M1 vs Fidelity – Traditional or Digital Age

Making the correct choice in a stockbroker is not always easy. There is now a slew of free investment platforms that offer consumers a wide range of options. As a long-established brokerage business, Fidelity is well-versed in modern technologies. However, M1 Finance was founded in 2016 and aimed to offer something fresh and unique.

With M1 Finance’s free automatic investing, there are no account fees or commissions. Automated investment advisers like M1 allow you to choose your own investments, which they will manage for you. As an investor, you will like this. However, the lack of human counselors is problematic. The minimum to get started is $100.

In contrast, Fidelity provides stock trading for zero per trade and more than 180 branch locations. Deposits might be as little as nothing.

Fidelity and M1 Finance may be compared side by side. Fidelity’s mobile app only allows you to buy fractional shares. No such restriction exists for M1. From your PC or mobile device, you may instantly diversify your portfolio by purchasing fractional shares of stocks and exchange-traded funds (ETFs).

M1 Overview

Investors may choose between active and passive strategies in M1 Finance, which are available to active and passive users. Assets managed by the platform now exceed $5 billion, reflecting its fast expansion.

Stocks and exchange-traded funds (ETFs) allow active investors to create their own personalized Pies. Passive investors like the convenience of using pre-constructed portfolios that professionals have put together.

Fractional shares are popular among investors because they allow them to spread their money over many different companies.

Only M1 Plus, optional, charges an annual fee and does not charge commissions. Several valuable features are available, such as the ability to automatically reinvest dividends at the portfolio level and the ability to minimize taxes. As a result, it is better suited for long-term investors than traders. 

Additionally, M1 Finance is valued by members because of the additional features, such as M1 Spend, M1 Credit, and M1 Borrow. M1 Finance is definitely a one-stop shop, thanks to these additional services.

Trade with M1

M1 Finance, which claims to be the “Finance Super App,” has various features that make it easier for investors to keep track of their funds. Individuals who use M1 will access all their finances in one place.

In contrast to other investment applications, M1 Finance’s platform has been structured in a novel approach. You may see your portfolio as a “Pie” with slices of each of the stocks and ETFs in your portfolio rather than a dashboard of the stocks.

The platform does not allow investors to buy individual shares of stock. M1 is in charge of the remainder. They just set their Pie to reflect their desired allocation percentages for each asset. Because you have already built your Pie before depositing monies into M1, you do not have to decide where those dollars should go. With M1, your money is automatically divided according to how many Pie portions you choose.

You have complete control over how your Pie looks and may make changes at any time. There is no such thing as a set-in-stone plan.

M1 Finance allows you to create several Pies on your account. A Pie with solely tech businesses and another that includes companies from other industries may be created simply. This enables investors to pursue many objectives at once.

Knowing that every last cent has been invested is one of the most excellent experiences for investors with limited resources.

M1’s automatic rebalancing is yet another significant advantage of investing with them. They will do all they can to get you back to your goal allocation, whether you put more money in or take money out of your portfolio. For example, they would sell more of a stock if you withdrew money from your account if you were overexposed to it.

Fidelity Overview

Fidelity is a well-known and reputable investment platform. Assets managed by the platform are $4.2 trillion, while assets administered by the platform total $9.8 trillion. Unlike M1 Finance, Fidelity provides clients with low-cost and straightforward investment options. Fidelity and M1 Finance, on the other hand, have a wide range of distinct advantages and disadvantages.

One of the most popular trading platforms comes from Fidelity. It is one of the key reasons they have such a formidable reputation for their market domination.

Fidelity, albeit not as innovative as M1 Finance, has a wide range of options for investors of all kinds. When it comes to making investments, imagine if you could get some help from a real person. Fidelity is the place to go if you need it.

Trade with Fidelity

Fidelity, albeit not as innovative as M1 Finance, has a wide range of options for investors of all kinds. When it comes to making investments, imagine if you could get some help from a real person. Fidelity is the place to go if you need it.

Moreover, you will be able to visit one of 190+ branch locations. Older investors may find this more enticing, but younger investors can also benefit from this feature.

Fidelity also provides a robo-advisor, who uses computers to handle your money and their great human advisers.

Fidelity Go is the company’s robo-advisor. Although Fidelity Go does not have any account minimums, it does charge a monthly fee of $10.

However, M1’s expert Pies are available in a single size. It does not matter who you are or what you are looking for. Fidelity and other robo-advisors use the information you give to create a portfolio just for you.

Everything is explained in detail in a free 30-minute video tutorial that you can watch at your own pace. In little time at all, you will be up and running.

The Fidelity Go robo-fee advisor’s structure was recently revised by Fidelity. The costs charged by robo-advisors are comparable to those charged by other firms. Even a meager cost can significantly impact when accumulated over an extended period.

You will be able to retain more of your money invested through fractional shares, regardless of whether you use Fidelity Go or the conventional broker. Set up dividend reinvestment, and you can buy additional fractional shares with dividends.

M1 vs. Fidelity Service & Feature Comparison

Costs

Aside from minor charges such as printed statements, outbound account transfers, and inactivity, Fidelity and M1 Finance offer commission-free trading and zero account fees. Brokerage fees and commissions are a free-for-all, and even established brokers are joining in. Zero-fee trading will be available at Fidelity beginning in January 2020.

This option is called Fidelity Go and costs 0.35 percent per year. Fidelity also offers an option called Fidelity Go Plus, which costs 0.50 percent per year.

M1 Finance is entirely self-directed; however, you may invest for free in “Expert Pies” designed by experts.

Account Types

IRAs, trusts, and custodial accounts are all available with M1 Finance, including joint and individual taxable accounts, Traditional IRAs, Roth IRAs, Rollover IRAs, SEP IRAs, and accounts set up in trust. No SIMPLE IRAs, Solo 401(k), 529, HSA, or Non-Profit plans are available.

All of M1’s account types, as well as Solo 401(k), SIMPLE IRA, 529, and HSA, are available through Fidelity. 401(k) plans can also be set up by employers using Fidelity’s services. Fidelity is the superior option if you require any of the following accounts. FDIC-insured checking accounts are available at both M1 and Fidelity.

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Education and Research

M1 Finance’s website features a fundamental screener. Some of the search parameters provided by the program include the P/E ratio and market capitalization. The broker’s investment articles (under a FAQ area) include the most basic information reflected in the security profiles.

Fidelity Investments offers various educational resources, including articles, videos, podcasts, webinars, and live events. From options to margin trading to annuities, these sites have you covered.

When it comes to stock profiles, Fidelity has a lot to offer. The valuable tools available are analyst ratings, pdf reports, technical analysis, ESG ratings, and more.

Range of Investments

Investors trade Pies at M1 Finance. ETFs and stock exchange-traded funds are included in these portfolios. Customers may buy M1 Finance’s Pies, or they can develop their own. Each Pie has a common theme, such as dividends and short-term bonds.

Individual stocks and mutual funds can be traded since M1 only allows one security to be in a Pie. Orders cannot be sent to the exchanges at any time. Only two trading windows are open each day at M1 Finance.

Traders at Fidelity have complete control over when and how orders are sent to the exchanges. Furthermore, these orders include not just stocks and ETFs but often bonds, mutual funds, and options contracts. Other services provided by the brokerage include life insurance, annuities, and stock in other countries.

Trade with M1

Investment Advice

M1 Finance does not provide in-person financial counseling or planning. Instead, it produces “Pies,” or security baskets, which hold a variety of securities. Aerospace and Defense and Hedge Funds are two of their primary focus areas. Only M1 Finance’s advisers use Modern Portfolio Theory (MPT) to design the company’s portfolios of assets.

On the other hand, Fidelity has developed its own mutual fund and ETF offerings. They are similar to Pies, but they have a few key distinctions. In the case of Pies, clients can design their own creations. On the other hand, fund families can only create mutual and exchange-traded funds. Fidelity does not employ MPT in all of its funds. Instead of trying to outperform the market, they use indices as their guide.

Unlike M1 Finance, Fidelity offers managed account services. The least expensive choice is Fidelity Go, which charges just 0.35 percent. There is no longer a bare-bones need for putting money down. Low-cost ETFs are purchased and sold by a computer algorithm. Fidelity’s portfolio management service can also invest in stocks, bonds, and mutual funds.

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Trading Technology

The desktop web interface for Fidelity is still a bit outdated. Because of their new mobile app, I hope they are working on modernizing it. Beginner investors may find it a little more challenging to understand. Fidelity offers more account types, investment products, and superior order management, which is partly expected.

With little emphasis placed on active trading, the brokerage company lacks powerful trading tools. A simple mechanism for exchanging Pies is available on its website. Basic charts and a trading bar are not available. As you may have already surmised, there is no desktop software or browser platform.

Fidelity has a lot more to offer than its competitors. Fidelity’s website has many more features than M1, but it is still easy to use. Orders for stocks, ETFs, and mutual funds can be submitted via a pop-up trading ticket. There is a free desktop version and a website with better charting and the ability to trade derivatives.

Mobile Apps

Fidelity has just redesigned its mobile app to attract a younger, more tech-savvy clientele. It is less intuitive than M1’s. Also, remember that the Fidelity fractional share option is only accessible via the company’s mobile app for some strange reason. The M1 Finance app is a user-friendly tool available to all consumers. There is not much nuance to it. The order ticket, for example, is simple and lacks graphing features. In addition to the absence of mobile check deposits, there is no video news.

Streaming news and mobile check deposit are available on Fidelity’s app. Charting tools are also available. Fidelity’s app can be used to trade mutual funds and options, unlike M1’s app, which cannot. Fidelity’s app has an uncommon feature: the option to send money to third parties via PayPal.

Other Features

FDIC-insured bank accounts with debit cards are available from M1 Finance and Fidelity. More extensive charting and analytical capabilities, as well as an all-day trading window and order control, come with Fidelity’s full-service trading brokerage status. There is no order control or a daily trading window in M1 Finance because it is designed for long-term investment.

To keep your portfolio’s target allocations constant, Fidelity does not use M1’s well-known “dynamic rebalancing.” Fractional shares or “dollar-based investment” are both terms used by M1 Finance to describe how you may put your money to work. Because Fidelity’s mobile app only provides fractional shares, clearing trades’ mechanics may differ from the online desktop interface.

Customer Support

When you call, you will reach a live person from Fidelity. 365 days a year, every day of the year. A human chat service, available only at certain times during the week, has consistently given excellent customer support. We also have an anonymous AI chatbot available 24 hours a day, seven days a week. At this point, the answers it provides are not up to par with those we have obtained through more traditional means, but that is to be expected.

M1 Finance’s customer service is only available on weekdays. There is no live chat available, and unlike Fidelity, this organization has no physical presence. M1’s website has a FAQ section, which proved helpful to us.

Trade with Fidelity

Banking

Free checking and a Visa debit card are provided to Fidelity clients. Fee-free withdrawals are another reward for using the Broker’s ATM card across the country. Customers of Fidelity can pick between FDIC-insured money market mutual funds and available cash balances.

M1 Finance provides two complimentary debit cards along with a checking account. One is complimentary, while the other costs $50 a year but offers a 1.5% annual percentage on cash deposits. The cashback rate is 1 percent, and four ATMs are available monthly.

My Preference: M1 Wins Over Fidelity

M1 Finance may be a superior option for investors who do not have a lot of prior expertise. M1 Finance may be more user-friendly if you fall into this group.

Inexperienced users will not be intimidated by M1’s user interface, which is clear and uncluttered. The platform makes it simple for new investors to start investing immediately. Consider that you are an expert trader seeking a platform with sophisticated capabilities and a lengthy history of quality. Fidelity may be a better choice for you in such an instance.

Extra M1 features like M1 Spend, M1 Borrow, and the Owner’s Reward Credit Card are significant advantages.

In comparison to Fidelity, M1 has lower margin rates. Both platforms allow you to automate your investments. Assume that you wish to automate your investment process using Fidelity. If this is the case, you will be required to pay an annual charge of 0.35 percent to Fidelity. The charge is waived if you have less than $10,000 in your account.

Consequently, the robo-advisor from M1 Finance might be cheaper because it is never charged.

Regarding sophisticated investors, Fidelity’s research tools and services may make this the best option. Trading choices, custodial options, and client service are all enhanced at Fidelity. These people have a record of delivering excellent service for a long time. You may also use Fidelity’s ZERO cost ratio index funds to construct your own portfolios.

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For example, imagine you are a seasoned investor who wants to tailor and manage your investment strategy. If that is the case, Fidelity is your best bet.

M1 Finance has a lot of potentials, but it is still in its infancy and has a long way to go before it can compete with Fidelity on the scale. Despite this, they have an ideal platform for novices that is far easier to get started with than a full-blown online brokerage platform.

M1 vs. Fidelity: The Bottom Line

Long-term and dividend investments can be made on either platform. Fidelity, on the other hand, is the clear victor when actively trading stocks.

Both platforms allow you to use robo-investing tools and capabilities, which is a huge advantage. Fidelity, on the other hand, is the only platform that allows you to work with a human adviser.

It is impossible to receive advice on investing at M1 Finance via phone. They will only answer questions about your account, such as how to transfer your 401(k). M1 Finance is attempting to reshape the way people invest in the future. If you are looking for the most terrific deal, it is a better option than the heavyweight competitor.

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