TD Ameritrade vs M1 Finance in 2020



TD Ameritrade vs. M1 Finance Introduction


Which brokerage house is able to give you the financial services you want, TD Ameritrade or M1 Finance? TD Ameritrade has futures and forex, while M1 Finance has a simplified trading process.

For more details, read the following:


M1 Finance Pros and Cons


M1 Finance is the broker of choice for traders who want these types of services:

- Whole-dollar investing
- Ability to create custom funds
- Banking tools

If you do choose M1 Finance, you will have to accept these drawbacks:

- Limited selection of tradable products
- No portfolio management
- Weak digital trading tools


TD Ameritrade Pros and Cons


TD Ameritrade is the broker of choice for traders who demand these features:

- Professional-level software
- Investment management in both traditional and digital packages
- Around-the-clock customer service

The company does have these downsides, though:

- Commissions on futures are rather high
- Software can be difficult to learn


Promotions


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

TD Ameritrade: $0 commissions + transfer fee reimbursement.



First Category: Assets and Investment Services


You should choose TD Ameritrade if you want to trade these asset classes:

- Forex (but not cryptocurrencies)
- Futures contracts (bitcoin contracts are available)
- Options, including options on futures
- Mutual funds (nearly 11,000 of them)
- Closed-end and exchange-traded funds
- Bonds and other fixed-income products
- Stocks

The last category includes penny and over-the-counter instruments, but not foreign stocks.

M1 Finance offers just equities, ETFs, and closed-end funds. And equities don’t include OTC stocks.

Winner: TD Ameritrade


Second Category: Banking Tools


Once you have your investments set up, you may want to add some banking features to your brokerage account. Both firms in this appraisal let you do just that, although their offerings do differ in important ways.

M1 Finance offers M1 Spend, which is a discrete bank account that can be linked to an investing account. TD Ameritrade simply attaches a debit card and checks to an existing brokerage account; so under TD Ameritrade’s system, a second account isn’t created.

As for features, a major difference is that M1 doesn’t offer checkwriting. So if you want to use checks, you’ll have to choose TD Ameritrade.

Perhaps the biggest difference of all is that M1’s service only comes with one ATM fee refund per month. TD Ameritrade has no limit, which obviously could be huge for some traders.

Winner: TD Ameritrade


Third Category: Websites


Managing investments and cash can be accomplished on the brokers’ websites. During our test drive of them, we found them easy to use. M1’s is by far the simpler of the two simply because there’s not much on it. TD Ameritrade has a lot of features on its site, but it still manages to be user-friendly.


M1 Finance


For actually placing a trade, M1 Finance doesn’t offer very much. There is no trade ticket to speak of because M1 clients don’t submit orders directly to the exchanges. What they do is submit an order request (using a simple web-based form) to M1 who then submits orders to the exchanges at specific times during the day.

TD Ameritrade clients can send orders whenever they want, and they can do it with a very nice trade bar called SnapTicket. Appearing near the bottom of the monitor, it offers a lot of great features, including:


TD Ameritrade or M1


- Trailing orders
- Extended-hours trading
- Conditional orders
- Streaming market data

Winner: TD Ameritrade


Fourth Category: Mobile Apps


If you can’t be at your desk, you could instead use M1’s or TD Ameritrade’s mobile app. The latter broker actually has two of them. One we will call the regular app; the other is a high-powered trading app. It has very advanced charting with hundreds of technical studies. The app’s order ticket has many advanced features, including the ability to trade options, futures, and forex.


TD Ameritrade


The second TDA app has mobile check deposit, educational videos, and Level II quotes.

On the M1 Finance app you won’t find these types of advanced features. You will find user-friendly tools to search through stocks, funds, and Pies—and make an investment. There is also a watchlist and very simple charting.


M1 Mobile App


Winner: TD Ameritrade


Fifth Category: Desktop Software


TD Ameritrade customers who don’t find what they’re looking for on the broker’s mobile apps or website can trade on thinkorswim, a very advanced desktop program. This is actually the high-powered mobile app in desktop format. It has many professional-level tools. A few examples are:


Ameritrade TOS


- Forex trading boxes
- Full-screen charting with right-click trading
- CNBC, live and free of charge
- Learning tools
- Order ticket with many trade types
- Level II quotes
- Direct-access routing

M1’s emphasis on user-friendly trading means that it has no desktop program to speak of.

Winner: TD Ameritrade


Sixth Category: Miscellaneous Services


Dividend Reinvestment Program: If you want to automatically convert cash dividends into additional shares of securities, both M1 Finance and TD Ameritrade have you covered. M1 Finance does require at least $25 first, though, before it makes a purchase.

Fractional-share Trading: Self-directed traders at M1 Finance can buy and sell partial shares of stocks and ETFs, something that’s not possible at TD Ameritrade.

IRAs: Although both broker-dealers have Individual Retirement Accounts, only TD Ameritrade has SEP and SIMPLE accounts.

Winner: TD Ameritrade


Promotions


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

TD Ameritrade: $0 commissions + transfer fee reimbursement.



At Last, Our Recommendations


Beginners: In theory, M1 Finance should get our endorsement here. It consciously tries to create a user-friendly trading experience for newbies. But during our testing of the Pie method of investing, we actually found creating Pies to be somewhat confusing. Plus, M1 just doesn’t have the customer service that TD Ameritrade has. We choose TD Ameritrade.

Stock/ETF Trading: This one is easy. TD Ameritrade.

Small Accounts: Robo investors with less than $500 have to go with M1 Finance because that’s TD Ameritrade’s minimum. Self-directed traders can choose either firm.

Long-Term Investors and Retirement Savers: Although M1 Finance does have target-date Pies, TD Ameritrade has a larger number of target-date mutual funds along with financial advice, a profit-sharing plan, and a self-employed 401k.


Assessment


Other than fractional-share trading, M1 Finance just doesn’t have very much to challenge the leviathan TD Ameritrade.


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