Robinhood vs M1 Finance


2020: M1 Finance versus Robinhood for online investing. Compare cost, brokerage fees, IRA accounts, and differences. Which firm is better?



Overview of M1 Finance vs Robinhood


M1 Finance and Robinhood are two zero-commission brokers that have contemporary views on investing. Their approaches come with downsides, however, as some services won’t be available. Let’s take a look.


Pricing


Broker Fees Stock/ETF
Commission
Mutual Fund
Commission
Options
Commission
Maintenance
Fee
Annual IRA
Fee
Robinhood $0 na $0 per contract $0 na
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.

Robinhood: Get one free $3-$7 value stock when you open an account.



Available Products


Robinhood offers trading in stocks, exchange-traded funds, closed-end funds, options, and cryptocurrencies. The brokerage firm does not offer mutual funds, bonds, foreign stocks, traditional forex, futures contracts, or precious metals.

M1 Finance customers trade Pies, which are collections of investments. They contain stocks, ETFs, and closed-end funds. As of now, that’s all the broker offers. There are no mutual funds or other investment vehicles.


M1 Finance vs Robin Hood


Pies are either built by customers or by M1. The broker’s Pies are created and overseen using Modern Portfolio Theory. Customers are able to construct their Pies however they wish. It’s possible to place just one stock or fund in a Pie.

Pies can be traded in whole dollars, which means it’s possible to trade fractional shares of stocks and funds. While Robinhood has promised fractional-share trading in the future, it hasn’t yet rolled out the service.

Overall, it’s pretty even in the first category.


Investment Research


Robinhood customers get very limited research tools. The broker-dealer doesn’t really have a security screener. Instead, it has “Collections,” which are groups of stocks and funds based on certain themes. These include classifications such as media and energy. Clicking on a tag generates a page where securities can be sorted by price, market cap, and a few other variables.

Stock profiles at Robinhood have very minimal information. There are links to news articles, earnings histories, and analyst recommendations (but not analyst reports).

For general investing education, there’s not much available, either. We did find brief articles that discuss trading the few investments the broker offers.

At M1 Finance, stock and fund profiles are also very concise. There are news articles posted along with P/E ratio, dividend yield, and market cap. There’s actually less information at M1 than on Robinhood’s platform.

But M1 does have a screener. It is very similar for stocks and funds. The tool offers the ability to search by the three criteria that appear on an equity’s profile. The fund screener can scan according to total assets, expense ratio, and dividend yield.

Like Robinhood, M1 Finance doesn’t offer very much in terms of general investing education. The company does have a FAQ that new customers will want to take a look at.

Pretty close in this category, too.


Funds


As we have already seen, both broker-dealers in this survey offer exchange-traded and closed-end funds. Neither one offers in-depth fund commentary or analysis from third parties.

Fund profiles at Robinhood note 52-week high and low figures, average volume, the day’s high and low prices, and the dividend yield. Funds that have options will have an options chain link.

Fund profiles at M1 Finance show top holdings, asset allocation (stocks, bonds, domestic, global, etc.), expense ratio, assets under management, dividend yield, and a few other points.

Some of the broker-constructed Pies at M1 are composed completely of funds. For instance, the Domestic Dividend Pie is composed of three ETF’s, with the largest percentage devoted to VIG, the Vanguard Dividend Appreciation Fund.

Another tie.


Website Trading


Neither brokerage firm in this survey has a desktop program, browser platform, or trade bar. So website trading is it.

Robinhood’s site offers full-screen charting with line and candlestick formats. There are also a handful of technical indicators. A stock can easily be added or removed from a watchlist. There are no alerts.

M1 Finance offers charting with just line mode. There are no technical studies, and a chart cannot be expanded the full width of the screen. As with Robinhood, there is a watchlist but no alerts.

M1 Finance doesn’t have a trade ticket because the broker’s clients don’t actually place trades. Instead, they send order requests to M1, who then submits them as actual orders at specific times of the day. Robinhood’s site has an actual trade ticket that customers can use any time of the day or night.

The first victory in this competition goes to Robinhood.


Mobile Software


Robinhood’s mobile platform offers very basic charting. Touch ID is integrated for Apple devices. The broker’s decent trade ticket with multiple order types makes an appearance.


Robinhood vs M1


We hoped to find a trade ticket on M1’s mobile app, but the broker has the same trade policy. There is Touch ID, but charting is as bad as Robinhood’s. Unlike Robinhood, options trading isn’t possible on M1’s app.

Neither broker has a mobile check deposit tool.

Robinhood wins this one, too.


Other Services


Dividend Reinvestment Program: Robinhood does not offer any type of dividend reinvesting. At M1 Finance, dividends are used by the broker’s software program to purchase additional shares of securities in a Pie that are underperforming. This policy is based on Modern Portfolio Theory.

IRA’s: Robinhood doesn’t currently offer any type of retirement account. M1 Finance customers can open Roth, traditional, and SEP IRA’s.

Automatic mutual fund investing: This service is obviously unavaialble at either firm.

M1 Finance is the better option here.


Recommendations


Stock and ETF Trading: Robinhood doesn’t currently offer fractional-share trading (it has plans for this service at a future date). But it does have an actual trade ticket with market, limit, stop, and trailing orders. Furthermore, orders can be submitted to the exchanges at any time. And in fact, extended-hours trading is possible, another service M1 Finance doesn’t offer. So we’ll go with Robinhood here.

Beginners: Because M1 Finance constructs its own Pies that customers can trade, we pick it over Robinhood.

Mutual Fund Traders: Neither broker.

Long-Term Investors and Retirement Savers: Without IRA’s, Robinhood loses to M1 Finance.


Promotions


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

Robinhood: Get one free $3-$7 value stock when you open an account.



Robinhood vs M1 Finance - Judgment


These two modern brokerage firms are pretty even overall. Robinhood definitely has the better trading software and cryptocurrency program; while M1 Finance is the only choice for retirement savers and fractional-share traders. M1 is also the only option right now for banking tools.