M1 Finance and Betterment represent two fundamentally different philosophies for automated investing. Both platforms are great for building a hands-off, diversified portfolio, but they are very different in their approach to customization, control, and human support.
The choice between them depends entirely on your personality: are you the investor who needs to build and control every investment slice, or are you the investor who needs a 100% automated service with access to human experts?
The Control Test (Customization)
The core difference between M1 Finance and Betterment lies in how your portfolio is built. Betterment is a pure robo-advisor, while M1 Finance is a hybrid: part self-directed broker, part automated manager.
M1 Finance: The Customization Champion
M1 Finance gives you complete control over your portfolio structure using its unique "Pie" interface.
- Customization: M1 Finance is the clear winner for customization. You can choose from over 6,000 stocks and ETFs to build your own custom investment allocation. You set the percentage for each slice, and the platform automatically invests all new cash and dividends according to those percentages.
- The Pie Interface: Portfolios are called "Pies." Each pie can contain up to 100 slices (stocks or ETFs), and you can even create "sub-pies" (pies within pies) to manage complex strategies like sector allocation or thematic investing.
- Verdict: If you are an investor who wants to follow a strategy from a specific expert (like a "Paul Merriman Pie") or design your own ETF-like basket of securities, M1 Finance offers a level of control that no other automated platform can match.
Betterment: The Algorithm's Choice
Betterment is a pure robo-advisor built for the truly hands-off investor.
- Customization: You do not choose the individual stocks or ETFs. Betterment creates your portfolio by selecting a basket of low-cost funds (ETFs) based on your answers to a risk tolerance questionnaire (age, goals, time horizon).
- Control Limits: You can tweak the asset class weightings (e.g., increase the total bond allocation or decrease U.S. stock allocation), but you cannot select individual tickers.
- Verdict: Betterment is for the investor who doesn't want to think about individual tickers. You tell the system your goal, and the algorithm handles all the fund selection, rebalancing, and optimization for you.
Human Support vs. Full Automation
The difference in customization is mirrored by a difference in support and features. M1 Finance is built around the assumption that "you know what you're doing," while Betterment offers a financial safety net.
| Feature | M1 Finance | Betterment |
| Portfolio Builder | DIY Customization (Build your own Pies) | Algorithm Only (Answer a quiz, they build it) |
| Human Financial Advice | NO (100% digital platform) | YES (Unlimited access to CFPs with Premium plan) |
| Account Minimum | $100 for brokerage, $500 for IRA | $0 (Best for absolute beginners) |
| Cost to Invest | $0 management fee (Platform fee of $3/month applies to small accounts) | 0.25% Annual Advisory Fee |
| Lending/Borrowing | YES (M1 Borrow—low-cost portfolio loan) | NO (Does not offer margin or lending) |
Betterment’s Edge: The Human Safety Net
Betterment’s key feature is its access to Certified Financial Planners (CFPs) through its Premium tier (for balances over $100,000). For complex life events (estate planning, stock options), having a human expert available is invaluable. M1 Finance does not offer this service.
M1 Finance’s Edge: Tax Efficiency and Trading
M1 Finance is highly efficient at managing tax lots when you sell, prioritizing losses first, and then long-term gains. M1 also offers access to a portfolio line of credit (M1 Borrow), a feature Betterment lacks.
The Trading and Investing Process
Even the process of buying and selling is different due to M1 Finance’s unique, highly automated structure.
- M1 Finance: Trades are executed once per day in a set morning trading window. M1 Plus members with high balances get access to a second afternoon window. This structure supports its long-term, passive philosophy but makes it completely unsuitable for active traders or day traders.
- Betterment: Trades are executed throughout the day, and their system actively avoids high-volatility times to ensure better pricing.
Final Verdict: Match the Platform to Your Involvement
The platform you choose depends on how involved you want to be in the selection of your investments.
- Choose M1 Finance if: You are an intermediate investor who wants complete control over their asset allocation and is comfortable choosing their own stocks and ETFs. It is the cheapest platform for this level of customization.
- Choose Betterment if: You are a beginner who wants a 100% hands-off experience, needs human guidance, and wants a $0 minimum to start. Betterment is the simpler, purely automated option.
M1 Finance is built for the self-directed investor who values customization and self-management. Betterment is built for the investor who wants maximum peace of mind and access to expert guidance.
Want to Learn More?
This video compares M1 Finance and Betterment for investors who prefer a degree of customization in their portfolio construction. M1 Finance vs Betterment Robo Advisor Comparison-by Investment Expert
