Robo Battle: M1 vs. Betterment

That is not to say that we are talking about BattleBots, the Discovery Channel’s hit show in which homemade robots battle it out in an improvised “arena.” M1 Finance and Betterment are two of the most notable Robo-advisors on the market today.

Robo-advisors provide algorithm-driven financial planning services that require little or no involvement on the part of the client. As you might expect, they are an excellent way for investors with little or no prior knowledge of the market too, well, get started in the market. Robo-advisors are also a fantastic option for those on a tight budget.

After putting away your hard-earned money in a traditional savings account in the hopes of seeing exponential growth, you discover that the national average annual percentage yield (APY) in the United States is only 0.04 per cent. To ensure that your savings actually grow, you must invest in the stock market, which can be a daunting prospect.

This article will compare and contrast these two titans of the rapidly expanding Robo-advisor industry, highlighting the advantages and disadvantages of each. As you will see, M1 Finance and Betterment each have a distinct flavour, or investment ethos, which you should consider before investing.

M1 Finance is a company that provides financial services to individuals and businesses.
Another advantage of M1 Finance is that it supports both passive and active investment strategies at the same time. The company, which was founded in 2015 by Brian Barnes, was founded to create something completely new. The unique aspect of M1 Finance is its emphasis on “pie investing,” which is a relatively new concept.

Pie investing, as the term implies, is a method of illustrating users’ investment allocations by using pie charts to represent their investments. Apart from being simple to use, this system also provides members with a visual representation of their investments, which is easier to comprehend than raw numerical values alone.

Furthermore, these pies are extremely easy to manipulate. Predetermined “expert” pies can be customised by adding stocks, bonds, or exchange-traded funds (ETFs) to the slices, which can then be combined to create a pie that perfectly meets your needs. It’s entirely up to you whether you want to change anything or not.

M1 Finance

A basic account has almost no monthly or management fees, and it is easy to get started. There is only a one-time minimum deposit of $100 to cover the costs of the course.
Its DIY ethos instils a sense of control: while they have excellent predetermined portfolios for their members to choose from, the high level of customization will appeal to those who want to put their own stamp on things, while the high level of customization will appeal to those who want to put their own fingerprint on things
M1 Finance offers one-click rebalancing and distributes your deposited funds evenly by using fractional shares, which are available through M1 Finance.
M1 Finance’s straightforward graphic user interface, combined with the understandability of pie charts, makes it an excellent platform for teaching children about investing.
Where does M1 Finance tend to fail? Although it is highly customizable and reasonably priced, there are a few aspects of it that may not sit well with some investors.

Perks of M1 Finance

There is no such thing as tax-loss harvesting. The ability to harvest tax losses when selling securities at a loss is important for more experienced investors because it allows them to avoid capital gains when selling securities at a loss.
There aren’t enough financial advisors. Although it may not seem important to most people, if you are new to the world of trading, it is beneficial to have a team of professionals on hand to assist you at all times.

Cons of M1 Finance

Betterment is one of the industry’s long-standing leaders. Interestingly enough, it was one of the world’s very first robot advisors, and it is still going strong. Improvement may be the best option for the completely passive investor, and we have no reservations about saying so. Even though Betterment’s services are not completely free, unlike M1 Finance, it is important to note that it does not require any ongoing maintenance.


You could theoretically invest, adjust your asset allocations to match your risk tolerance, and then sit back and enjoy the fruits of your labour. You will never have to think about your money again; all you will have to do is relax and enjoy the fact that it is growing.

Betterment is simple to use and understand, and it gives even the most inexperienced investors a chance to “get a piece of the pie.”

Perks of Betterment

There is no need for any type of maintenance whatsoever. Because everything essential has been automated, you can make an investment, forget about it, and come back to it years later.
Tax-loss harvesting is a term used to describe the process of harvesting tax losses. While we identified this as a significant disadvantage of M1, Betterment’s tax-loss harvesting is handled by a powerful algorithm, which has the potential to save you a significant amount of money.
Investing that is socially responsible. Although this could be accomplished by manually allocating funds in M1’s pies, not everyone is aware of which funds are ethical and where to find reliable information about a company’s ethical practices and practices in other industries. Betterment takes care of this for you by offering three socially responsible investment portfolios.

The Bottom Line

This is going to be a difficult battle. It even appears to be a tie; M1 Finance provides significantly greater flexibility but suffers as a result of the absence of tax-loss harvesting. The tax-loss harvesting feature of Betterment, along with increased access to advisory services, makes it a better alternative to M1 Finance, which does not provide the same level of creative investing opportunities.

At the end of the day, we believe it is quite straightforward. There’s a reason why both of these platforms are legitimate and industry leaders. They are steadfast, and they will likely continue to be so for many years to come. M1 Finance is a better option for advanced beginners and intermediate investors who have some experience. Beginners will find Betterment to be a haven, as they will appreciate the level of hands-off management it provides.