M1 Finance
First Seen: February 2016 · Founded: 2015 by Brian Barnes · Status: Hybrid robo-advisor with customization
Overview
M1 Finance is “robo-advisor meets self-directed brokerage” allowing custom portfolio allocation (“pies”) with automated rebalancing. Free for basic accounts.
Key differentiator: Customize portfolio vs accepting robo’s allocation. “Automation for sophisticated investors.”
Pie System
Portfolio as “pie”: Divided into slices (stocks, ETFs, other pies)
Example: 70% stocks (50 slices), 20% bonds (10 slices), 10% real estate (5 slices)
Auto-rebalancing: New deposits allocated to underweight slices
Dynamic rebalancing: Optional selling of overweight slices
Expert Pies: Pre-built portfolios (General Investing, Hedge Fund Strategies, Bogleheads Three-Fund)
Pricing
Free tier: No fees, unlimited trades, fractional shares, auto-rebalancing
M1 Plus ($125/year or $10/month):
- Higher cash APY (4.5% vs 3.5%)
- Lower margin rates
- 2% cashback M1 card
- Instant transfers
No trading commissions, no advisory fees (makes money from margin lending, M1 Spend/Borrow services)
M1 Borrow (Portfolio Line of Credit)
Margin rates: 3.5%-5% (vs 8-12% credit cards)
Borrow up to: 35-50% of portfolio value
Use cases: Real estate down payments, business funding, emergency liquidity
Risk: Margin call if portfolio drops (must sell holdings or deposit cash)
FIRE Community Reception
Pro: Free, customizable, tax-loss harvesting (M1 Plus), sophisticated automation
Con: One daily trading window (vs real-time), limited Roth IRA ladder flexibility, margin temptation
r/M1Finance: 50K+ members, portfolio sharing, “pie” optimization discussions
Criticism
One daily trading window: Trades execute 9:30am or 3pm ET (vs real-time at Fidelity/Schwab)
Margin risk: Easy access to leverage can lead to overleveraging
Customer service: Growing pains (complaints about support responsiveness)
Sources
- M1Finance.com
- r/M1Finance subreddit
- Brian Barnes founder interviews