Firstrade vs M1 Finance


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



Overview of M1 Finance and Firstrade


M1 Finance is a new hybrid brokerage firm that offers both computerized investment services and self-directed programs. Firstrade is an older low-cost brokerage firm that only offers self-directed accounts. We’re going to compare these two firms in important areas, and see if one broker comes out on top.


Pricing


Broker Fees Stock/ETF
Commission
Mutual Fund
Commission
Options
Commission
Maintenance
Fee
Annual IRA
Fee
Firstrade $0 $0 $0 per contract $0 $0
M1 Finance $0 na na $0 $0


Promotions


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

Firstrade: Get $0 commission in ALL trades!



Style of Investing


M1 Finance offers trading in Pies. A Pie is a basket of securities—basically a collection of stocks and ETF’s. Some Pies are created by the brokerage firm, while others are built by the firm’s customers. The broker-constructed Pies are rebalanced every quarter and they’re constructed using MPT (Modern Portfolio Theory).

One Pie can have as many as 100 holdings or as few as 1. An M1 account cannot have more than 500 total holdings.

Firstrade offers regular self-directed accounts. Investment advice of any kind is not available. Firstrade clients have access to stocks, bonds, ETF’s, options, and mutual funds. M1 Finance does not offer bonds, options, or mutual funds; and here, the broker is at an obvious disadvantage compared to Firstrade.


M1 Finance vs Firstrade


Technology


M1 Finance has a website that’s well0designed and user-friendly. It can be used to create Pies and invest in the broker’s Pies.

M1 Finance does not have a desktop platform or a browser-based one. Buying and selling Pies takes place on the M1 website. It’s fairly straightforward to navigate. Clicking on a button that says “Create New Pie” is the first step to building your own basket of investments. One nice feature on the M1 Finance website that other brokers don’t have is a company logo displayed for each stock, which makes browsing through a list of equities fast and easy.

Going to Firstrade is a step up in this category. The first tool we found on Firstrade’s website that M1 doesn’t offer is a trade bar. It sits at the bottom of the browsing window. It can be minimized or expanded. In minimized form, it offers trade data, such as volume and bid-ask spread of whatever ticker symbol is entered. Selecting the expanded mode produces the trading ticket. Here, stocks, options, and ETF’s can be traded. Buying power is shown on the trade bar, and option chains can be generated as well. A small graph can be found on a second layer along with news articles, a Morningstar stock rating, and basic security information.

Bonds and mutual funds can be traded on the Firstrade website, and we found the order forms easy to use.


Promotions


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

Firstrade: Get $0 commission in ALL trades!



Mobile Apps


Both broker-dealers offer mobile apps. Firstrade’s platform can be used to buy and sell options, stocks, and ETF’s. We didn’t like the lack of equity and derivative research features. Also disappointing was the lack of video news and mobile check deposit.

Moving to M1 Finance’s mobile platform, we see a similar app. There is no check deposit or streaming news. Pies can be built just as on the website. One difference between the two is that the Firstrade app has a charting feature, whereas M1 offers only an elementary graph. On the flip side, the M1 app incorporates a funds transfer feature, whereas Firstrade still has not added this important feature.


Customer Support


M1 Finance has customer service channels open from 9 o’clock in the morning until 5 o’clock in the afternoon (CST). It doesn’t have any Saturday or Sunday hours, and the M1 website doesn’t have an online chat function. There is an M1 chatbot, although you have to login to find it. It didn’t always do a perfect job of answering our test questions.

There is an extensive FAQ on M1’s website. The questions cover some important topics, such as M1’s investment method.

Moving to Firstrade, we did find an online chat function, and the human rep did a better job of answering our questions than M1’s chatbot. Phone and chat support are available 8 to 6 (EST)—an extra 2 hours per day compared to M1 Finance.

One advantage that Firstrade has over M1 Finance in this category is the former’s Chinese-language support, both on a Chinese site and via phone service. Neither firm has branch locations.


Firstrade vs M1


Trading in Funds


As already mentioned, M1 Finance does not offer mutual funds. Obviously, it is at a disadvantage right off the bat here. However, it does provide ETF’s via its Pies. A Pie can be made up of a single ETF or multiple ETF’s. There is not extensive information on funds on the M1 site, so adding funds to a Pie is about the extent of fund trading here.

We found Firstrade’s ETF profile pages to be much more extensive. The information is courtesy of Morningstar. There is a price history chart, risk and return estimates, sector allocations, top holdings, and much more. Everything you would find on Morningstar’s site, including the formatting, is there. And it’s easier to trade ETF’s at Firstrade because you don’t have to put them in Pies before you trade them.

For mutual funds, we found 8,340 available for purchase. Out of these, 3,412 come with no load. All of these come with no transaction fee.


Research & Educational Resources


The M1 Finance platform focuses on creating Pies and trading them. There is minimal research materials on the stocks and ETF’s that compose them. We found a few data points, such as P/E ratio and 52-week highs and lows. Unfortunately, there are no investment learning materials. In order to do thorough research, users will have to go to other research sources.

Firstrade has far more materials on its site. Funds and stocks have Morningstar’s information, and there are also many learning materials for general investment purposes. We found a tax center, a bond search tool, and e-books on trading derivatives.


Promotions


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

Firstrade: Get $0 commission in ALL trades!



Recap


Firstrade is obviously a better broker for mutual fund investors and active traders. M1 Finance is our recommendation for beginners, buy-and-hold, and retirement investors.