Robo-Advisors history

The concept of Robo-Advisors has grown significantly since their inception in 2008. As a result, today there are numerous companies, that utilize this technology in order to provide investment management services to retail investors. Some of the larger Robo-Advisors include M1 finance, Wealthfront… These companies have successfully gathered assets that total more than $20 billion dollars.

M1 Finance

Overview

M1 Finance is a new type of investment platform that offers a robo-advisory investment platform with brokerage accounts, digital checking accounts, and lines of credit. The company has been operating since 2015 and is based out of Chicago, Illinois. With its latest funding round, the company is looking to grow its reach into the financial investing space.

(Account types: Individual and joint brokerage accounts, Roth IRA, SEP-IRA, and Traditional IRA, plus trust accounts and custodial accounts)

Details

If you have a brokerage account with a service like Betterment, you will see that they offer tools to rebalance your portfolio automatically. But for many people, one-click rebalancing isn’t good enough. They want the freedom to make their own decisions about when and how to rebalance. M1 Finance’s deposit balancing feature lets you decide for yourself.

Getting started with M1 Finance is quick and easy. After creating an account, you’ll have access to the following features:

• Invest with M1 Community pies

Pies are better when they’re shared. Introducing M1 Community Pies: Easily sharable portfolios that allow you to invest with your values and financial goals in mind.

• Retirement

Allows you to Invest in expert-recommended portfolios designed to help you reach your retirement goals. Also offers an automated contribution so you can invest in the future without any hidden fees. You can choose from Traditional, Roth, or SEP IRAs.

• M1 Invest

Offers you the option of customizing your portfolio of stocks and funds or choosing expert portfolios. Regardless of share price, you can own stocks and ETFs. This simplifies diversification and ensures you’re always invested.

Fees

M1 Finance offers two types of accounts. There is a free M1 account and a premium M1 Plus account. The free account offers limited trading capabilities and has no fees associated with it. The M1 Plus account costs $125 per year to maintain and has some additional features that the free account does not offer. These features include:

• Tipping: Tipping allows you to send money to others’ portfolios on the platform.
• M1 Q&A: M1 Q&A allows you to ask questions and receive answers directly from M1’s experts.
• M1 Bill Pay: This feature allows you to pay your bills through your portfolio on the platform.
• Loan Payment Planner: This tool helps users set up loan payment plans with their portfolios, allowing them to make regular payments toward loans they have taken out through the platform.
• Personalized Portfolio Analysis: This is a tool that analyzes your portfolio in more detail and offers you suggestions for where improvements can be made.

TIP: Try M1 Finance risk-free by using this link to open an account: HERE

Wealthfront

Overview

Wealthfront is an online financial advisory service. It was founded in 2008 by Andy Rachleff, Dan Carroll, as a robo-advisor service for financial planning and portfolio management. Based in Palo Alto, CA.

(Account types: Traditional IRA, Roth IRA, SEP IRA, Brokerage, Trust, Savings Account, Checking, 529 plans)

Details

Wealthfront has all the bells and whistles you’ll ever need to manage your investments, including:

• Tax Loss Harvesting: Wealthfront integrates with your brokerage account to determine securities that have experienced a capital loss in the past. Wealthfront then sells the security for a loss in order to offset gains you may have had in other positions.
• Automatic rebalancing: Diversification is one thing, but keeping it is another. Wealthfront automatically rebalances your portfolio when necessary to keep it as close to your target allocation as possible.
• Personalized advice. Personalized advice comes from our licensed financial advisors who can help you make smart investing decisions at every step of the process.

Fees

Wealthfront has two fee structures — the Wealthfront Standard and Wealthfront Black Tie.

• Wealthfront Standard has a 0.25% annual fee, which covers all of the automated investing services that Wealthfront provides, including rebalancing, tax-loss harvesting, and financial planning tools like retirement income projections, tax-planning tools, cash flow projections, and so on.
• Wealthfront 529 plans have a fee ranging from 0.42% to 0.46%.

M1 Finance or Wealthfront?

M1 Finance and Wealthfront are two automated investing services that appeal to those who want to build a portfolio without the help of a human financial advisor. M1 Finance and Wealthfront’s approaches to investing are similar in some ways but different in others.

Which is the right choice for you?

M1 Finance and Wealthfront are both good options for people who want to invest their savings over time. M1 Finance has no minimum balance and no annual fees, while Wealthfront has a $500 minimum balance and charges a 0.25% annual fee.

What makes M1 Finance stand out from Wealthfront, Betterment and other financial management platforms is that it’s primarily designed as a brokerage: like Robinhood, it’s an app that helps you buy and sell stocks. You don’t get the full service of an advisor, but you also don’t pay any fees. In addition, it offers a “Pay Yourself First” feature that automatically takes money from your checking account every day and invests it for you. This is essentially like getting a raise without having to ask for it!

Conclusion

So, if you’re looking to invest and want an introduction to some of the best robo-advisors on the market, Wealthfront and M1 Finance should be at the top of your list. They offer a lot of the same features as more well-known financial advisors without charging a wealth management fee. If you have several thousand dollars to invest and are looking for a hands-off investment strategy (that’s still not quite passive), either one is a good place to start!

Related M1 Finance Comparison Posts:

• M1 Finance vs. Webull
• M1 Finance vs. Vanguard
• M1 Finance vs. Fidelity
• M1 Finance vs. Robinhood
• M1 Finance vs. Betterment
• M1 Finance vs Charles Schwab
• M1 Finance vs SoFi Invest
• M1 Finance vs. Acorns
• M1 Finance vs. Wealthfront