Interactive Brokers vs M1 Finance in 2022



Overview of M1 Finance and Interactive Brokers


If you’re looking for a place to conduct hands-off investing, M1 Finance could be your broker. If you want the best active trading tools, Interactive Brokers might be a better home. For more information on these two broker-dealers, keep reading.


Pricing


Broker Fees Stock/ETF
Commission
Mutual Fund
Commission
Options
Commission
Maintenance
Fee
Annual IRA
Fee
IB $0 $14.95 $0.70 per contract $0 $30
M1 Finance $0 na na $0 $0


Promotions


M1 Finance: Up to $500 cash bonus for funding account at M1 Finance.

Interactive Brokers: Use this referral link to get up to $1,000 of IBKR stock for free!



Style of Investing


M1 Finance specializes in long-term, buy-and-hold, investing. With this goal in mind, it created Pies, which are baskets of securities (more specifically, stocks, closed-end funds, and ETFs). Orders for Pies are sent to the major exchanges just twice a day—no need to trade all day since this is long-term investing only. M1 Finance customers can choose the broker’s Pies or create their own.

Because Interactive Brokers specializes in active trading, its customers can send orders to the exchanges during regular market hours (and other hours, too). Besides the securities M1 offers, IB offers mutual funds, bonds, futures, forex, warrants, and precious metals.

On top of the major US stocks that M1 Finance offers, IB has over-the-counter stocks and products on major international exchanges. M1 Finance has neither.

Winner: Interactive Brokers


Education and Asset Research


M1 Finance’s website has a collection of articles on investing topics that cover many areas, from retirement to 529 plans to Regulation E. The company also has a blog.

For security research and analysis, M1 has two screeners, one for stocks and the other for funds. Both are equally brief with just a few search criteria. Clicking on a result generates a security profile with very succinct details. For Disney, M1 Finance provides a market cap of $357 billion, a dividend yield of 0.0% (the company suspended dividends during COVID-19), and some news articles.

Investors who need more than the brief materials that M1 Finance offers will find more at Interactive Brokers. For general education, the IB website has sections for:

- IBKR Campus
- Traders' Academy
- Traders' Insight
- IBKR Quant Blog
- Webinars
- Student Trading Lab
- Short Videos
- Traders' Glossary
- Traders' Calendar

During our research, we found lots of materials spread throughout these website sections.

For actual security research and analysis, the broker delivers in-depth screeners on both its website and desktop platform. The lion’s share of information on individual stocks and funds will be found on the website. Examples of data points include:

- Lipper ratings
- Dividend history
- ESG ratings
- Tear sheet
- Social sentiment

Winner: Interactive Brokers


Margin Borrowing


Both brokerage firms offer margin accounts, and these are a great way to maximum your trading endeavors.

M1 Finance currently charges either 5% or 3.5% (with a $125 annual fee). Interactive Brokers customers pay on a sliding scale that varies from 0.75% to 2.57%, depending on commission schedule (IBKR Lite or Pro) and amount borrowed. Assets on foreign exchanges have their own schedules.

Interactive Brokers, but not M1 Finance, displays margin requirements for individual securities on its software.

Winner: Interactive Brokers


Websites


M1 Finance’s website is about as simple as its educational program. It has a transfer tool for moving funds. There are five tabs in the top menu, one of which is an Invest tab. This is where Pies are managed, rebalanced, and edited. The Research tab is where the simple asset screeners are located.


M1 vs IB


Unfortunately, charts on the M1 site are very simple, and there is no order ticket (M1 takes order requests and sends them to the exchanges in batches).

Because Interactive Brokers emphasizes active self-directed trading, it is possible to send orders to the major exchanges at will. The best place to do this is on the client portal, which is accessed with a login (2-factor authentication is required). Advanced charting and a trade ticket with bracket orders are on tap.

Winner: Interactive Brokers


Desktop Software


IB customers can download Trader Workstation, the broker’s flagship trading platform, and use it on Windows, Mac, or Linux. This very advanced piece of software delivers a professional look and feel with a lot of great features. During our trial run of the program, we really liked the following features:


IB


- Advanced trade ticket with direct access to specific venues
- Graphs with many tools (including right-click trading)
- Very sophisticated option tools
- Screener with the ability to look for foreign assets

Since M1 Finance has no stress on frequent trading, it doesn’t have a desktop platform.

Winner: Interactive Brokers


Mobile Apps


Neither broker has neglected to remember the mobile lifestyles of its customers. The M1 Finance app is as simple as its sister website. It has very elementary charts and an order request form.


M1 Mobile App


When we took the IB app on a test run, we found a totally different experience. The software has excellent charting with a horizontal mode and several technical studies. The platform also has multiple order tickets. One of them is a wheel order entry system; just tap on pre-filled numbers and off you go.


IBKR


If you opt for the traditional vertical order ticket, you’ll get a less user-friendly experience but more order types. We found limit-on-close, relative, and market-if-touched, among others. Bracket orders can be attached, and a price management algorithm can be added as well.

Winner: Interactive Brokers


Day Trading


Shorting. M1 Finance customers cannot short securities, but IB customers can.

Level II quotes. Interactive Brokers has these, but M1 does not.

Direct-access routing. Same story here.

Routing fees and rebates. Again, same story.

Winner: Interactive Brokers


Other Services


Cash management: Both firms have debit cards with zero annual or maintenance fees. M1 Finance reimburses one ATM fee per month. IB does not.

Automatic mutual fund investing: Although Interactive Brokers does offer investing in mutual funds, it doesn’t have a periodic investing service.

IRAs: Both brokerage houses have Roth, traditional, and SEP retirement accounts.

Fractional-share trading: Both firms also provide whole-dollar investing in stocks and funds.

IPO availability: Neither brokerage firm offers IPO participation.

Extended hours: Interactive Brokers clients can trade before the market opens and after it closes. M1 Finance customers cannot; in fact, they cannot even trade during the whole day session.

Dividend reinvestment program: Cash distributions inside an Interactive Brokers account can be reinvested into the securities that pay them. M1 Finance has a similar service, although it does have a $25 minimum reinvestment amount, a policy that IB doesn’t have.

Winner: Interactive Brokers


Promotions


M1 Finance: Up to $500 cash bonus for funding account at M1 Finance.

Interactive Brokers: Use this referral link to get up to $1,000 of IBKR stock for free!



Our Recommendations


Stock/ETF trading: Interactive Brokers. Easy choice.

Beginners: M1 Finance attempts to make the investment process as easy and as simple as possible. But Interactive Brokers has better customer service, better educational materials, and a demo mode on its desktop platform. Toss up.

Small accounts: M1 Finance has a $100 minimum investment amount for taxable accounts and a $500 minimum for IRAs. The IBKR Lite commission schedule at Interactive Brokers has no such minimums.

Retirement savers and long-term investors: M1 Finance has 28 target-date Pies built by M1 that are designed for retirement saving. Interactive Brokers has a longer list of target-date mutual funds from multiple fund families. We would go with IB.


Final Judgment


M1 Finance has a user-friendly investment method that does take a lot of self-directed work out of the equation. For all other trading routines, though, Interactive Brokers clearly is head and shoulders above its rival here.


Open M1 Finance Account





Open Interactive Brokers Account




About the Author
Chad Morris is a financial writer with more than 20 years experience as both an English teacher and an avid trader. When he isn’t writing expert content for Brokerage-Review.com, Chad can usually be found managing his portfolio or building a new home computer.