M1 Finance vs. Betterment for ESG Investing (Review)

Both M1 Finance and Betterment let you create socially responsible (SRI) portfolios, though the two platforms are very different. We have reviewed over 30 robo-advisor portfolios, and we will help you compare Betterment and M1 Finance if you are a responsible investor.

SustainFi October 18, 2021

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At a glance

  • Both M1 Finance and Betterment offer environmental, social, and governance (ESG) investing options that consider factors like carbon emissions and shareholder rights. Because the platforms are so different, the best option depends on what you are looking for
  • Best for self-directed investors: M1 Finance. M1 Finance lets you easily create custom ESG portfolios, buy fractional shares and borrow against your investments at cheaper rates 
  • Best for low fees: M1 Finance. M1 Finance doesn’t charge account management fees
  • Best full-service robo-advisor: Betterment. You can fully outsource your investments to Betterment, which will create a balanced portfolio for you
  • Best for access to human advisors: Betterment. You can buy packages or a premium membership to get access to human financial advisors

Keep reading to learn more.

Minimum investment


Minimum investment


Management fee

None ($125/year for Plus accounts)

Management fee


ESG option

Two Responsible Investing "Pies"

ESG option

Three Impact (SRI) Portfolios (Broad Impact, Climate Impact, Social Impact)

Fractional shares


Fractional shares


Margin loans

Yes (2.0%-3.5%)

Margin loans


Tax-loss harvesting


Tax-loss harvesting


What is M1 Finance?

M1 Finance is an investment platform rather than a full-service robo-advisor; it’s a cross between an online broker and a robo-advisor. M1 Finance offers an easy-to-use app that lets you build customizable portfolios (called “pies.”)

The pie portfolio model allows you to easily add a stock or an exchange-traded fund (ETF) as a piece of the pie. You choose what percentage to invest in each asset.

If you don’t want to “bake” your own pies, M1 Finance comes with over 80 premade options. The app offers two socially responsible pies, the Responsible Investing and the International Responsible Investing Pies. Both are made up of asset manager Nuveen’s ETFs. In addition, M1 Finance offers fractional shares and lets you borrow to invest.

Despite its flexibility, M1 Finance is a platform for investing, not for day trading. For example, you can only buy and sell during the daily trading window (two windows for M1 Plus members.) (If you are interested in trading more frequently, check out Public, a social investing app.)

Brian Barnes started Chicago-based M1 Finance in 2015. His startup has recently surpassed $4.5 billion in assets under management, raising over $300 million from investors like Softbank.

🔔 Read the full review of M1 Finance.

What is Betterment?

Founded by Jon Stein in 2008, Betterment is the first and most successful robo-advisor judging by assets under management (which reached $29 billion in early 2021). The robo-advisor uses algorithms based on the Modern Portfolio Theory to create the right portfolio to meet your goals, such as saving for retirement or growing your wealth.

🔔 Check out the full Betterment review.

M1 Finance vs. Betterment: Account Types

Both M1 Finance and Betterment support:

  • Individual and joint taxable investment accounts
  • Retirement accounts for traditional, SEP, and Roth IRAs, plus rollover 401(k)s
  • Trusts

In addition, M1 Finance offers custodial accounts (UTMA/UGMA accounts) for children. Custodial accounts are for M1 Plus members only.

💰 The winner: M1 Finance. M1 Finance wins if you need a custodial account for your child.

M1 Finance vs. Betterment: Checking accounts

Both M1 Finance and Betterment can set you up with checking accounts.

M1 Spend is a free savings account that comes with a Visa debit card. M1 Plus members get 1% APY on their money and 1% cash back on qualifying purchases. The account is FDIC-insured for up to $250,000. M1 Plus members get reimbursed for up to four ATM transactions each month.

An M1 credit card is coming soon.

Betterment offers two cash management accounts:

  • Betterment Cash Reserve, a high yield savings account, is FDIC-insured for up to $1 million and pays a 0.10% APY as of October 2021
  • Betterment Checking Account, a no-fee checking account that comes with a Visa debit card. The account is FDIC-insured for up to $250,000 and reimburses all ATM fees. You can get cash back rewards from thousands of brands like Dunkin, adidas and Walmart

💰 The winner: Tie. Although M1 Finance offers a higher APY, you need to be an M1 Plus member to qualify.

M1 Finance vs. Betterment: Minimum investment

Both M1 Finance and Betterment have low minimums compared to human financial advisors, some of whom require $250,000 to work with you.

M1 Finance asks you to deposit $100 into your account to start building pies. The minimum goes up to $500 for IRAs.

There is no minimum for the Betterment Digital plan. The premium plan, which gives you access to fiduciary financial advisors, requires a $100,000 investment.

💰 The winner: Betterment. There is no minimum investment, compared to $100 with M1 Finance.

M1 Finance vs. Betterment: Management fees

Unlike full-service robo-advisors, M1 Finance doesn’t charge a management fee. M1 Finance makes money on lines of credit and optional extras like Plus memberships. (However, accounts with less than $20 and no trading activity for over 90 days are charged a $20 maintenance fee.)

M1 Finance Plus memberships cost $125 per year and offer access to perks like an extra trading window and discounted borrow rates. Plus accounts also let you set up Smart Transfers, a service that sweeps excess cash into your investing account. As a Plus member, you also earn interest and get cash back on your M1 Spend account.

In contrast, Betterment charges an annual fee of 0.25% of assets under management ($25 annually on a $10,000 investment). Betterment Digital charges the same management fee for traditional and ESG portfolios. 0.25% is one of the lower fees among full-service robo-advisors. The premium plan costs 0.40%.

Neither M1 Finance nor Betterment charges any account opening fees.

💰 The winner: M1 Finance. M1 Finance doesn’t charge management fees (unless you choose the Plus membership). (However, M1 Finance does not offer full-service robo-advisor services either.)

M1 Finance vs. Betterment: Socially Responsible (SRI) Portfolio

Both M1 Finance and Betterment offer socially responsible investing (SRI) options. SRI, also known as ESG, portfolios score better on environmental, social, and governance metrics like carbon emissions, diversity and governance.

🔔 Read our ESG investing guide to learn more.

M1 Finance Responsible Investing Pies

M1 Finance comes with two premade Responsible Investing Pies, though you can design your own.

The International Responsible Investing Pie includes seven Nuveen ETFs. International “slices,” split between developed and emerging market ETFs, are 30% of the pie. The remainder is made up of large, mid, and small-cap U.S. stock ETFs.

Here are the funds in the International Responsible Investing Pie:

  • U.S. large-cap growth stocks: Nuveen ESG Large-Cap Growth ETF (NULG)
  • U.S. large-cap value stocks: Nuveen ESG Large-Cap Value ETF (NULV)
  • U.S. mid-cap growth stocks: Nuveen ESG Mid-Cap Growth ETF (NUMG)
  • U.S. mid-cap value stocks: Nuveen ESG Mid-Cap Value ETF (NUMV)
  • U.S. small-cap stocks: Nuveen ESG Small-Cap ETF (NUSC)
  • International developed markets stocks: Nuveen ESG International Developed Markets Equity ETF (NUDM)
  • Emerging markets stocks: Nuveen ESG Emerging Markets Equity ETF (NUEM)

The Responsible Investing Pie has the same U.S. stock ETFs as the International Responsible Investing Pie. It doesn’t include any international ETFs. The pie splits the portfolio into five “slices,” including large-cap growth and value stocks, mid-cap growth and value stocks, and small-cap stocks.

M1’s Responsible Investing Pies do not include bonds.

🔔 Read the full review of M1 Responsible Investing Pies.

Betterment Impact Portfolios

Betterment offers three socially responsible investing options: Broad Impact, Climate Impact, and Social Impact Portfolios. 

Broad Impact Portfolio

Betterment’s general ESG option includes ESG funds for U.S. stocks, emerging and developed markets stocks, and, for non-taxable portfolios, U.S. high-quality bonds. Because of fees or trading limitations, the rest of the portfolio (including U.S. bonds for taxable accounts, international bonds, and emerging markets bonds) is still drawn from conventional ETFs. When tax-loss harvesting is enabled, Betterment adds conventional ETFs for emerging and developed markets stocks. 

The Broad Impact Portfolio includes the following funds:

  • U.S. stocks: iShares ESG Aware MSCI USA ETF (ESGU), iShares MSCI KLD 400 Social ETF (DSI), iShares MSCI USA ESG Select ETF (SUSA)
  • U.S. engagement stocks: Engine No. 1 Transform 500 ETF (VOTE)
  • Emerging markets stocks: iShares ESG Aware MSCI EM ETF (ESGE)
  • Developed markets stocks: iShares ESG Aware MSCI EAFE ETF (ESGD)
  • U.S. bonds: iShares ESG Aware USD Corporate Bond ETF (SUSC), iShares ESG U.S. Aggregate Bond ETF (EAGG) for retirement accounts, iShares National Muni Bond ETF (MUB) for taxable accounts
  • Conventional options for international bonds and emerging markets bonds

The portfolio relies on cheap ESG ETFs from iShares. Betterment uses large ESG ETFs from iShares (BlackRock), especially the iShares ESG Aware MSCI USA ETF (ESGU). While iShares ETFs own fossil fuel companies, they generally contain less energy than conventional alternatives. They also exclude tobacco, thermal coal, and certain weapons manufacturers. 

In July 2021, Betterment added the VOTE ETF, which will try to engage with large U.S. companies to drive change on issues like climate change.

Climate Impact Portfolio

The Climate Impact Portfolio emphasizes the “E” or environmental factors in ESG. This portfolio features a low-carbon footprint stock ETF (CRBN) and ETFs that divest from fossil fuel reserve owners. According to Betterment, carbon emissions per dollar of revenue for the 100% stock Climate Impact Portfolio are half of those of the conventional (Core) Portfolio. The portfolio adds green bonds – bonds that fund environmentally friendly projects – through a green bond ETF. 

To construct this portfolio, Betterment relies on the iShares MSCI ACWI Low-Carbon Target ETF (CRBN). CRBN is an ETF that seeks to include companies with a lower carbon footprint. The ETF provider measures the carbon intensity of each stock by tracking the tons of CO2 emissions per million dollars in sales. (Despite lower carbon intensity, CRBN has energy exposure, including oilfield services provider Schlumberger.)

The remaining half of the stock exposure in the Climate Impact Portfolio is invested in fossil fuel reserve-free ETFs (SPYX for U.S. stocks, EFAX for developed markets stocks, and EEMX for emerging markets stocks). (Despite excluding oil and gas companies with reserves, SPYX includes oilfield services and fossil fuel-powered utilities.)

The Climate Impact Portfolio includes the following funds:

  • Global stocks: iShares MSCI ACWI Low-Carbon Target ETF (CRBN)
  • U.S. stocks: SPDR S&P 500 Fossil Fuel Reserves Free ETF (SPYX)
  • U.S. engagement stocks: Engine No. 1 Transform 500 ETF (VOTE)
  • Emerging markets stocks: SPDR MSCI EAFE Fossil Fuel Reserves Free ETF (EFAX)
  • Developed markets stocks: SPDR MSCI Emerging Markets Fossil Fuel Reserves Free ETF (EEMX)
  • U.S. high-quality and international bonds: iShares Global Green Bond ETF (BGRN)
  • Non-ESG options for other bonds

The Climate Impact Portfolio is not fossil free. Although the Climate Impact Portfolio is not free of fossil fuels, it does have better ESG scores and less exposure to energy than Betterment’s Core Portfolio, particularly for international stocks.

This portfolio doesn’t take into account social or governance factors (the “S” and the “G” in ESG), leading to lower ESG ratings from ESG rating providers Sustainalytics and MSCI than the Broad or Social Impact Portfolios. 

Social Impact Portfolio

The Social Impact Portfolio adds diversity and inclusion funds. The Social Impact Portfolio adds two impact funds that promote gender diversity and ethnic and racial inclusion. These funds are SPDR SSGA Gender Diversity Index ETF (SHE) and Impact Shares NAACP Minority Empowerment ETF (NACP). These two funds add up to around 8% of the portfolio invested 70% in stocks and 30% in bonds.

  • SHE is a U.S. Stock ETF that includes companies with greater gender diversity in senior leadership. Companies are ranked according to the ratio of women in senior leadership positions; the leaders in each sector are added
  • NACP, a U.S. stock ETF from Impact Shares, uses a scoring methodology from the National Association for the Advancement of Colored People (NAACP). The goal is to provide exposure to companies with strong diversity policies

The Social Impact Portfolio includes the following funds:

  • U.S. stocks: iShares ESG Aware MSCI USA ETF (ESGU), Impact Shares NAACP Minority Empowerment ETF (NACP), SPDR SSGA Gender Diversity Index ETF (SHE)
  • U.S. engagement stocks: Engine No. 1 Transform 500 ETF (VOTE)
  • Emerging markets stocks: iShares ESG Aware MSCI EM ETF (ESGE)
  • Developed markets stocks: iShares ESG Aware MSCI EAFE ETF (ESGD)
  • U.S. bonds: iShares ESG Aware U.S. Aggregate Bond ETF (EAGG), iShares National Muni Bond ETF (MUB)
  • Non-ESG options for international bonds, emerging markets bonds, and inflation-protected securities

🔔 Read the full review of the Betterment Impact Portfolios.

M1 Finance (International Responsible Investing) Pie vs. Betterment Core Impact Portfolio

Expense RatioWith Management Fee% of Assets in ESG Funds
% of Assets in Energy
Sustainalytics ESG Rating
7.6 / 103.4 / 5
M1 Finance 0.39%
4.0%7.8 / 10
4.6 / 5

Data as of 9/30/2021

We’ve compared the all-stock M1 International Responsible Investing Pie to Betterment’s riskiest Core Impact Portfolio, which is 100% invested in stocks.

As you can see, M1’s portfolio is cheaper after management fees are added. It’s also less invested in oil and gas stocks and has higher ESG scores from rating agencies Sustainalytics and MSCI.

🔔 We’ve created an ESG investing pie that is fossil free and costs only 0.11%. Check it out here or read more about the ESG investing pie.

💰 The winner: Tie. M1 Finance lets you create custom portfolios that suit your goals, but their premade Responsible Investing Pies are not bad either. Betterment gives you three impact investing options, more than any other full-service robo-advisor. Betterment may be easier to use if you are just learning about investing in general and ESG investing in particular.

M1 Finance vs. Betterment: Fund expenses

When you invest through a robo-advisor or a platform like M1 Finance, you need to pay the expenses of the funds in your portfolio. (They are deducted automatically.) The money goes to the fund manager, not to the robo-advisor company.

M1 Finance lets you create your own pies, so your all-in fund expense ratio will vary.

If you are interested in M1’s premade Responsible Investing Pies, the funds in those pies cost between 0.35% and 0.40%. All-in, the Responsible Investing Pie costs 0.38% ($38 annually on a $10,000 investment). The International Responsible Investing Pie costs 0.39%. These pies are more expensive than ESG portfolios from most other robo-advisors.

However, higher fund expenses are offset by no management fee from M1 Finance. All-in, M1’s Responsible Investing Pies are one of the cheapest ESG options. And, of course, nothing prevents you from designing even cheaper pies.

🔔 Read our ESG ETF guide to learn to create DIY pies.

The funds in Betterment Impact Portfolios are cheaper than M1’s Responsible Investing Pies before management fees are added. For example, the Broad Impact Portfolio costs 0.13%-0.18% ($13 to $18 on a $10,000 investment). However, with a 0.25% management fee added, you end up paying 0.38%-0.43%.

💰 The winner: M1 Finance. M1 Finance lets you choose any funds you want (you can even pick the ones in Betterment Impact Portfolios.) Even if you choose M1’s relatively expensive Responsible Investing Pies, the all-in cost will still be cheaper because M1 Finance doesn’t charge management fees.

M1 Finance vs. Betterment: Individual Stocks and Fractional Shares

M1 Finance lets you add individual stocks and fractional shares to your pies.

Fractional shares allow you to buy a piece of a share if buying the entire thing is more than you would like to spend. For example, one share of Tesla (TSLA) stock costs $800, but if you only want to spend $100, you can buy 1/8 of that share. Buying fractions of shares limits how much cash is sitting in your account unspent.

Betterment doesn’t let you buy individual stocks or fractions of them.

💰 The winner: M1 Finance.

M1 Finance vs. Betterment: Margin lending

M1 Finance gives margin loans to customers with over $5,000 in their investment account. The platform charges 3.5% interest (2% for M1 Plus members), and you can borrow up to 35% of the value of your account.

💰 The winner: M1 Finance. Betterment doesn’t offer margin loans.

M1 Finance vs. Betterment: Tax-loss harvesting

Tax-loss harvesting is a tax reduction strategy that involves selling a fund or stock that has experienced a loss. By realizing this loss, you can offset taxable gains on other investments. The sold fund is replaced with a similar one, maintaining an optimal asset allocation.

Betterment offers automatic tax-loss harvesting at no additional cost at the ETF level. A more advanced tax-loss harvesting strategy, selling individual stocks that have lost money (also called direct indexing), is not available. (If you are interested, you can check out Personal Capital.)

In addition to tax-loss harvesting, Betterment offers Tax-Coordinated Portfolios. To take advantage of that, you need to open both a taxable investment account and a retirement account with Betterment. Betterment will then hold income-earning assets like bonds in your tax-advantaged retirement account and stocks in your taxable account. This will ensure an optimal asset allocation while reducing taxes.

💰 The winner: Betterment. M1 Finance doesn’t offer tax-loss harvesting.

M1 Finance vs. Betterment: Human Financial Advisors

The Betterment Digital plan doesn’t come with access to human advisors, though you can buy a package for an extra fee ($299-$399 for 45-60 minutes). Human advisors are Certified Financial Planners (CFP), the most rigorous certification for financial professionals. CFPs also pledge to be fiduciaries, meaning that they promise to act in your best interest.

Here are some of the packages:

  • Getting Started: $299
  • Retirement Planning: $399
  • Financial Check up: $399
  • College Planning: $399
  • Marriage Planning: $399

💰 The winner: Betterment. M1 Finance doesn’t have any human financial advisor options.

M1 Finance vs. Betterment: Automatic Rebalancing

Both Betterment and M1 Finance automatically rebalance your portfolio. Automatic rebalancing means that the robo-advisors will buy or sell investments to get to the asset allocation that suits your goals.

Sometimes, when one asset class, like stocks, does much better than another one, like bonds, your portfolio may “drift” and become riskier (or less risky) than it should be. Automatic rebalancing solves that.

M1 Finance also lets you rebalance the portfolio when you want.

💰 The winner: Tie. Nearly all robo-advisors now offer this feature.

💰 The Overall Winner

  • There is no clear winner because the two platforms are designed for different types of investors
  •  Best for self-directed investors: M1 Finance. M1 Finance gives you more choices if you know how you want to invest. There are no management fees. You can add individual stocks and fractional shares or borrow against your investment account. If you want to invest sustainably and have specific requirements (like not owning oil and gas stocks), you can create a DIY portfolio of fossil free ETFs
  • Best for beginners: Betterment. Betterment will create a portfolio to suit your goals, but it will charge you 0.25% for the service. Betterment is best if you don’t know where to start and want a hands-off solution. Betterment’s three impact options are good enough for most investors (though not the ones who want to be 100% fossil free)

🔔 Want to compare more options? Read our guide to ESG robo-advisors.

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We compared robo-advisors with an ESG offering based on management fees, ESG portfolio expense ratios, the percentage of the ESG portfolio invested in ESG funds vs. traditional funds, ESG portfolio ratings (from Sustainalytics and MSCI), portfolio exposure to energy, transparency, features like tax-loss harvesting and automatic rebalancing, and access to human advisors.