M1 Finance Responsible Investing Review

M1 Finance is an investing app that offers self-directed trading and a robo-advisor. Although it lets you invest in over 6,200 stocks or exchange-traded funds (ETFs) you want, the app comes with two socially responsible investing options.

SustainFi Updated October 17, 2021

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Rating: Excellent (4.5 / 5)

Pros

  • Customizable portfolios let you invest in over 6,200 ETFs or stocks plus 80 expert portfolios
  • Choice of two responsible investing “pies” (plus unlimited community portfolios)
  • No management fee or trading fees
  • Extra features such as a checking account with a debit card and margin loans
  • Fractional shares

Cons

  • No goal-setting or budgeting tools
  • No human financial advisors
  • No tax-loss harvesting
  • Premade socially responsible pies do not include bonds
  • No mutual funds
  • You are limited to 1-2 daily trading windows
  • Inactivity fee for accounts with less than $20 and no trades over 90 days

Summary

SustainFi Rating:4.5 / 5
Account minimum$100
Management fee0%
ESG options2 pre-made ESG "pies" (Responsible Investing and International Responsible Investing) are offered but you can add any ESG ETFs or stocks to your portfolio. The pies are made from Nuveen ETFs
Investment expense ratio (ESG portfolios)0.38-0.39% for the Responsible Investing Pies
Accounts supported• Individual and joint investment accounts
• Traditional, Roth, SEP IRAs
• 401(k) rollovers
• Custodial accounts (M1 Plus)
• Trusts
Human advisorsNo
Tax-loss harvestingNo
Automatic rebalancingYes
Best for• Customized portfolios for self-directed investors
• No management fee

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.

Credit: M1 Finance

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.

Credit: M1 Finance

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.) To make sure that your order is executed that day, you need to make any changes before 8 am that day. M1 Plus members get to trade again, in the afternoon. 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.

M1 Finance is registered with the U.S. Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).

M1 Finance signup process

It’s easy to sign up. There is no risk assessment questionnaire, and you can start building pies once you’ve linked your bank account using Plaid.

M1 Finance account types

M1 Finance offers individual and joint taxable investment accounts, traditional, Roth, and SEP IRAs, trust accounts and custodial accounts (UTMA/UGMA accounts for kids). Custodial accounts are for M1 Plus members only. You can also roll over your 401(k).

M1 Finance portfolio options

M1 Finance’s pie portfolio model allows you to easily add a stock or an ETF as a piece of the pie. (They don’t allow trading mutual funds). You choose what percentage to invest in each asset. 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.

Account minimum 

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

Management fee

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 Plus memberships

Plus memberships cost $125 per year and offer access to various perks like an extra trading window and discounted interest rates if you borrow through M1 Finance. 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.

Fund expense ratios 

The funds in the Responsible Investing Pies cost between 0.35% and 0.40%, which is more expensive than the ETFs that most other robo-advisors use for their socially responsible portfolios. However, this is offset by no management fee. You can also design cheaper portfolios yourself.

M1 Spend

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. The Owner’s Rewards card will let you earn 2.5% – 10% cash back when you shop with some of the big brands in your portfolio, including Apple, Amazon, and Starbucks. You can reinvest your rewards in your portfolio. The card will be available to M1 Plus members only.

M1 Borrow

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.

Smart Transfers

Smart Transfers is a service that lets you transfer any money above the specified amount that’s in your Spend account into the Invest account. You can use Smart Transfers to max out your IRA account, pay off your M1 Borrow loan, and then invest.

Human advisors

M1 Finance doesn’t provide access to human financial advisors, even a la carte. If you are looking for human advisors, we suggest Personal Capital. You can also just get a financial planner.

Automatic rebalancing

M1 Finance will automatically adjust your holdings if the portfolio strays from the predetermined asset allocation when you add or remove money from your account.

You can also make M1 Finance rebalance your pies whenever you want by clicking the rebalance button on the dashboard. Unless you make new trades, M1 Finance won’t rebalance your portfolio without authorization from you.

Tax-loss harvesting

M1 Finance doesn’t offer tax-loss harvesting, a tax minimization strategy that involves selling loss-making investments to reduce your tax bill. If you have over $100,000 to invest and are interested in advanced tax-loss harvesting capabilities, consider Personal Capital.

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.

M1 Finance Responsible Investing Pies

M1 Finance comes with two premade Responsible Investing Pies. 

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.

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.

All assets are in environmental, social, and governance (ESG) funds. The Responsible Investing Pie includes the following funds: 

  • 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)

The International Responsible Investing Pie adds two foreign stock ETFs, covering developed and emerging markets: 

  • 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)

Although the Responsible Investing Pies are not fossil fuel free, they own very few energy stocks. The Responsible Investing Pies only invest in ESG funds and have less exposure to fossil fuels than socially responsible portfolios from Betterment or Ellevest. Having said that, the pies are not fossil fuel free.

The pies have high ratings from ESG rating agencies. The pies have high ratings from Sustainalytics and MSCI, two of the most prominent ESG rating agencies.  

Nuveen ETFs are relatively expensive, but that is offset by a 0% management fee. Although Nuveen ETFs cost between 0.35% and 0.40%, which is more expensive than iShares ETFs that most other robo-advisors use for their socially responsible portfolios, the total expense is lower because M1 Finance doesn’t charge a management fee. On a blended basis, the Responsible Investing Pie costs 0.38% ($38 annually on a $10,000 investment), and the International Responsible Investing Pie costs 0.39%.

The pies only include equities. The Responsible Investing Pies only include equities, so they are not diversified enough for you to put all your savings in them. You also need bonds and, maybe, other asset classes like real estate.  

This is what the dashboard looks like for the Responsible Investing Pie:

M1 Finance Responsible Investing Pie

The Responsible Investing Pie Portfolio Composition

Asset ClassFundExpense RatioESG Fund?Allocation% of Fund in EnergyMSCI ScoreSustainalytics Rating
U.S. Large-Cap Growth StocksNuveen ESG Large-Cap Growth ETF (NULG)
0.35%

Yes20%
0.4%

7.6
5 / 5
U.S. Large-Cap Value StocksNuveen ESG Large-Cap Value ETF (NULV)0.35%

Yes20%7.0%
8.0
5 / 5
U.S. Mid-Cap Growth StocksNuveen ESG Mid-Cap Growth ETF (NUMG)0.40%
Yes20%
1.3%
7.5
5 / 5
U.S. Mid-Cap Value StocksNuveen ESG Mid-Cap Value ETF (NUMV)0.40%

Yes20%
8.3%
7.6
5 / 5
U.S. Small-Cap StocksNuveen ESG Small-Cap ETF (NUSC)0.40%

Yes20%

3.3%
7.5
5 / 5
Portfolio Total0.38%100% of Portfolio in ESG funds100%4.0%
7.6
5 / 5

Data as of 9/30/2021


Here is the International Responsible Investing Pie dashboard:

M1 Finance International Responsible Investing Pie

The International Responsible Investing Pie Portfolio Composition

Asset ClassFundExpense RatioESG Fund?Allocation% of Fund in EnergyMSCI ScoreSustainalytics Rating
Developed Markets Stocks
Nuveen ESG International Developed Markets Equity ETF (NUDM)
0.40%
Yes15%
3.9%
9.5
4 / 5
Emerging Markets Stocks
Nuveen ESG Emerging Markets Equity ETF (NUEM)0.45%
Yes15%
4.1%
6.9

3 / 5
U.S. Large-Cap Growth StocksNuveen ESG Large-Cap Growth ETF (NULG)
0.35%

Yes14%
0.4%

7.65 / 5
U.S. Large-Cap Value StocksNuveen ESG Large-Cap Value ETF (NULV)0.35%

Yes14%
7.0%
8.0
5 / 5
U.S. Mid-Cap Growth StocksNuveen ESG Mid-Cap Growth ETF (NUMG)0.40%
Yes14%
1.3%
7.55 / 5
U.S. Mid-Cap Value StocksNuveen ESG Mid-Cap Value ETF (NUMV)0.40%

Yes14%
8.3%
7.6
5 / 5
U.S. Small-Cap StocksNuveen ESG Small-Cap ETF (NUSC)0.40%

Yes14%

3.3%
7.5
5 / 5
Portfolio Total0.39%100% of Portfolio in ESG funds100%4.0%7.8
4.6 / 5

Data as of 9/30/2021

🔔 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.

💰 Takeaway

  • M1 Finance Responsible Investing Pies are a good ESG investing shortcut for self-directed investors. You can also create your own pies, which can be fossil fuel free
  • M1 Finance targets expereinced, self-directed investors, so it’s not the best option if you need a lot of hand-holding
  • If you need more guidance on asset allocation and need help saving, we suggest using a full-fledged robo-advisor like Acorns

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

Methodology

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.