Which Broker is for you: M1 Finance or Betterment?

M1 Finance Vs Betterment

Both Betterment and M1 Finance have good passive investing options(Robo-Advisors). One of them is significantly better for most people though due to the lack of fees it has compared to the other platform.

While Betterment has a good platform they also have high fees. M1 Finance charges no fees and nothing for investing with them and using their “Expert Funds” which are adjusted just like Betterment’s basic funds are, but with significantly less expenses/fees. Because of this I believe M1 Finance is the better option, which is why I personally use M1 Finance.

Which Platform has lower fees?

M1 Finance definitely wins in this regard, Betterment has a flat-rate 0.25% management fee for ALL assets you have with them. This may not seem like an issue, however as your portfolio grows you could be paying hundreds of dollars per year, even thousands if you’re quite wealthy. That’s huge over the long-term. If you invested $500 per month into Betterment for 40 years you’ll pay around $20,000 in fees.

Meanwhile, M1 finance has no management fees if you build your own portfolio, or mirror ones of those you like. If you want a fully-managed (allocations adjusted throughout years) portfolio like you’d get with Betterment, you’ll pay about 1/4th the amount in fees, as M1 doesn’t offer any fees even for their managed target-date portfolios. The only fees you’ll pay will be for the ETF’s you may buy within your portfolio, or that may be in M1’s portfolios if you choose to follow them.

Due to M1 Finance having around 1/4th the amount of fees, 1/6th of the fees if you used Betterment Pro, it’s clear that M1 Finance is the better option when it comes to fees.

This isn’t even to mention Betterment has fees for small accounts, accounts which don’t deposit enough money every single money, and other nonsense, none of which M1 Finance has.

Which Management Service Performs Better?

While I’d like to answer this question, currently any answer I could provide would be misleading at best, and potentially harmful at worst. The reason being, both of these companies/brokerages have only been around a handful of years and don’t have a long track record to compare and contrast against.

M1 Finance uses Vanguard-funds primarily in their managed-funds, and Vanguard has a good track record, so it’s safe to assume M1 should be good at managing your money in the long-term.

Betterment’s funds are essentially the same as the M1 Finance ones that use Vanguard Funds, so their record is likely nearly identical. Just with higher fees.

So is there ANY reason to use Betterment over M1 Finance?

While I’ve been negative and beating down on Betterment in this article, there are some benefits to using Betterment. The problem is, at least in my opinion, the couple benefits do not at all make-up for the extra fees Betterment has.

So what are Betterment’s benefits?

Betterment allows for automatic tax-loss harvesting, which can benefit people in high tax brackets who have large investment portfolios, however in truth all this would do is off-set capital gains in the long-run and it wouldn’t at all make-up for the higher management fees. The other benefit of Betterment is that they give financial advice if you pay for their premium package, however that’s most definitely not worth it due to the excessively high fees.

At least for me, and most people, I think those benefits don’t outweigh the extra fees betterment charges. Because of that I only use M1 Finance for my long-term investing and retirement.

If you need financial advice learn about finance through youtube or get it from elsewhere in my opinion rather than letting Betterment rake in thousands in fees off you.

So Which Brokerage is better for you?

I’m sure you’ll know my answer by now, but I’m pretty confident it’d be M1 Finance.

I would like to say some people may be better off with Betterment, to try to be fair about things, however honestly I don’t believe that. I can’t imagine a group or scenario where someone would benefit from using Betterment over M1 Finance.

If you want to sign up for M1 Finance you can do so by clicking here. If you use that link you should receive between $10 and $25 or so after making your first investment of $100 or more, which is a bonus M1 Finance offers to readers of Greenery Financial.

Betterment doesn’t offer any free stock or signup bonus as far as I know of, so if you do want to go with them you can signup normally here.