M1 is a technology company offering a range of financial products and services. "M1" refers to M1 Holdings Inc., and its wholly-owned, separate affiliates M1 Finance LLC, M1 Spend LLC, and M1 Digital LLC.
Overview of M1
M1, established in the United States over 20 years ago, is a regulated brokerage offering a wide range of trading assets, including stocks, ETFs.
With no trading commissions and a minimum deposit of $100, it provides accessible investing opportunities. Its high-yield savings feature offers a competitive 5.00% APY.
However, the platform lacks educational resources and charges a $3 monthly fee for advanced features.
Overall, M1 presents a user-friendly platform for investors seeking commission-free trading and high-yield savings, despite some limitations in educational support and additional fees.
Regulatory Status
M1 is regulated by the Financial Industry Regulatory Authority (FINRA), holding license numbers CRD#: 281242 and SEC#: 8-69670.
As a regulated entity, M1 operates under the oversight of FINRA, ensuring compliance with established standards and regulations within the financial industry. This regulatory status provides traders on the platform with a sense of security and confidence, knowing that the brokerage adheres to stringent guidelines set forth by a reputable regulatory body.
Pros and Cons
Pros:
Commission-free investing: With M1, investors can buy and sell stocks and ETFs without incurring any trading commissions. This helps investors save on transaction costs, allowing them to allocate more of their funds towards building their investment portfolios.
High-yield savings: M1 automatically directs uninvested cash into a high-yield savings account, where it can earn a competitive annual percentage yield (APY). As of January 2024, the APY is 5.00%, significantly higher than the national average for savings accounts.
Dynamic rebalancing: M1's platform dynamically rebalances users' investment portfolios to ensure they remain aligned with their chosen asset allocation. This automated feature helps investors maintain a diversified portfolio and optimize their returns over time.
No trading or management fees: M1 does not charge any trading or management fees for stocks and ETFs. Investors can build and manage their portfolios without worrying about additional costs eating into their returns.
Wide range of choices: M1 offers access to over 6,000 stocks and ETFs, providing investors with a wide selection of investment options to choose from. This extensive range of choices allows investors to customize their portfolios according to their investment objectives and risk tolerance.
Cons:
$3 monthly fee for Plus plan: While M1's basic features are free to use, users can opt for the Plus plan, which costs $3 per month. The Plus plan offers additional features such as two daily trading windows and four ATM fee reimbursements per month.
No educational content: M1 lacks educational resources to help investors learn more about investing and financial planning. This absence of educational content may be a drawback for novice investors who require guidance in navigating the financial markets.
Can't buy mutual funds: Unlike some other brokerage platforms, M1 does not offer the option to invest in mutual funds. This limitation may restrict investors' ability to diversify their portfolios across different types of investment vehicles.
Limited features compared to full-service brokers: While M1 offers a range of investment tools and services, its features may be relatively limited compared to full-service online brokers. Investors who require advanced trading tools or access to financial planning services may find M1's platform lacking in this regard.
No financial planning services or human advisors: M1 does not provide financial planning services or access to human advisors. Investors seeking personalized financial advice may need to look elsewhere for guidance on their investment strategies and financial goals.
Tradable Securities and Services
M1 Finance offers access to a wide range of tradable securities and services.
With over 6,000 stocks and exchange-traded funds (ETFs) available, users have the flexibility to construct personalized portfolios tailored to their investment objectives. This selection enables investors to diversify across various asset classes and sectors, potentially optimizing their risk-return profiles.
Commissions and Fees
M1 Finance distinguishes itself in the realm of commissions and fees by not charging trading, commission, or portfolio management fees for its Basic plan.
However, users have the option to upgrade to the Plus plan for $3 per month, which offers additional features such as two trading windows per day and four ATM fee reimbursements monthly, compared to the Basic plan's one.
For account services, overnight mail within the US incurs a $125 fee, while international or Canadian overnight mail costs $100. Account maintenance fees include a minimum balance fee for accounts under $50 with no activity for 90+ days, amounting to up to $50, and a $75 fee per account for escheatment processing.
Direct account transfers are free for incoming transfers but incur a $100 fee for outgoing transfers, and Computershare transfers cost $115 per security transferred.
Compared to popular brokers that typically charge trading commissions, M1's fee structure presents a competitive advantage, particularly for investors who prefer a fee-free or low-cost approach to investing.
Account Types
M1 provides various account types including:
Individual Brokerage Account: This account type is tailored for individual investors looking to buy and sell a variety of securities, including stocks, bonds, exchange-traded funds (ETFs), and other investment options.
Joint Brokerage Account: Designed for individuals seeking equal ownership with another party, Joint Brokerage Accounts at M1 can accommodate two account holders. This structure is suitable for couples, parents and their adult children, or adults managing assets for aging parents.
Trust Accounts: Managed by a trustee for the benefit of designated beneficiaries, Trust Accounts offer a structured approach to asset management. These accounts can be established through M1's paper account opening process.
Custodial Account: Ideal for parents or guardians looking to set aside funds for minors, Custodial Accounts are managed by a custodian until the minor reaches the age of majority. This account type facilitates long-term wealth transfer and financial planning for children.
Individual Retirement Account (IRA): M1 offers Traditional, Roth, and SEP IRAs, providing tax-advantaged retirement savings options. Traditional IRAs allow for tax-deductible contributions, while Roth IRAs offer tax-free growth and distributions under certain conditions. SEP IRAs serve specifically to self-employed individuals or small business owners.
Cash Account: Combining features of checking, savings, and investment accounts, Cash Accounts offer flexibility in managing finances. While M1's High-Yield Cash Account provides interest-bearing benefits, it's important to note that it is not a bank account but rather offered by M1 Finance, LLC, a registered broker-dealer.
Crypto Account: Tailored for investors interested in buying and selling cryptocurrencies, Crypto Accounts provide access to digital asset trading within the M1 platform.
Platforms & Tools
M1 offers a self-developed app that serves as a comprehensive financial platform designed for wealth building.
The platform integrates various features including high-yield savings on cash deposits, personalized investment management, a cash-back credit card, and borrowing capabilities.
With a focus on simplicity, M1's app provides users with access to powerful portfolio management tools for investing in stocks and ETFs commission-free. Advanced automation features assist users in aligning their investment strategies with long-term financial goals.
Additionally, M1's borrowing feature allows qualified users to access a line of credit against their investment accounts or obtain personal loans with flexible repayment terms and competitive APRs.
Referal Program
M1's referral program offers a $75 bonus to users who refer friends. To qualify, the referred friend must sign up and fund their account with $10,000.
Users simply share their referral code and both parties could receive the bonus. To participate, users copy their code from the M1 app, share it, and encourage others to join M1. Once the friend signs up and funds their account, both parties receive the $75 investment bonus.
This program presents an opportunity for users to benefit from sharing their positive experiences with M1, while potentially helping others kickstart their investment journey. Referral terms and conditions do apply.
Deposit & Withdrawal
The minimum deposit requirement for M1 Finance is $100. This means that users need to deposit at least $100 to start investing on the platform. This minimum deposit amount is relatively low compared to some other investment platforms.
M1 applies distinct fees for direct account transfers and miscellaneous bank transactions in its Invest Account.
Outbound direct transfers incur a $100 charge, while Computershare transfers levy $115 per security. Domestic wire transfers entail a $25 fee. Incoming direct transfers do not incur any charges.
Customer Service
The M1 Finance Client Success Team offers personalized assistance in setting up accounts.
Once users create a login, they can schedule a convenient 15-minute call with a team member via Calendly within the app. This feature eliminates the need to wait on hold for an agent to answer.
Additionally, the M1 Finance website hosts a Help Center covering topics like account setup, transfers, investing, and more.
If users cannot find the answer they seek in the Help Center, they can submit a request and expect a response within one business day. However, users should note that there is no option for immediate phone support.
Educational Resources
It's disappointing that M1 Finance doesn't offer educational resources for novice investors.
Educational materials can be crucial for individuals looking to enhance their understanding of investing and make informed decisions. Compared to popular brokers that provide extensive educational content, M1's lack of resources could be seen as a drawback. Investors, especially beginners, may find themselves seeking supplementary learning materials elsewhere, potentially leading to a less integrated or cohesive learning experience.
Conclusion
In conclusion, M1 offers a compelling platform for investors with its commission-free trading, high-yield savings, and wide range of trading assets, including over 6,000 stocks and ETFs. Its competitive 5.00% APY on uninvested cash further enhances potential returns.
However, the $3 monthly fee for advanced features, limited educational resources deter some users. While M1 lacks financial planning services, its user-friendly interface and low minimum deposit requirement of $100 make it accessible to a wide range of investors.
Ultimately, M1 provides a streamlined investing experience with notable advantages, albeit with certain drawbacks to consider.
FAQs
Question: Does M1 Finance charge trading commissions？
Answer: No, M1 Finance does not charge any trading commissions for stocks or ETFs.
Question: What is the minimum deposit required to open an account with M1 Finance？
Answer: The minimum deposit to open an account with M1 Finance is $100.
Question: Does M1 Finance offer margin trading？
Answer: M1 Finance supports margin trading.
Question: Can I invest in mutual funds through M1 Finance？
Answer: No, M1 Finance does not offer the option to invest in mutual funds.
Question: Does M1 Finance provide financial planning services？
Answer: No, M1 Finance does not provide financial planning services or access to human advisors.
Question: Is there a monthly fee for using M1 Finance？
Answer: M1 Finance offers a free Basic plan, but users can opt for the Plus plan for $3 per month, which offers additional features.
United States
