What is M1 Finance?

Jeremy BiberdorfBy: Jeremy Biberdorf

April 20, 2023April 20, 2023

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M1 Finance is a comprehensive investment platform designed to provide users with an array of investing services, all in one place. M1 Finance LLC has gained significant popularity among passive investors and buy-and-hold investors, thanks to its innovative features and competitive pricing. In this article, we will provide an overview of M1 Finance, touching on its various features, offerings, and key elements that make it stand out from other investing platforms.
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Company Background: The Story Behind M1 Finance

M1 Finance was founded in 2015 by Brian Barnes with a mission to empower individuals to manage their own investment portfolios. Since its inception, the platform has grown rapidly, attracting thousands of investors seeking a user-friendly, low-cost solution for managing their financial assets. Headquartered in Chicago, Illinois, M1 Finance has continued to innovate its offerings, providing a suite of tools and features tailored to the needs of modern investors.

As of September 2022, M1 Finance had over $5.5 billion in assets under management, a testament to the company’s success and growing popularity. The platform’s unique approach to investing, combining automated and customizable portfolio management with a wide range of investment options, has set it apart from traditional investment services and robo-advisors.

In recent years, M1 Finance has expanded its product lineup, adding features like margin accounts, debit cards, and tax-loss harvesting to its already robust investment platform. The company has also introduced M1 Spend, a checking account with cashback rewards, and M1 Borrow, a low-cost margin loan service.

M1 Finance’s commitment to innovation, transparency, and customer service has earned it numerous accolades from both users and industry experts. The platform’s continued growth and success are a testament to its ability to adapt to the ever-changing financial landscape, providing investors with the tools they need to achieve their financial goals.

M1 Finance: A Comprehensive Investment Platform

M1 Finance’s investment platform allows users to create a custom portfolio by choosing individual stocks, mutual funds, and even expert pies – pre-built portfolios designed by financial advisors based on specific goals, risk tolerance, and investment themes. The platform also offers automatic rebalancing to help maintain a target asset allocation, along with dynamic rebalancing for taxable accounts, ensuring that investors’ portfolios remain in line with their desired risk levels.

One of the standout features of M1 Finance is its M1 Plus membership, which provides several additional benefits to users. These include lower margin rates, early access to direct deposit, and cash back on debit card purchases. The M1 Finance debit card is provided in partnership with Lincoln Savings Bank and allows users to earn cash back on their spending while also providing cash management features.

Investment Accounts and Offerings

M1 Finance offers various types of investment accounts, such as individual taxable accounts, joint accounts, custodial accounts, and retirement accounts like IRAs and Roth IRAs. M1 Finance’s minimum investment requirement is $100 for taxable accounts and $500 for retirement accounts, making it accessible to a wide range of investors.

In addition to its investment offerings, M1 Finance also provides users with the option of M1 Invest, a service that enables investors to access margin loans and margin accounts. These loans are subject to a credit check, and the platform offers competitive margin rates compared to traditional brokerage firms.

Fees and Expenses

M1 Finance is known for its competitive pricing, with no management fees, inactivity fees, or trading fees for its basic investment platform. However, the platform does charge fees for certain additional services, such as M1 Plus membership for $125 annual fee, human advisors, and tax-loss harvesting.

While M1 Finance does not charge trading fees, it’s essential to note that mutual funds and ETFs within expert pies may have expense ratios, which are annual fees charged by the funds themselves. The ETFs that make up the expert pies range from .06% to .20%.

M1 Finance Security

M1 Finance takes the security of its users’ data and investments very seriously. The platform employs multiple layers of protection to ensure that users’ personal information and funds are secure. Some of the security measures implemented by M1 Finance include:

  • Encryption: M1 Finance uses 256-bit encryption to protect the transmission of users’ data over the internet. This high level of encryption ensures that sensitive information is securely transmitted between the user’s device and M1 Finance’s servers.
  • Two-Factor Authentication (2FA): M1 Finance offers two-factor authentication to provide an extra layer of security for users’ accounts. With 2FA enabled, users are required to provide a unique code in addition to their password when logging in, making it more difficult for unauthorized users to gain access to their accounts.
  • SIPC Coverage: M1 Finance is a member of the Securities Investor Protection Corporation (SIPC), which protects customers’ securities and cash up to $500,000, including a $250,000 limit for cash, in the event of the platform’s failure. It’s important to note that SIPC coverage does not protect against investment losses due to market fluctuations.

Responsible Investing and Smart Transfers

M1 Finance encourages responsible investing by providing users with access to “socially responsible” expert pies, which focus on companies with strong environmental, social, and governance (ESG) practices. Additionally, the platform offers a unique feature called “smart transfers,” which allows users to automate their cash flow between their M1 Finance accounts and an external bank, making it easier to save and invest.

Human Advisors and Customer Support:

While M1 Finance primarily operates as a robo-advisor, the platform also offers access to human advisors for personalized financial advice. This hybrid approach provides investors with the best of both worlds, combining the convenience of automation with the expertise of professional advisors.

What is M1 Finance – Final Thoughts:

Overall, M1 Finance is a comprehensive investment platform that offers a wide range of investment options, competitive pricing, and innovative features. Its user-friendly interface and customization options make it an attractive option for both new and experienced investors. With its commitment to innovation, responsible investing, and customer service, M1 Finance has proven to be a reliable and trustworthy platform for investors.

If you’re looking for a low-cost, automated investment platform that also provides access to human advisors, M1 Finance is definitely worth considering. So why not give it a try and see if it’s the right fit for your investment needs?

Click here to get started with M1 Finance today.

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Jeremy Biberdorf
Jeremy Biberdorf

About the Author:

Jeremy Biberdorf is the founder of Modest Money. He's a father of 2 beautiful girls, a dog owner, a long-time online entrepreneur and an investing enthusiast.

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