Ellevest vs M1 Finance
There has never been a better time to get started with investing in the stock market.
This is because there are now more investment apps and brokerages to choose from than any before.
Now this can be a struggle in some cases as the number of options could lead to analysis paralysis. Our goal is to clear things up and make it an easy choice for you between Ellevest and M1 Finance.
Ellevest has a very specific goal in mind, which is meeting the financial and investing needs of women.
M1 Finance does not have a specific target demographic. Their goal is to combine the features of a robo advisor with a brokerage free of charge.
Both have become very popular in recent months. Here is our comparison!
- M1 Finance has no annual fee for basic (Ellevest does charge a fee)
- Ellevest has a very structured approach
- M1 Finance allows you to invest in stocks, ETFs or prebuilt portfolios for free
- M1 has more account types available than Ellevest
- Ellevest comes with one on one guidance for your financial needs with the premium plan
- M1 does not offer any financial guidance services
- M1 offers the traditional brokerage service as well as the robo advisor features
- Ellevest has a $0 minimum deposit* (see below) while M1’s minimum is $100
What Is Ellevest?
Ellevest is a robo advisor that uses a gender-specific algorithm in order to try and bridge the gap between men and women in the world of investing.
With women taking a larger interest in investing, it is natural for something like Ellevest to have come into existence specifically to fit their needs.
The company states on its website that 86% of investment advisors are men with an average age of 50 or above.
This means that the investment industry’s gender-neutral stance defaults to men’s salaries, career paths, preferences and lifespans.
Where is the service tailored for women?
The goal for this service is to swing investments in the other direction and cater specifically to women and their needs as it pertains to their financial portfolios.
This platform has features that are designed to help take on some difficulties unique to women and investing. Women tend to live longer, take off time to have children and the company points out that women are less aggressive in asking for a raise or a promotion.
These factors create very specific issues for women in the investment world and are precisely what the Ellevest platform was designed to overcome.
How Does Ellevest Work?
After creating your account with Ellevest and putting in the necessary information to do so, the platform gives you a free financial plan which can tell you where you are in relation to where you want to be in terms of your goals.
Upon completion of the financial plan, you have the ability to change your time horizon, initial deposit and recurring deposits to meet your goals. You can also choose to invest for impact or increase your risk tolerance.
Their plans are centered around low-cost ETFs in order to minimize investment expenses for you.
There is a $0 minimum deposit* with Ellevest. This means you do not have to put in money right away in order to open up an account with them.
Ellevest does not use a tax-loss harvesting service, this platform uses a tax minimization strategy. They will use municipal bonds in their rebalancing efforts in order to ensure the lowest taxes possible on capital gains.
While browsing their website or using their platform you will be met with a very clean and well-designed system that promotes a very easy to use feel. This can make it much less overwhelming on a beginner if you are just starting out.
Ellevest Service Tiers
The platform’s basic level of service has a fee of 0.25% of the total amount you invest annually.
Digital gives you access to their tax minimization methodology, free emergency fund, automatic rebalancing and other basic features.
For customer support, you will have access to the Ellevest Concierge Team.
This plan will cost you an annual fee of 0.50% and is designed for people that are investing $50,000 or more.
It comes with everything that Ellevest Digital does and one-on-one career coaching from an executive coach for guidance on salary negotiations and things of the like.
In addition to career coaching, you also get access to a CERTIFIED FINANCIAL PLANNER™ to get specific guidance on your finances.
Ellevest Private Wealth
This is a specific subset of the Ellevest platform that is targeted at people with more complex financial situations.
It is supposed to be used by individuals looking to invest one million dollars or more.
You get dedicated financial advisors that provide one-on-one portfolio management services. This gives you direct access to the client services team, customized portfolio construction, and asset allocation, as well as options for impact investing.
Their website does not give a price for this and is marked as “based on assets under management” in their annual fee section.
- No account minimum* and low fees
- Women’s investing needs are very specifically met
- Has a structured approach to your investments
- Beginner-friendly platform and design
- Emergency fund
- No-fee transfers
- Real estate ETFs included in some portfolios
- No tax-loss harvesting, unlike many other robo advisors
- Few numbers of supported accounts
- Limited customer support hours
What Is M1 Finance?
M1 Finance is a hybrid between a robo advisor and a broker built for everyday people who want to take part in investing in stocks or ETFs.
It meshes many of the features involved with a traditional brokerage account with the newer robo advisor utilities.
The process works as follows; You manually select which investments and allocations that you want and then you automate your portfolio. Or, you choose a prebuilt portfolio to invest in, simple as that.
It aims to give you as much control as possible of your finances while still being a tool for passive investing.
M1 Finance Features
Dividend Reinvestment Plan
If you are earning dividends in your portfolio, then that money will go towards your cash balance up to a $10 mark. Upon reaching this threshold your money is automatically invested across your entire portfolio!
The feature allows you to turn your M1 Finance platform into a banking platform as well.
With M1 Plus Checking you get access to the M1 Visa debit card which has a 1% cashback. M1 Plus Checking allows you to get to your money when you are ready to by integrating with your brokerage account.
With M1 Spend you will be getting 1.5% APY in addition to 1% cashback on all purchases, 4 free ATM withdrawals a month, $0 minimum balance and the security of being FDIC insured.
If you get the M1 Plus program you will have an annual fee of $125.
With M1 they offer a simple approach to borrowing money.
First you’ll create your account and build your investment portfolio with a schedule for deposits either weekly, biweekly or monthly.
Next, when your portfolio value reaches the $10,000 mark you will have access to a line of credit which allows you to borrow up to 35% of the value of your taxable brokerage account.
As stated above M1 allows you to take out a margin loan. As long as you have a balance of $10,000 in your brokerage account you will be able to make use of this feature. It allows you to borrow up to 35% of your taxable brokerage account.
Something that M1 strives to be able to do is keep you in control of your finances without making it too hands-on. This is something that they aim to accomplish with the automation of your portfolio.
You set up automated deposits and if you wish you can put your portfolio on autopilot.
M1 Portfolio/ Pies
M1 allows for added flexibility with the feature of creating a portfolio of stocks and ETFs called “Pies."
You can have up to 100 stocks or ETFs in each pie and you can have as many pies on your M1 account as you would like. They also offer expert pies for someone who wants a little bit of help in choosing their investments.
- 100% free investing platform
- Option to be 100% passive or 100% active with selection of individual stocks/ETFs
- Automation features like DRIP and rebalancing
- Expert pies for a no stress investing strategy
- Fractional shares
- No mutual funds
- Less efficient tax loss harvesting than other robo services
- Only 1 trading window per day on the basic program
- No access to financial advisors
The Verdict: M1 Finance vs Ellevest
It is difficult to render an end all be all between these two services as they are really designed to accomplish two different tasks.
Ellevest is very specific in what it sets out to do. They aim to help women with their specific investment needs.
Ellevest also has a lot more of the structure that has become the industry standard for robo advisors such as access to financial planners and tax minimization strategies. So it may be the better choice for someone who wants a lot of guidance on what to do with their finances in this certain area. You won't have access to financial advisors with M1.
M1 Finance is designed for long term investors and those who would like to build their own portfolios. Or, those who want to invest in expert built portfolios for free.
M1 also features greater flexibility than Ellevest and has an abundance of features for active investors. It also doesn’t have any fees and has a lot more account types available to you.
In the end, if you are looking for the most structured option, out of these two with a targeted approach then Ellevest may be the choice for you.
However, if you want something with less hand-holding as well as great flexibility and long term investing features then you may want to choose M1 Finance.
*Ellevest Account Requirements
Ellevest Digital doesn’t require you to maintain a minimum account balance. However, there are portfolio specific minimums (ranging from $1 to approximately $240). You may not receive the entire recommended portfolio until your account balance meets the respective portfolio minimum.
Rebalancing And Ongoing Management
Ellevest will not rebalance a portfolio until it meets the respective account balance minimum necessary to generate the required shares. This minimum is a function of portfolio allocation and the share price of individual holdings, which will vary.