Choosing the right brokerage can be a big decision. So how do you know which is right when they all sound promising?
The key is determining what you want from your brokerage, what you can afford, and what assets you want to trade. Two popular brokerages compared for beginners and experienced investors are M1 Finance and Fidelity.
Here’s how they compare.
M1 Finance vs Fidelity: Overview
Both platforms offer opportunities to invest in various assets and low costs, and many assets trade commission-free.
M1 Finance is not a robo-advisor and offers self-directed investing, with the option to use pre-built portfolios.
Fidelity offers similar options but with more robust support, including human advisors. Fidelity also customizes automated portfolios based on your goals and risk tolerance, whereas M1 only offers prebuilt portfolios.
M1 Finance: Key Features
M1 Finance has a great reputation for new investors who want to begin DIY investing. They offer a nice selection of account types and have a great reputation for low-cost investing.
Services and Account Types
M1 Finance offers taxable accounts for individuals and joint account holders. They also offer custodial accounts for parents to hold for kids and retirement accounts, including:
- Traditional IRA
- Roth IRA
- SEP IRA
M1 Finance is known for its well-rounded financial features. It’s a low-cost platform that works great for self-directed investors just starting their journey. You can get hand-holding or DIY investing, giving investors the best of both worlds.
M1 Finance Free automated investing. Create your own portfolio with any stock and/or ETF, for free. Users can also get access to lines of credit and high yield on their non-invested monies. Try M1Finance Today!
Fidelity: Key Features
Fidelity offers many account options, too, and is best for investors who want more flexibility. You can DIY your investments or use the robo-advisor (for a fee). They have more asset options, but their platform is outdated compared to M1.
Services and Account Types
Fidelity offers taxable accounts for individuals and joint account holders. You can also save for retirement with the following accounts:
- Traditional IRA
- Roth IRA
- Rollover IRA
Fidelity is one of the most well-known investment platforms that cater to all types of investors, including retail investors, day traders, and passive investors who want a robo-advisor to handle their portfolios. Fidelity doesn’t have the same modern features as M1 but is a well-liked platform regardless.
M1 Finance vs Fidelity: Services and Features
Knowing a brokerage’s services and features is important. You want more than a way to trade assets. Consider automatic rebalancing, DRIP, margin investing, and cash balance options.
- Investing ‘pies’ – M1 Finance calls its portfolios, pies, giving investors a visual of their portfolio rather than a list in a dashboard. Each asset has a target allocation, and when you contribute funds, M1 decides where they go based on your target allocations.
- Fractional shares – M1 limits the ‘cash drag’ by allowing you to invest in fractional shares. This allows you to invest any leftover funds after investing into a percentage of a full share, making every dollar work.
- Smart rebalancing – M1 automatically rebalances your portfolio based on your target allocations when you deposit or withdraw funds. This service is free and automatic, a major bonus for M1.
- DRIP – You can opt into automatic dividend reinvestments. M1 will reinvest earned dividends in your entire portfolio, not just the stock that paid them, to keep up with your target allocations.
- Expert pies – If you want a hands-off approach to investing, you can invest in expert pies. M1 has 80+ expert-created pies to choose from to make investing easy.
- Margin investing – You can borrow on margin and invest more or use the funds for other personal purposes.
- Owner’s credit card – The Owner’s cashback credit card pays cashback when you shop at the companies you invested in. For example, if you invest in Amazon and make a purchase there, you’ll earn cashback on your purchase.
- 24/7 customer service – Fidelity is one of the few brokerages that offer customer support around-the-clock.
- Robo-advisor service – If you prefer automated investing with a passive investment strategy, Fidelity Go is Fidelity’s robo-advisor with no minimum balance required and personalized portfolios created based on your goals.
- Full-service brokerage options – If you prefer to work with a human advisor, Fidelity offers full-service investing options for a fee.
- In-person branches – You can visit over 190 in-person branches if you prefer to do business in person.
- DRIP – You can opt-in to have your dividends automatically reinvested to increase your investment portfolio.
- Fractional shares – Fidelity allows you to invest every dollar by investing in fractional shares instead of having cash drag.
M1 Finance vs Fidelity: Fees and Minimums
Understanding an advisor’s minimum account balance requirements and fees is important. First, you must be able to meet the minimum to have an account. Second, the fees can take away from your profits, so minimizing them is important.
M1 doesn’t charge any monthly maintenance or trading fees, but other fees should be considered.
Stocks and ETFs trade commission-free on M1. They also don’t charge a fee for ‘expert pies.’ However, M1 offers a service called M1 Plus that costs $125 per year and includes the following benefits:
- Smart transfers: Automatic transfers you set up based on certain conditions
- On-demand crypto windows: Set up to ten crypto trading windows per month
- Cash back: Plus Members get higher cashback rates with the Owner’s Rewards Card
- Two trading windows: Get an AM and PM trading window
To open a taxable account, you’ll need $100 minimum and $500 for a retirement account.
Like M1, Fidelity doesn’t have trading fees, but there are fees for other services, such as robo-advisor services.
Like M1, stocks, ETFs, and, options are commission-free. However, using the Fidelity Go robo-advisor, you’ll pay 0.35% of assets under management annually on balances of $50,000+ and $3 per month on balances of $10,000 to $49,999. However, Fidelity charges $1 and $49.95 for mutual funds, but Fidelity mutual funds are commission-free.
Like M1, Fidelity doesn’t have any account minimums.
M1 Finance vs Fidelity: Online and Mobile User Experience
User online and mobile experiences are key to choosing the right brokerage. While fees and account minimums are important, if you can’t understand how to use the platform or it’s frustrating, it could make for an unpleasant experience.
M1 has a desktop and mobile option, both of which are user-friendly. They are both easy to navigate, and the website and mobile app are identical, so there’s no steep learning curve.
Fidelity’s desktop option is more robust than its mobile app, but both make it easy to get the job done. You can manage your accounts, trade, get personalized news feeds, and listen to podcasts on the mobile app.
On their desktop version, you have more robust tools, such as Active Trader Pro, that you can completely customize for your trading needs. In addition, the desktop app provides real-time analytics, allowing you to see your trades in charts for more visual analysis.
M1 Finance vs Fidelity: Security
When dealing with your investments and private financial information, you must ensure the app or desktop tool you use is secure, and fortunately, both M1 and Fidelity are safe.
In addition, your cash deposits are insured by FDIC insurance up to $250,000, and your investments up to $500,000 should M1 Finance goes out of business.
Fidelity also takes security seriously. They use the most up-to-date technology to ensure the security of your assets and information. They also offer a Customer Protection Guarantee that reimburses you if there is any unauthorized activity in your account.
Like M1, Fidelity is FDIC and SIPC insured, and they use top-notch encryption to protect your most private documents.
M1 Finance vs Fidelity: Customer Service and Ease of Use
Customer service is a key factor in choosing a broker. Knowing you can have help whenever necessary is important. Here’s how they stack up.
M1 Finance Customer Service
M1 Finance offers many options for customer service, making it easy to get the answers you need.
- Instant Help – This service is available 24/7 by clicking the chat bubble at the bottom of the page
- Email – Send an email, and you’ll receive a response during normal trading hours
- Call – If you have urgent issues, you can call 1-312-600-2883
Fidelity Customer Service
Fidelity also gives multiple ways to get the customer service you need, making it easy to get the answers you need.
- Virtual assistant – The virtual assistant is available 24/7 to answer your basic questions
- Live chat – You can talk directly with someone from your computer Monday – Friday 8 AM – 10 PM ET and Saturday/Sunday 9 AM – 4 PM ET
- Call – You can call 1-800-343-3548 24/7
M1 Finance vs Fidelity: Pros and Cons
Fidelity and M1 Finance are both great platforms, but they have pros and cons.
M1 Finance is a great investment app that offers a variety of options, low or no fees, and fractional shares.
- Offers a full-service experience, including a credit card, and loans
- User-friendly for beginners
- Low account minimums
- Offers fractional shares
- Does automatic rebalancing
- Has only one trading window for regular members and two windows for M1 Plus members
- Doesn’t work well for active traders
- Doesn’t have automated tax-loss harvesting
Fidelity is a great broker for DIY investors and those who need a robo-advisor. They charge little to no fees and have many assets to consider, including options.
- Offers a traditional trading window of 9:30 AM to 4 PM EST
- Traditional broker with many options, including a robo-advisor option
- No account minimums
- 24/7 customer service
- Offers a large number of assets
- The platform can be overwhelming for beginners
- The fee for the robo-advisor can be high
- No tax loss harvesting
Frequently Asked Questions
Investing online can be convenient, but for many investors, it can be intimidating not working with an advisor face-to-face. So here are some common questions investors have.
How do I choose a financial advisor?
Choosing a financial advisor is a big decision. Decide how much hand-holding you want, how much you can invest, and what fees you want to pay. Many advisors are fee-free for stocks and ETFs but charge commissions for other services.
Always read the fine print and know the full cost, especially if you’ll use a human or robo-advisor for support.
What are alternative investments?
Alternative investments are investments in something other than stocks or bonds. Of course, the sky’s the limit regarding alternative investments, but some common options include real estate, art, and cryptocurrency. Of course, alternative investments have more risk, but they can be a great way to diversify your portfolio.
What should I invest in first?
Every investor has a different risk tolerance, timeline, and goals. Decide what you want from your portfolio and choose your investments accordingly. Many investors start with ETFs because they are diversified and low-cost, but there’s no rule regarding how you start.
How do I build a diverse portfolio?
A diverse portfolio includes many different assets, such as stocks, bonds, crypto, and real estate. You can even diversify a portfolio with all stocks by investing in different industries or types of stocks, such as common and preferred stocks. The key is not to put your money in one industry or type of asset to avoid a total loss if there are issues.
Which Is Best For You?
M1 Finance and Fidelity are both great options for investors but have different features and even costs. So again, compare what you need from a brokerage to decide which is right for you.
Fortunately, both offer commission-free trades and have no minimums required, making either option a good option for most investors.