M1 Finance vs Acorns vs Vanguard in 2020


Overview


Acorns, Vanguard, and M1 Finance are three unique brokerage firms with different styles of investment management. So which firm is the best of the bunch? That’s what this survey is going to find out.


Cost


Broker Fees Stock/ETF
Commission
Mutual Fund
Commission
Options
Commission
Maintenance
Fee
Annual IRA
Fee
M1 Finance $0 na na $0 $0
Vanguard $0 $20 $1.00 per contract $20* $20*
Acorns na na na $1-$2-$3 per month $1-$2-$3 per month

When it comes to pricing, M1 Finance is hard to beat! It's the only broker to offer $0 commissions an all stocks, ETF's in combination with the lowest margin rates in the industry.


Promotions


M1 Finance: Pay $0 commissions. Transfer account to get up to $2,500 bonus at M1 Finance.

Acorns: Try Acorns for free and get a $5 friend referral bonus.

Vanguard: none.



Category 1: Style of Investing


Vanguard is the traditional brokerage firm in this survey offering human-managed and self-directed accounts. Available investment vehicles include stocks, fixed-income securities, option contracts, and funds (mutual, exchange-traded, and closed-end).

Acorns offers something unique and different. Clients make transactions with debit and credit cards, the transactions are rounded up to the nearest dollar, and the difference is transferred to a brokerage account. This Acorns account offers a grand total of 6 ETFs (that’s not a typo), and the funds are overseen by a computer program.


Acorns vs M1 Finance


M1 Finance is somewhere in between these two. The brokerage firm provides investing in Pies, which are collections of stocks and ETFs. Every major stock and ETF in the U.S. is available for trading. Customers can either create their own Pies or invest in broker-constructed Pies. The latter option is robo managed. Because a whole-dollar amount can be invested, fractional shares can be purchased.

Overall, we like Vanguard best here.


M1 vs Acorns


Category 2: Cash Management


As of July 31, 2020, Vanguard no longer offers VanguardAdvantage, which was its cash management account. Now, the only banking option is to link an external deposit account.

Acorns customers can open Acorns Spend, which is an FDIC-protected deposit account with a Visa debit card (but no checks). The account costs $3 per month and comes with unlimited ATM fee rebates.

At M1 Finance, investors get a free debit card with one ATM fee per month reimbursed. For $125 per year, the account earns very high interest and cash back on transactions. Plus, the number of ATM fees waived per month goes up to 4.

M1 Finance takes the victory here.


Category 3: Software


Although Vanguard is the traditional brokerage house in this assessment, it does have a mobile app and website. The app can submit orders for stocks, ETFs, and (Vanguard) mutual funds. There is a mobile check deposit feature, which is a huge plus here because the other two apps don’t have one.





Both M1 Finance and Acorns have apps that primarily offer management tools because there’s not a lot of self-directed trading (at Acorns, there is none). On the M1 app, it’s possible to create Pies and trade them. The Acorns app has tools for setting up the round-up program and linking an external bank account to pay the monthly fee.

Moving to websites, both M1 Finance and Acorns have software that pretty much replicates their mobile apps. Same features and interface. At M1, we were able to browse through all the available Pies and set up investment preferences. At Acorns, we could see a projected account growth until retirement.

Vanguard’s site offers trading capability, including charting with a few tools and an order ticket. Alerts and a watchlist can be setup.

Vanguard is the outperformer here.


Category 4: Learning Resources


Acorns offers limited learning materials (in the form of articles and videos) on both its mobile app and website. On either platform, the resources are the same. Topics include basic financial issues like credit scores and diversification.

At M1 Finance, we found news articles from sources like Forbes and Seeking Alpha. Market indexes are shown, and there’s a simple equity screener for stocks and ETFs. Stock profiles have a small chart and limited data.

Vanguard offers more information on stocks. For example, analyst reports are available free of charge from Argus and MarketGrader. Financial statements are shown in both annual and quarterly formats. Earnings history and earnings estimates are displayed in numerical and bar chart format. And the broker’s security screeners are more thorough than M1’s. Vanguard also has a blog with commentary on investing, personal finance, retirement, and taxation.

Vanguard gets the nod here.


Category 5: Managed Accounts


All three brokers in this challenge offer some type of portfolio management. Acorns offers a robo-only service that costs $1-$3 per month, and it’s actually free for university students.

Vanguard does pretty much the opposite; it has a human-only service. The price is 0.30% to 0.05%, depending on account balance; and it comes with a one-on-one relationship with a financial advisor through the Internet.

M1’s service is computerized management and rebalancing of the Pies on its platform (except for the ones built by customers). There is no charge for the service; and there is also no traditional service.

M1 Finnace takes this one.


Category 6: Other Services


Acorns automatically reinvests dividends from the 6 funds it offers. At M1 Finance, dividends are used to automatically purchase underperforming stocks or funds. There is a $10 cash minimum for M1’s service to kick in.

Vanguard has a traditional DRIP service, and for reasons already mentioned, it’s the only company to offer auto deposits into mutual funds.

Individual Retirement Accounts are available at all 3 broker-dealers. Vanguard offers more types than its rivals.

Vanguard wins.


Our Recommendations


Beginners: We recommend M1 Finance for its Pie method of investing.

Mutual Fund Traders: Vanguard is the only option.

Retirement Savers and Long-Term Investors: Vanguard’s financial planning service and target-date mutual funds give it the edge here.

ETF and Stock Trading: Go with Vanguard.


Promotions


M1 Finance: Pay $0 commissions. Transfer account to get up to $2,500 bonus at M1 Finance.

Acorns: Try Acorns for free and get a $5 friend referral bonus.

Vanguard: none.



M1 Finance vs. Acorns vs. Vanguard: Results


Despite the new way of investing Acorns have rolled out, and great mutual funds from the old, boring traditional firm, M1 Finance looks like the best option.