M1 Finance Article Review

What is M1 Finance?
 
M1 Holdings, Inc. or M1 Finance is a brokerage company founded in 2015 by Brian Barnes. The company offers an electronic trading platform for financial assets trade. It offers various financial services that aim to provide ease and convenience towards its clients and users. The original niche of this company was mainly on offering robo-advisors to its clients and users. However due to the increasing demand of the people, the company has expanded to other service areas such as becoming an investment platform itself.
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M1 Finance’s main service towards its users is providing them an online brokerage platform where they are able to invest in individual stocks and ETFs with no trading fees charged. It also provides its users with free robo-advisor that caters to their needs based on the type of investment they want to make, depending on the risk they are willing to take and the goals they set on their investments.  

Features and Services Offered

FEATURES
SERVICES
​Minimum investment
$100
​Account Types
  • Trust account
  • Individual account
  • Joint account
  • Custodial account
  • Traditional IRA
  • Roth IRA 
  • SEP IRA 
  • Rollover IRA 
​Fractional Shares
Yes
Extended trading hours
None
Mobile App
Yes
Customer Service
Phone service or email
​Sign up and referral bonus
$10 - $30 but can only applicable if the account was registered through a referral ​
M1 Finance offers a unique combination of automated investing with a high level of customization, allowing clients to create a portfolio tailored to their exact specifications.

​Pros and Cons
PROS
CONS
Pie based investment scheme
Limited trading hours
Auto-invest
Limited geographical accessibility
Fractional shares
​Limited stock options
Dynamic rebalancing
Tax efficiency
Signup bonus
Referral bonus
Margin loan and Margin borrowing
Commission free investment charge
Mobile application
  • Pie-based investing system – a unique feature offered in the M1 Finance platform is its pie-based investing system where a user can create or customize investment allocations using a pie-based platform, and with the help of robo-advisors.
  • Auto-invest – a special feature offered in the M1 Finance platform wherein funds are automatically invested and allocated based on the client’s or user’s desired preference. This is an optional feature in the platform and the user must first turn it on to activate it.
  • Fractional shares – like other investment platforms, M1 also offers fractional sharing in its platform. This gives the user the ability to purchase investment stocks with the available fund on hand without purchasing a full share of that particular stock.
  • Dynamic rebalancing – it is through this that the platform helps its clients in adding funds to underweighted assets, thus maintaining balance in the pie allocation.
  • Tax efficiency – it is a integral tax minimization feature in the platform that ensures its clients a  minimum tax fee when selling parts of a portfolio.
  • Signup bonus – M1 Finance offers a sign up bonus of at least $10 for new users who are using a referral from a current M1 Finance user. This amount can be obtained once the user funds an account with at least $100 to $500 within thirty days upon opening the account.
  • Referral bonus – M1 Finance users can have a referral bonus of at least $30 for every referral. However it must be noted that an initial deposit of at least $100 or $500 must be kept into the account for at least 30 days and this referral bonus will not be transferred to a retirement account.
  • Margin loan and margin borrow – a feature offered by the M1 platform where a user can borrow an amount of 35% of their portfolio value with an interest rate of at least 2% for its M1+ users, and 3.5% for its standard M1 userss. 
  • Commission-free investment charge – unlike other platforms in the market that charges certain fees for every transaction done, one positive feature offered in this platform is that M1 Finance offers zero commission charge for every transaction due to the fact that M1 Finance is a free investing platform.
  • Mobile application – like other platforms, M1 Finance also has its mobile application for its users. This application gives its users all access to the services and features the company offers in its platform. 
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Cons
  • Limited trading window – unlike other investment platforms that offers extended trading window hours, M1 Finance only has a limited trading window hour. It usually starts ay 9:30 AM EST and it is highly recommended that trades be executed before 10:00 AM to be included in the queue for the day. 
  • Limited geographical accessibility – one downside of this platform is that its services is only limited to those citizens and permanent residents of the United States. It is not currently available to any other parts of the globe.
  • Limited investment options – another downside of this platform is that it has limited investment options. Unlike other platforms which offer extensive options for investments, M1 Finance is currently limited only to stocks investment and ETFs.


    What is M1 Finance’s pie-based investing system?
    M1 Finance’s pie-based investing scheme is the platform’s main service highlight. Once a user creates an account in this platform, he is offered a pie scheme regarding his investment fund allocation. This pie is composed of a collection an average of 100 slices that is made up of stocks, ETFs, or another pie. This is the platform’s main foundation for every investment transaction and how investment funds are allocated are measured by each pie’s allocated percentage.
     M1’s pie-based system is like an automatic investing set-up plan for the users to fully customize their investment portfolios manually, or through the help of a robo-advisor. There are two pie options a user can choose from for its investment: Custom or Expert.
  • Custom pie – under this scheme, a user can choose to customize or design how each portion of an investment goes. The good thing about this is that a user have full control on how each asset is allocated depending on a user’s preference. Each investment allocation talks up a “slice” of this pie, depending on a user’s target or preference, and can change it over time if needed or if a new target is set. It is the user that has a full control over the allocation of each funds available in his account. 
  • Expert pie - Another type of pie-system M1 offers is its “expert pie”. In this platform, a robo-advisor is the one that creates a specially designed pie with already a preallocated incestment allocation for the user, or a user can choose from the predesigned pies in the platform’s system. But still, it takes into consideration the user’s preference and target for its investment. 

Under Expert Pies, there are several options created by the system for its users:
  1. Retirement plan – pies set towards a target retirement date of the client
  2. General investing – pies that are customized depending on the risk tolerance of the client
  3. Income earners – pies whose main target is on dividends and income returns
  4. Stocks and bonds – pies created for those clients or investors who prefer to have their portfolios diversified in an easier manner without the need to invest in other assets aside from stocks and bonds
  5. Hedge fund followers – pies  created for users or investors who want to copy other hedge funds' portfolio strategies, but stay away from high management fees.
  6. Responsible investing – pies created specially for a socially responsible investor
  7. Other strategies


How to create M1 Finance account 
To be able to join the M1 Finance platform community and enjoy its perks, a user must first register his account on the M1 Finance mobile application or website.

  1. Open the M1 Finance application or website to register for M1 Finance account
  2. Once the application or site is opened, enter your email address and password on the tabs designated for the email address and password, and then click on Sign Up Now.
  3. Once you have clicked sign up, you will be directed to a page where you will see three steps which says Create a Pie, Open Your Account, and Fund Your Account.
  4. Click on Continue to go to the first step.
  5. You will be directed to a page introducing the pie system of the platform, and then once again click on Continue.
  6. Once you click on Continue, you will be directed to a page showing different companies. Select at least three companies that interests you in making an investment.
  7. Once you have selected the companies you want to invest stocks, click on Continue.
  8. You will be shown a pie chart with equally weighted distribution slices of the stocks you have chosen. You can always make changes of this weight distribution anytime you want to, and the press on Continue.
  9. On the following page you will see a message where it says you have created your first pie, and then click on Continue.
  10. On the following page, again click on Continue.
  11. Once the next page, enter your phone number, and then you will be asked to verify your identity by sending you a text message or a phone call, depending on what you prefer.
  12. Once you have verified your identity, you will be directed to a page where you will be required to enter your profile information like your name, address, state, and postal code.
  13. Once you have entered the needed details, click on Continue.
  14. On the next screen, you will be shown your profile information. You will be asked to enter your date of birth, citizenship and employment status. Once you have entered all the details, click on Continue.
  15. Next, you will be taken to a Financial and Investment Profile where you will be asked to provide insight to your financial situation and investing style. Click on Continue.
  16. Once you click on Continue, you will be asked to answer several questions in relation with your financial situation and investment style. Answer all the given questions, and then at the end, you will be asked to enter your Social Security Number.
  17. Enter your Social Security Number, and then click on Continue.
  18. Once you click on Continue, you will be directed to a page asking you for disclosures. Select which one is applicable to you and then click on Continue.
  19. Once you have entered all the required details and everything looks good, click on Confirm.


  20. On the next page, you will be asked to connect your bank. You can search from the bank options already given on the screen or you can manually search for your bank by typing it on the search bar. However if you opt not to connect your bank at that moment and choose to do it at a different time, you can click on the option that says “I’ll do this later” at the bottom of the screen

  21. You have now created your first pie. You can now have the option to invest more in your first pie, browse for expert pies, or just search for securities and ETFs.

How to create M1 Finance portfolio
  • On mobile
    Once a user has already created an account in the M1  platform, he will automatically be given the option to create his own pie based portfolio or employ the help of robo-advisors. 
 
  1. Once the app is opened, the user will be redirected to the stock and fund screener of the app where he will be able to search for any stock or ETFs in the United States. The user can tap on the option on the particular company he wants to choose to see its details and updates in the market including its profile and price history.
  2. Once a particular company has been chosen, simply tap on the plus (+) sign beside the company name or the “Add to pie” button below the screen to add it to the user’s portfolio.
  3. A user can also opt to use the expert pie by tapping on the “Expert Pie” tab above the screen.
  4. There are several expert pie options that a user can choose from in this platform, all specially designed for a users target goals and risk tolerance. To be able to decide which pie suits the best to use, the user can tap and select the particular category of interest that he wants to use.
  5. Once a category is selected, the user can tap and select the expert pies given for that particular category. There the user can see the expert pie details such as the holdings and dividend yields.
  6. Once a particular expert pie is selected, the user can tap on the plus (+) button on the tab for that particular pie type, or tap on the “Add to pie” tab on the screen, and then tap on Done.
  7. The user will be redirected to a screen showing a pie chart visualization of the portfolio. The user can select a target weight for a particular slice on the pie chart, and afterwards click on Save when done.
 
  • On the web
  1. On the Portfolio Tab, the user will be directed to browse expert pies, previously created pies, or search for securities to build a portfolio. A user can also search for a particular stock of interest and then click it to see its details.
  2. To add the stock to a portfolio, the user can check the box next to the stock or click the “Add to basket” button shown on the screen. 
  3. Once  a particular stock is selected, the user can click on the tab labeled as “Expert Pies” to opt for a predesigned portfolio customized to cater to the user’s target preference and risk tolerance.
  4. The user can select a particular category of expert pie he is interested in by clicking on that particular pie category, and then click on the pie type to see its details like its return history and dividend yield.

  5. To add that particular expert pie in a portfolio, the user can check the box next to the expert pie selected, or click on the “Add to basket” button shown on the screen, and then click on “Add” after finishing with his selection.
  6. ​The user will be then directed to a page showing a pie chart visualization of his portfolio. There, he can select for specific weight targets for each slice, and then click on “Save” once it is all done.

For both mobile and web-based platform of creating a finance portfolio, the user can always opt for choosing either a predesigned expert pie portfolio, or a self customized portfolio. It all depends on the preference and the risk a user is willing to make.
Who can apply for  M1 Finance account?
At present, M1 Finance is limited only to citizens of the United States and residents who have obtained permanent residence by being a green card holder, over 18 years old and currently residing in the United States. 

Who is M1 Finance preferably for?
For unfamiliar traders or investors, one might initially think that M1 Finance is just like any investment and trading platform in the market. However, in reality it is different from the typical investment and trading platforms like Robinhood or Webull, Mainly due to its investment scheme. M1 Finance is a platform not preferable for everybody, especially for beginners who do not have enough skill or trading in this kind of platform. There is a limit to services and features that the platform offers that may not cater to what a user needs. Given the fact that it was not originally a platform for trading and investment, it can be drawn that the company still has a lot to improve on their services when it comes to this platform. If a person wants to have more trading options with a different scheme style, he can opt for other platforms in the market such as the abovemention Robinhood or Webull.  However, it can be favorable for advanced or active traders and investors who have a piece of explicit knowledge and vision about the types of investments and transactions they want to make. It is also not recommended for those who are not willing to take risks since this platform stresses out risk-taking in its services most especially when it comes to making fund allocations. Whether a user chooses the custom pie platform where he can customize the fund allocation, or the prebuilt pies the platform has predesigned in its system, both constitutes a significant amount of risk on the part of the user. 

Is investing in this platform safe for its clients and users?
For some who might have any concern regarding the platform’s safety when it comes to their client’s investment, it can be noted that M1 Finance is covered by Securities Investor Protection Corporation (SIPC) which is a reputable insurance company used by most leading brokerage companies to ensure the investments of its users and members most especially on times when a company is facing crisis. Also, M1 Finance is backed up by Apex Clearing Corporation (APC) as their clearing bank. This backs up the company’s funds and ensure its fund management. Thus with the abovementioned details, it is safe to say that M1 Finance is a safe platform for investors who wants to invest using this platform.

​How does M1 Finance profit?
Despite the fact that M1 Finance is a free trade platform, the company still earns through the cash management, securities lending, and directed order flow payments that the company offers. Also, it should be noted that the company also offers loans to to its clients and users with an interest rate of 3.5% for its standard M1 users, and 2% for its M1+ users. There is also 35% of assets in taxable accounts invested in the company which adds to its funding.

Conclusion
Although M1 Finance is a platform not very advisable for beginners in the trade and investing platform, it does not necessarily mean that it is not the best for anybody else. For average or intermediate to active and professional investors, M1 Finance is probably one of the best platforms in the market in terms of investment. Although there is a very limited service featured in this platform compared to what other companies are offering, M1 Finance has made it sure that it offers the best of what it has to offer to its clients and users. The platform’s pie chart investment portfolio scheme offers convenience and support to its clients and users regarding the various investment options it gives them and gives clear visualizations of each investment scheme a user has in its portfolio. Also, aside from the customized pies that the user can freely design for his portfolio, the expert pies also offers another convenient way of customizing a portfolio through its predesigned pie schemes which all caters to the user or client’s targeted goals and risk.
Over all, M1 Finance is one of the best trading and investing platforms in the market due to its unique platform and pro client policies in its system. 

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