M1 Finance vs SoFi Invest
Robo-advisors are one of the few niches to have benefitted from the pandemic. M1 Finance and SoFi Invest are two of the fastest-growing robo-advisors in the U.S. From 2019 to 2020, M1 Finance saw its assets under management triple, for example.
Selecting the right robo-advisor can be difficult when they share so many features in common. For this reason, we at Modest Money have decided to compare two of the flagship Robo-advisors to help you make an informed decision.
So, in the debate over M1 Finance vs. SoFi Invest, which offers the best product for first-time and experienced investors?
M1 Finance Overview
M1 Finance has a history dating back to 2015. Its growth rates have been nothing short of incredible under CEO Brian Barnes. Based in Chicago, Illinois, M1 reports consistent growth rates, with more than $3 billion held on behalf of its clients.
Its automated portfolios are the focus, but what separates it from the crowd is the M1 pie investing system. Users can create different pies with separate allocations to various stocks, ETFs, and more. Construct as many pies as you want, and even include pies within pies. It’s this approach to investing that makes portfolio management simple.
If you don’t want to take control of your own portfolio, start with M1 Expert Pies. When you create an account with M1 Finance, you gain access to different pies constructed by a combination of artificial intelligence and human experts. These pies fit different risk tolerances and financial goals.
The sheer level of control available with M1 investing is what puts it a cut above many of its competitors.
To learn more about how the platform works, read our M1 Finance review.
Overall, M1 Finance focuses on providing a user-friendly interface accessible via desktop and mobile. Its low-fee model makes it especially attractive to investors who don’t have vast amounts of starting capital to invest.
M1 Finance Details
|Management Fees||$0-$125 per year|
|Account Types||Individual and joint brokerage accounts, Roth IRA, SEP IRA, and Traditional IRA, trust accounts, and custodial accounts|
|Investment Type||Stocks and Exchange-Traded Funds (ETFs)|
How do you get started with M1 Finance?
Create your account and make your first deposit. There are no account minimums, so it’s more than enough to construct your initial portfolio if you have just a few dollars to spare.
You don’t need to pay any management fees, trading fees, or commissions to become an investor with M1. Unlike with traditional brokerages, there’s also no need to maintain a minimum dollar balance on your account.
Investors may also take advantage of fractional shares. These enable you to make every dollar work for you without waiting until you can afford a full share. In other words, you maximize your profits every time you add money to your portfolio.
M1 offers many supported account types you won’t find with other Robo-advisors, such as the trust and custodial accounts.
If you’re new to investing, M1 guides you every step of the way; no market knowledge is required.
M1 Finance Fees
M1 Finance operates using a no-fee model for its clients. With no commissions, management, or trading fees to cover, you don’t start investing at a loss. Furthermore, there are no setup fees when using M1 recommended pies.
If you want to create an account to figure out how the platform works, you can without making a minimum deposit.
Instead of making money through M1 Invest, the platform generates an income via its different M1 Borrow and M1 Spend programs.
For investors who’re searching for some additional features, such as bigger ACH deposit limits, there’s the M1 Plus program. This is a low-cost subscription at $125 per year, but at Modest Money, we don’t believe that most investors need anything more than a free M1 account.
M1 Finance Pros
- Simple user interface
- No fees to pay
- M1 pie investing system
M1 Finance Cons
- No tax-loss harvesting
- Limited asset range
- $75 migration fee
Build your financial future with M1 Finance and put your portfolio on permanent autopilot. All you have to do is make a deposit. To learn more about M1 investing, check out our M1 Finance review now.
Now it’s time to look at M1 Finance’s close competitor, SoFi Automated Investing. Initially offering its services in 2019, SoFi joined the wave of Robo-advisors just as the market started to surge. Considered to be one of the most advanced investment platforms in the sector, SoFi seeks to cut out the complexity of investing.
Like M1, you’ll never pay commissions or trading fees when you buy or sell stocks or ETFs. While there’s a significant lack of complex trading features aimed at more experienced investors, this shouldn’t be an issue for most beginners.
Suppose you’re looking for an investment platform that cuts the hassle out of investing. SoFi Invest could be the option for you.
Creating an account and getting started with SoFi is all about passive investing. They do most of the work on your behalf. A basic SoFi account will open up the opportunity to trade ETFs, whereas a SoFi Active Investing account gives you access to other assets, such as fractional shares.
While SoFi has a lot in common with M1, how does it stack up?
|Account Types||Traditional IRA, Roth IRA, SEP IRA, and individual and joint taxable accounts|
|Investment Type||Stocks, IPOs, cryptocurrency, and Exchange-Traded Funds (ETFs)|
To start with, there’s no minimum deposit required and no management fees to pay. If you’re new to the world of investing, SoFi will manage everything on your behalf, including diversification between stocks and bonds.
Like M1, they offer many different account types, but there’s a noticeable lack of trust and custodial accounts.
It should also be mentioned that there’s no unique pie investing system available. Although SoFi automates much of the process, it would be nice to have more control over your portfolio. In this respect, M1 is the clear winner.
However, SoFi’s limited track record is vital for a robo-advisor. You know you can safely put your trust in the platform if you’re looking to be a 100% passive investor.
Finally, if you’re looking to talk to a human advisor, SoFi provides free access to all its clients. While this service isn’t as comprehensive as some traditional brokerages, it’s a much-appreciated feature not found at M1.
Our SoFi Invest review praised the platform for its low-cost model. There are no setup fees, no minimum investment requirements, no commissions, and no management fees. There’s just a single fee levied on users.
If you want to close your account and move it to another brokerage, you’ll need to pay a $75 migration fee. It’s slightly irritating, but most investors on the platform will never need to worry about this fee.
Some ETFs will invite expense ratios, but these can be as low as 0.05%. Compared to M1 Finance, there are a lot of similarities in expense ratios.
- No-fee investment model
- Free access to qualified financial advisors
- Access to fractional shares
- No tax-loss harvesting
- Limited asset range
- $75 migration fee
|Feature||M1 Finance||SoFi Invest|
|Avg. ETF Expense Ratio||$0 (with some exceptions)||0.05%|
|Account Types||Individual and joint brokerage accounts, Roth IRA, SEP IRA, and Traditional IRA, Trust accounts, and Custodial accounts||Individual accounts, Traditional, Rollover, and Roth IRAs|
|Financial Advisor Fee||Unavailable||Free|
|Best For||Beginners||Long-Term Investors|
M1 Finance vs. SoFi Invest: Which One is Right for You?
There are so many similarities between M1 Finance and SoFi Invest that it’s easy to assume they’re the same. The truth is that they’re both viable platforms for beginners who want to invest in their long-term futures.
At Modest Money, we would give the edge to M1 Finance due to its pie investing system. This user-friendly approach to portfolio construction is revolutionary.
One area where SoFi is worth looking into is its financial advisors. All clients can enjoy a free consultation with a team of qualified financial advisors to help them direct their investors. For this reason, it’s well worth creating an account with both services.
Either way, regardless of which option you choose, there’s more than enough offered by both platforms to make them both viable options. Your choice revolves around how you want to invest and if you wish to take the time to build your own portfolio from scratch.