When it comes to choosing an investment platform, two names that often come up are M1 Finance and Wealthfront. Both platforms offer a range of investment options, including stocks, ETFs, and retirement accounts. However, they differ in their fee structure, investment strategies, and overall user experience. In this blog post, we will compare M1 Finance and Wealthfront in detail to help you make an informed decision about which platform is right for you.
M1 Finance Overview
M1 Finance is a digital investment platform that combines the automation of robo-advisors with the flexibility of self-directed investing. The platform allows users to create a customized investment portfolio by selecting from a wide range of stocks and ETFs. Once the portfolio is created, M1 Finance uses fractional shares to invest your money in the most efficient way possible. M1 Finance also offers a range of account types, including taxable accounts, retirement accounts, and trusts.
M1 Finance’s fee structure is unique in that there are no trading or management fees. Instead, the platform generates revenue through its lending program. When you borrow money through M1 Borrow, the platform earns interest on the loan, which allows it to offer free trading and management. M1 Finance also offers a premium subscription service called M1 Plus, which includes additional features like a second trading window and lower interest rates on M1 Borrow loans.
Wealthfront Overview
Wealthfront is a robo-advisor that uses algorithms to create and manage investment portfolios for its users. The platform offers a range of investment options, including ETFs, individual stocks, and tax-optimized portfolios. Wealthfront also offers a range of account types, including taxable accounts, retirement accounts, and 529 college savings plans.
Wealthfront’s fee structure is straightforward. The platform charges a 0.25% annual advisory fee, which is based on the total amount of assets under management. Wealthfront also offers a premium service called Wealthfront Black, which includes additional features like tax-loss harvesting and a dedicated financial planning team.
Investment Strategies
M1 Finance and Wealthfront have different investment strategies. M1 Finance allows users to create a customized portfolio by selecting from a wide range of stocks and ETFs. Once the portfolio is created, M1 Finance uses fractional shares to invest your money in the most efficient way possible. M1 Finance also offers pre-built portfolios called “Pies” that are designed to meet specific investment goals, such as income or growth.
Wealthfront, on the other hand, uses a proprietary algorithm to create and manage investment portfolios for its users. The platform considers factors like age, income, and risk tolerance to create a personalized portfolio that is designed to meet the user’s investment goals. Wealthfront also offers tax-optimized portfolios that are designed to minimize the user’s tax liability.
Fees
M1 Finance and Wealthfront have different fee structures. M1 Finance offers free trading and management, which means there are no trading or management fees. Instead, the platform generates revenue through its lending program. When you borrow money through M1 Borrow, the platform earns interest on the loan, which allows it to offer free trading and management. M1 Finance also offers a premium subscription service called M1 Plus, which includes additional features like a second trading window and lower interest rates on M1 Borrow loans.
Wealthfront charges a 0.25% annual advisory fee, which is based on the total amount of assets under management. Wealthfront also offers a premium service called Wealthfront Black, which includes additional features like tax-loss harvesting and a dedicated financial planning team.
User Experience
M1 Finance and Wealthfront have different user experiences. M1 Finance offers a user-friendly platform that is easy to navigate. The platform allows users to create a customized portfolio by selecting from a wide range of stocks and ETFs, and the fractional share investing feature ensures that your money is invested in the most efficient way possible. The platform also offers pre-built portfolios called “Pies” that are designed to meet specific investment goals, such as income or growth. M1 Finance also provides a mobile app that allows users to manage their portfolios on-the-go.
Wealthfront’s platform is also user-friendly, with a clean and modern design. The platform uses a proprietary algorithm to create and manage investment portfolios for its users, which takes the guesswork out of investing. Wealthfront also offers tax-optimized portfolios that are designed to minimize the user’s tax liability. The platform provides a mobile app that allows users to monitor their portfolios and make changes as needed.
Customer Service
M1 Finance and Wealthfront both offer customer service support, although their methods of contact differ. M1 Finance provides customer support through email and phone, while Wealthfront provides support through email and chat.
Which Platform is Right for You?
When it comes to choosing between M1 Finance and Wealthfront, there are several factors to consider. If you are looking for a platform that allows you to create a customized portfolio and offers free trading and management, M1 Finance may be the better choice for you. The platform’s unique fee structure and fractional share investing feature make it a good option for investors who want to minimize costs and optimize their portfolio.
On the other hand, if you are looking for a robo-advisor that uses a proprietary algorithm to create and manage your portfolio, Wealthfront may be the better choice for you. The platform’s tax-optimized portfolios and premium service may also be attractive to investors who want to minimize their tax liability and receive additional support.
Ultimately, the decision between M1 Finance and Wealthfront will depend on your individual investment goals, risk tolerance, and preferences. It may be worth considering both platforms and comparing their features and fees before making a final decision.
