust accounts

Cash reserve

Best Use

Active Investors

Passive Investors

Current Promotion

More Info

More Info

Modest Money Overall Rating
5.0 rating based on 5 ratings
4.5 rating based on 5 ratings

M1 Finance vs Betterment: Determining Factors?

In Modest Money’s analysis, M1 Finance (5 stars) triumphs over Betterment (4.5 stars). This is because M1 Finance has a greater ability to customize your accounts and actively trade than Betterment.

This does not mean M1 Finance is the best choice for everyone, though. Despite M1 Finance’s advantages, Betterment could be the optimal choice for people who prefer automated portfolio rebalancing and achieving the savings of tax-loss harvesting.

Factor 1: M1 Finance and Betterment Management Fees

For management fees, most robo-advisors charge an annual percentage of assets under management (AUM). Since these management fees comprise mostly of the fees you directly pay to robo-advisors, comparing them is a good place to start to figure out which of these investing platforms is better for you.

M1 Finance Tops Betterment in Low Management Fees

  • M1 Finance does not charge management fees
  • Betterment’s management fee is 0.25%
  • M1 Finance earns revenue elsewhere

Betterment Management Fees

Betterment charges an annual 0.25% AUM fee for its basic account.

Click here to get Betterment’s management fees waived for the first year.

If you have over $2 million in investments with Betterment, these fees fall to 0.15% and .30% respectively.

Factor 2: M1 Finance vs Betterment, Subscription Services

Virtually every robo-advisor has multi tiers of service. M1 Finance and Betterment are no different. Subscription services offer an enhanced trading experience for an extra cost.

Betterment Tops M1 Finance in Subscription Services

  • Betterment’s subscription has access to human financial advisors
  • M1 Finance’s subscription offers AM/PM trading windows, better loan rates, and favorable FDIC-insured checking account and debit card terms
  • While extended trading windows and better loan terms are nice, they would have to be used extensively to justify the cost

M1 Finance Enhanced Subscription Fees

While M1 Finance does not charge an asset management fee, it does offer a premium subscription, known as M1 Plus, which costs $125 annually. With this premium plan, you get access to both AM and PM trading windows, better loan rates, and more favorable checking account and debit card terms.

Click here to sign up for an M1 Plus account, the $125 annual subscription fee will be waived for the first year.

Betterment Enhanced Subscription Fees

If you have a $100,000 minimum investment that is managed by Betterment, you can get access to a Betterment Premium account that costs slightly more in management fees at 0.40% AUM. A Betterment Premium account gets you unlimited access to human financial advisors for any questions you have.

Even if you don’t have a Betterment Premium account, you can still access their human financial advisors, but it will cost you an additional fee.

These over-the-phone advice packages cost between $199 and $299 and will give you one-on-one access to Certified Financial Planners who can answer questions related to your investment strategy or finance-related goals such as college planning and asset allocation.

M1 Finance vs Betterment, Other Fees

So, since M1 Finance has no management fees it must be a better choice than Betterment, right?

Not necessarily. Even if they don’t have management fees, all brokerage companies make money somehow. Let’s look at some additional services offered by M1 Finance and Betterment for a more comprehensive understanding of the fees you will end up paying for each of them.

Betterment Tops M1 Finance in Other Fees

  • M1 Finance does not charge management fees
  • Betterment’s management fee is 0.25%
  • M1 Finance earns revenue primarily from a pay-for-order flow

M1 Finance Other Fees

M1 Finance does not charge investment management fees or trade commissions, however, some other fees might catch you by surprise if you are not expecting them.

For instance, if you terminate your IRA, you’ll get hit with a $125 fee per event. You’ll also be charged $20 for mutual fund sales and $50 for selling foreign-exchange securities. There is also an account transfer fee of $100 and account inactivity fees can be $20. These aren’t all the fees either, so make sure you are aware of the extraneous fees M1 will charge you for certain transactions.

Be careful about requesting paper copies of anything with M1 as well. There are fees associated with this and they can add up very quickly.

These fees are not necessarily terrible though. They are there to help defray the cost since M1 does not charge a management fee. But if you are the type of investor who likes transferring money from your investment accounts on an ongoing basis, these fees will cut into your profits.

The best way to avoid paying fees is to keep your cash balance largely untouched and only take out money when necessary.

Betterment Other Fees

Betterment will not charge you miscellaneous fees. You will not be charged for closing accounts or transferring money. All transactions are covered by their existing management fee.

M1 Finance vs Betterment, Pay for Order Flow

“Pay for order flow” is a controversial practice where brokers receive a fee from market makers for referring clients.

M1 Finance vs Betterment, Pay for Order Flow, Neutral

  • M1 generates income from their “pay for order” flow
  • Betterment does not generate income from pay for order flow
  • Proponents of pay-for-order flow claim it decreases expenses. Detractors say it poses a conflict of interest. Whether a plus or minus depends on your stance.

Pay for order flow is a primary way M1 Finance generates income. While M1 doesn’t make money on commissions, they do make money every time they route an order to a market maker.

This fee might be only a few cents per transaction, but it could mean traders on M1 Finance’s platform might not get the best trading prices.

The jury is still out on whether pay-for-order flow is a good thing or a bad thing. Detractors say it can present a conflict of interest, while proponents counter that it helps keep commissions and management costs in check. Traders used to have to pay hefty commissions every time they bought or sold a stock, something that disproportionately cut into the profits of small investors.

Sophisticated investors with brokers like M1 Finance and Robinhood might theoretically pay slightly more for a stock, but they also might be paying the same price as everyone else. One thing they aren’t paying, however, is commission fees.

Betterment does not receive pay for order flow. Its revenues are generated solely through management and subscription fees.

M1 Finance Tops Betterment in Investment Services

  • M1 Finance allows for active, automated, and expert-selected pie accounts
  • Betterment only has automated portfolio options
  • Active traders will appreciate the ability to select portfolio securities with M1. For passive investors, Betterment might be a better choice due to tax-loss harvesting.

M1 Finance Services

M1 Finance’s investment platform allows you to build a fully automated account optimized for your risk tolerance and investment choices. You can also choose how you want to build your customized platform of individual stocks and funds. If you don’t like either of these options, you can choose to have your money invested in an expert-created “pie”.

M1 Finance requires a minimum deposit of $100 in order to open an account.

This structure provides an extraordinary amount of flexibility, making it a cross between an automated portfolio account and a fee-free actively traded brokerage account, all combined on the same platform.

One cool feature of M1 Finance is you can trade fractional shares on the platform. So, if you don’t have $500,000 to buy one share of Berkshire Hathaway’s Class A stock, you can allocate your hundred bucks to get a fractional share.

Betterment Finance Services

Betterment is solely a robo-advisor platform, so you as the investor do not have the option to choose individual stocks and ETFs. You can, however, choose beyond Betterment’s Core Portfolio, which it chooses for you based solely on your risk tolerance, and opt into Smart Beta, Innovative Technologies, or even Socially Responsible investing portfolios.

Betterment’s stance on this is that they have already done the research to choose optimized pre-made portfolios, which is why they don’t let you choose your own.

Betterment offers additional features that can save you significant money, like tax-loss harvesting, automatic rebalancing, and dividend reinvestment. You can read a thorough explanation of these features here.

M1 Finance Tops Betterment in Account Types

  • M1 Finance has a variety of investment options including taxable accounts, retirement accounts, and custodial accounts.
  • Betterment has taxable accounts and retirement accounts.
  • M1 Finance has both more investment account types and securities. Betterment builds pre-made portfolios with ETFs and bonds.

M1 Finance Accounts

M1 Finance allows you to open individual and joint taxable accounts, retirement accounts, and custodial accounts. M1 Finance does not support 529 education plans.

With M1 Finance, you can trade stocks, bonds, and ETFs. All your trades will be commission-free, though there might be underlying fees associated with the ETFs. These are built into the cost of ETFs and are very low.

Betterment Accounts

With Betterment, you can open taxable investment and retirement accounts. You can also open a high-yield cash account with Betterment. You cannot open minor accounts, like 529 plans and custodial accounts.

None of these accounts require minimum balances to open, except for the cash reserve high-yield account. For a cash reserve high-yield account, the minimum balance required is at least $10.

M1 Finance and Betterment both don’t charge commissions, but the ETFs that Betterment purchases on your behalf might have underlying fees.

The account Betterment builds for you will be constructed mostly with ETFs with some room left over for bonds depending on the market and your risk tolerance. Bonds trade with less volatility than ETFs, so Betterment might use them to hedge your account against losses.

Over time, target allocations in a portfolio tend to “drift.” This is because different securities appreciate or depreciate and end up being over or under-weighted in your portfolio. Betterment will periodically perform dynamic rebalancing in order to make sure that your target allocation is restored according to your risk tolerance, which you set by answering their questions.

So, Who Wins in the Battle of M1 Finance vs Betterment?

When it comes to choosing between M1 Finance and Betterment, Modest Money recommends M1 Finance to most traders, due to its all-around superior flexibility. Solely passive traders should seriously consider Betterment.

M1 Finance is Better for:Betterment is Better for:
Active tradersPassive investors
Occasional account transfersFrequent transfers
Occasional withdrawalsMore withdrawals
Multiple account typesGetting human advice
Lower net worth balanceshigher net worth balances

M1 Finance Advantages

M1 Finance has a definite advantage when it comes to its 0% management fee structure. But for investors who aren’t careful, the money you could save in investment management fees can be clawed back through additional fees, especially if you make a lot of transfers from your accounts.

Over time, these fees will cost you, possibly even more than the management fees you’ll be paying elsewhere. Not making frequent withdrawals and other unnecessary transactions will minimize the fees you pay with M1 Finance.

M1 Finance is also advantageous to people who want to actively trade investments. For people who want to choose their securities, this feature is an absolute must and one that is not available through Betterment.

If you like to make your own investment choices, click here to find out more about an M1 account and get the first year of M1 Plus free.

Learn More About M1 Finance

Betterment Advantages

Other investors of the more passive type might be big fans of the fully diversified pre-made investment portfolios that are offered by robo-advisor investment platforms. This makes sense because the more diversified you are, the better chance you have at maximizing your returns according to your risk tolerance.

If you don’t want to manage your own portfolio choices, Betterment is probably a better choice for your circumstances.

You will pay a yearly management fee, but you won’t get hit with extra fees when you withdraw or transfer money. You also won’t end up paying more money for the securities in your account because of pay for order flow. And you will benefit from cost-saving measures like tax-loss harvesting.

To get the full benefits of an algorithm-enabled robo-advisor pre-made investment portfolio with the option to also speak to financial experts when needed, click here to open a Betterment account.

Learn More About Betterment