M1 Finance vs Betterment

M1 Finance vs. Betterment vs. Swell Investing


Betterment vs Swell Investing vs M1 Finance for online investing. Compare cost, brokerage fees, IRA accounts, and differences. Which firm is better?



Overview of M1 Finance, Betterment, and Swell Investing


Three non-traditional brokers that provide unique investment methods are Betterment, M1 Finance, and Swell Investing.Let’s take a look at these companies and see which one offers more value.


Investment Methods


Each broker in our survey has its own unique method of investment management. Betterment was one of the first robo advisors on the scene in the brokerage world. It buys and sells a very limited number of low-cost ETF’s using a software program. The broker begins the account opening process with a very short questionnaire. It asks just age, annual income, and retirement status. The firm’s website then recommends an asset allocation of various proportions of stocks and bonds.

M1 Finance offers a selection of pre-designed portfolios called Pies. They are composed of stocks, ETF’s, and other Pies. Customers can create their own Pies, and it’s possible to change Pies after signing up. The customer, and not a robot, makes this decision. A single Pie can be composed of just one stock or ETF. M1 rebalances Pies automatically, and cash deposits are also automatically deposited into Pies. There is no questionnaire here.

Swell Investing is a socially-conscious firm. It offers impact investments that focus on social causes. Some of the available portfolios include Disease Eradication, Zero Waste, and Renewable Energy. They are composed of stocks. Technically, the portfolios are separately managed accounts (SMA’s), not ETF’s or mutual funds. One nice feature of the broker’s SMA’s is that up to three equities can be removed, a luxury that funds don’t provide.

The three investment methods have their own unique strengths and weaknesses, and they will benefit different types of investors. Since M1 Finance offers the most flexible and assets rich investing, it wins this category.


Pricing


Betterment charges just 0.25% for its basic robo-advisory plan. This price includes automatic rebalancing, tax-savings strategies, no balance requirement, and unlimited phone consultations with licensed financial experts.

For an additional 15 basis points per annum and a $100,000 balance, the broker offers financial advice for investments off of its own platform. These assets can include individual stocks, real estate, and 401(k) management. Called the Premium plan, it also includes access to advisors with a CFP® certification.

Swell Investing is a little more expensive at 75 basis points per year. Its account minimum is $500. The broker does not charge any commissions on SMA’s or securities within an SMA, although it does pass on regulatory and exchange fees. An account at Swell has no annual fee besides the SMA management fee.

M1 Finance requires zero deposit to open an account, although there is a $100 minimum to start investing. The broker charges 0.0% for an account’s first $1,000, and 0.25% for balances up to $100,000. After this level is reached, the fee is a very low 0.15% for all balances (not counting the first $1,000). The broker allows for an unlimited number of Pie trades at no cost.

M1 Finance has the lowest prices and it takes this category too.


M1 Finance


Available Products


Betterment offers only exchange-traded funds with low expense ratios. Stocks and mutual funds are not available, nor are options, bonds, forex, or futures. Obviously, there’s a lot left out here. In addition to taxable accounts, Betterment also provides IRA’s.

M1 Finance customers also can open either taxable or nontaxable accounts. Besides ETF’s, the broker’s clients can trade stocks, too, which is a major advantage over Betterment. Mutual funds and other investments are not available, however.

Swell Investing offers only its SMA’s, and there is a rather small selection of them. The broker does not provide IRA’s, business accounts, or joint accounts.

M1 Finance is the clear winner here.


Customer Service


Betterment provides phone support Monday through Thursday from 9:00 am until 8:00 pm, Eastern Standard Time. On Friday, the company closes two hours early. On Saturday and Sunday, there is an on-line chat function that’s open from 11:00 am until 6:00 pm. On-line chat is also accessible during the week.

M1 Finance provides phone support between 9:00 am and 5:00 pm, CST, during the week. The company hosts no weekend hours. There is a service e-mail address, but no on-line chat. There is a robo-chat feature on the M1 website, and it can be used to send messages with attachments to the broker.

Swell Investing does not publish its phone number, which seems really strange. To contact the broker, you first have to send an e-mail, and someone will try to resolve your issue. If the broker needs to speak with you, someone will call. This seems like a terrible form of customer service.

This category is awarded to Betterment.


Swell Investing Review


Financial Advice


As we have already seen, all three companies offer portfolio management for a small fee. M1 Finance does not provide anything beyond this service.

Betterment, however, has a team of investment advisors who work with customers to help them make more informed financial decisions. These professionals are available through the company’s mobile app. CFP advisors can be contacted over the phone or through e-mail. The broker’s financial experts provide advice on such topics as retirement, equity-based compensation, and getting married.

Swell Investing does not offer any type of financial advice currently. It does, however, plan to create an option to allow clients to open an account with a third-party advisor.

The best choice here is obviously Betterment.


Summary


Overall, M1 Finance (read review) outperformed the other two firms. Some investors, however, will prefer Swell Investing (read review) for its style of impact investing.


Open M1 Finance Account



Open M1 Finance Account


Open Betterment Account


Open Betterment Account


Open Swell Investing Account


Open Swell Account


Updated on 9/26/2017.





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