Betterment vs. Ellevest vs. M1 Finance

Daniel Penzing
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About Betterment

Vs. Ellevest vs. M1 Finance

Don’t invest in a roboadvisor until you’ve read this review! The three leading robo-advisors in the U.S. Betterment vs. Ellevest vs. M1 Finance all have different account minimums, tax efficiency, and investment portfolios. Luckily you don’t have to pick between any of these because you can invest in all of them with Skimlinks, which allows you to buy links and get paid by publishers when your readers click them.

By the end of this review, you’ll be equipped to make an informed decision and select your own ideal robo-advisor.

About Ellevest

When Ellevest began in 2014, they had two primary goals: to provide Investors with a personalized financial planner that was simple to use and easy to understand, and to provide Mentors with a simple way to teach women about investing. Ellevest website has a clean design, and it’s both simple to use and easy to understand.

Ellevest serves as a personalized financial planning for men and women. The company partnered with American Funds, the executives that make up the largest family of index funds in the industry. There are ten preset portfolios that you can set up, all based on your goals and values.

Ellevest also provides you with your own financial coach who will help you meet your goals, as well as a financial advisor who will use your goals to help you reach your financial goals. The financial advice you receive from your coach or your advisor is completely free.

Ellevest has partnered with companies like LearnVest and NestWise, who provide their financial advisors with educational training. In addition, in order to establish a risk profile, the company allows you to take a personality test and an investment quiz that will determine how your personality is affected by stress and emotions.

About M1 Finance

The M1 Finance app is a way for individuals to invest and save a little money by automating the process. It was created by OnDeck Capital and is almost fully automated. When you establish your account, M1 Finance sets up your percentage of stocks, bonds and cash according to your risk tolerance and goals. Then, it automatically makes changes to your portfolio when you add funds. There are no rebalancing fees or minimums, either.

The M1 Finance app is ready to go for those interested in both short-term and long-term goals. You can rebalance as little as once a week or you can choose to not rebalance at all. This flexibility lets you pick your schedule based on the amount of time you want to put into your investments.

Investing is one part of building a secure financial future, but a financial advisor can help you with the rest. The M1 Finance app alone is a great way to invest and save on your own, but having an outside perspective can help you expand your portfolio and come up with new ways to grow your money.

The M1 Finance app is available on Android, iOS or on a web browser and charges no fees.

How Are They the Same?

All three companies offer a robo-advisor service, meaning they use an algorithm designed to pit their customers’ investments against other investors to increase their overall performance. The three are also relatively new companies, with Ellevest and M1 Finance being the younger siblings of Betterment.

How Are They Different?

When making retirement and investment choices, it can be confusing and overwhelming to know what is the best for you. And whether you are just beginning to take charge of your retirement savings or are more experienced (maybe you have been freelancing for a few years or have a history of saving for your later years), it is likely that you have come across one or more of the robo-advisor companies – Betterment, Ellevest, or M1 Finance. (This is not necessarily a comprehensive list, there are other companies out there, including but not limited to, WealthFront, Robinhood, WiseBanyan, and Vanguard Personal Advisor Services, but we are focusing on the three major companies.)

All three will give you the same services – managing your investments and helping you grow your portfolio, investing for and tracking your retirement and tax account, and helping you plan for the big day.

Unique Features

Of Ellevest:

Features Unique to Betterment

At the most basic level, all investment apps are designed to help you save money and make more money. So you have to ask yourself two essential questions when you’re comparing investment apps:

  • Does this app help me save?
  • Does this app help me make more money?

By looking at the answer to both of these questions, you’ll see which investment app is best for you.

Does this app help me save?

As far as savings go, a personal finance app like M1 Finance or Stash is a better choice than an investment app like Betterment or Ellevest. The reason is simple: you save money in your bank account, not in a brokerage account. Personal finance apps allow you to easily move your money around on your own without the help of an advisor. They also enable you to set up automatic savings for similar amounts throughout the month.

Betterment, on the other hand, is better for investing.

Unlike a personal finance app where you can only move your saved money, Betterment sweeps your entire balance out of your bank account and puts it into your investment account every once in awhile. This makes it easy to invest and saves you the trouble of having to arrange for separate transfers into your investment account.

Does this app help me make more money?

Features Unique to Ellevest

Ellevest brings a lot to the financial planning table due to a few unique features. Ellevest accounts aren’t connected to any other accounts – meaning that there’s no unwelcome automatic investment transfers to or from the Ellevest client’s personal bank accounts. The client has the full control of where his or her money goes.

This is a great feature especially for those new to investing; it helps keep the investor’s money in a diversified portfolio while avoiding the stress of trying to keep track of the different funds, where the money is, and the desire to keep more of it. This feature can also be a great option for those that wish to easily access their money. It’s a lot simpler to cash out an investment when there aren’t contributions to multiple accounts. Clients have the option to move their investment away from Ellevest, but otherwise, it’s a simple process.

Ellevest’s wealth manager often holds regular meetings with the clients to make sure that the strategy is still in line with the clients’ goals and to make sure that they’re on track to reach them.

Features Unique to M1 Finance

Since we last posted from M1 Finance we have changed how investors will be receiving their payouts.

As of March 1, 2018, a change will be made in how M1 Finance distributes payouts following dividend quarterly payments and corporate stock buybacks. M1 Finance will now factor a company’s stock price into the dividends it pays out to you, known as “Payout Adjustment Factors.”

We are changing this to keep a steady pace of distributing payouts. You will see the impact of the distribution schedule updates on your cash outflow when we go live with Payout Adjustment Factors.

Instead of receiving all dividends at the end of the quarter, we will be distributing all dividends weekly, instead of quarterly. The week before every quarterly pay date, the payout schedule will be adjusted accordingly based on stock prices.

Minimum Investments

Annual Fees

Standout Features

Betterment is an online investment management service that allows you to maintain and manage your investment accounts on a self-directed basis. The company is legally incorporated under the name Betterment Inc. and was founded in 2008.

Is an online investment management service that allows you to maintain and manage your investment accounts on a self-directed basis. The company is legally incorporated under the name Betterment Inc. and was founded in 2008. Ellevest is an online investment management service for women investors. This company was formally launched in 2016 by Sallie Krawcheck.

Is an online investment management service for women investors. This company was formally launched in 2016 by Sallie Krawcheck. M1 Finance is a robo-investing platform that enables investors to construct a diverse portfolio of investments using low-cost exchange-traded funds (ETFs). This investment management service was developed by the founders of AdvicePay, a company that provides financial advice to workers without access to retirement plans.

Betterment

Vs. Ellevest vs. M1 Finance

Betterment, Ellevest, and M1 Finance are three leading online-only financial advisors. They all offer robo-advisors that invest your contributions in exchange-traded funds to help you reach your financial goals.

Betterment, Ellevest, and M1 Finance all charge fixed fees of 0.25% to 0.40% of your balance and all offer automatic rebalancing and tax-loss harvesting. Along with traditional index fund portfolios, the robo-advisor plus service provides ongoing financial advice at an affordable rate.

They vary slightly in terms of the types of accounts available – they offer individual investors Roth IRA, 401(k) rollover, SEP IRA, and traditional IRA options, and they’re adding IRA options to personal checking accounts. They all offer multiple portfolios – two for Betterment and Ellevest, four for M1 – and investment advice from financial advisors at ETFs for each of the portfolios.

On the surface, you may think there’s little difference between each of the robo-advisors. But there are subtle differences that you should take into account when choosing one of these financial advisors.

Ellevest

The rise of online stock trading has led to the rise of robo-advisors, or online investment services. Currently, some of the most popular robo-advisors include Betterment, WealthFront and Personal Capital. So how do you decide which one’s right for you?

One robo-advisory platform you should consider is called Ellevest. Ellevest is the brainchild of Sallie Krawcheck, the former Wall Street veteran who was brought on in 2017 as Ellevate’s Chief Executive Officer. Krawcheck founded Ellevest with the mission of empowering women’s financial wellness. The platform provides investment advice exclusively for women, and it is not a one-size-fits-all solution. In fact, the proprietary algorithm takes into consideration the specific financial needs of each woman.

So what exactly are the Ellevest investment options?

Ellevest Build Wealth Account

This is the core investment option. Here are the benefits:

  • Ellevest presents women a customized financial plan based on their goals and values
  • The plan is tailored to women, which means they will be shown diversified, gender-specific investment portfolios and will also be given specific tips and guidance on how to manage finances
  • The customer support team is available 24/7 to address the needs of women

M1 Finance

Vs. Ellevest

Before diving into M1 Finance vs. Ellevest, we first need to take a look at the similarities and differences between robo-advisors and brokerage accounts.

Robo-Advisors v. Traditional Brokers

Robo-advisors are wealth management services that connect to individual/joint bank accounts via an online platform. These qualified investment advisors (QIA) use algorithms to invest in the appropriate securities/investments based on your specific goals/objectives, risk tolerance, and investment horizon. The services are free and also provide customers with an optional human advisor (e.g. a tax advisor, financial planner, etc.) at extra cost.

On the other hand, traditional brokers are account custodians that manage client accounts. They provide portfolio management, performance reporting, and access to a broad variety of securities. The account fee/regulatory fees are cheaper than the fees provided by robo-advisors, but focus on traditional investment products.

Thus, the key difference between the two is that robo-advisors use a computer-generated model to make investments, whereas the entire process is performed by the human advisor in traditional brokerage accounts.

Comparing M1 Finance vs. Ellevest

Customer Service

Ellevest stands out, not only for the way it mitigates risk and increases growth potential for its clients, but for their excellent customer service. These days, it’s incredibly rare to find a company that has a great product, so when one comes along, you have to make sure you bring it to the public’s attention. You won’t be disappointed.

Not only does the company take a human approach to asset management (they assign a Personal Financial Advisor to every investor), it does so in a 100% digital environment. To ensure no one falls through the cracks during the application process, its customer service agents remain in constant contact with applicants to gather information, discuss investment goals, and address any fears they may have. When the time comes to make a contribution to the investor’s portfolio, personal financial advisors review the investor’s goals and risk tolerance to make sure they’re on the right track to reach their specific end goal. They also walk investors through the 401k to determine which investments to choose and the impact those investments may have on their financial future.

Security

Competition is always a good thing and when you have a handful of players in a particular market looking to attract your business the singular customer benefit of Betterment is it has a Certified 100% secure Server SSAE 16 Type II certified.

This is a coveted security certification so the fact that this meets and exceeds the Banking Standards around Financial Data Storage also means you know that your money is securely stored.

Now, there are other platforms out there like M1 Finance, Ellevest and Wealthfront that also have secure servers but none with the demonstrated verification that Betterment has gotten in the history of this software.

Who Are They Best For?

We created the Ellevest Woman’s Index to identify the funds that are best for women. It’s based on a few factors, including fees, past performance, and price volatility. We think it’s pretty neat, because it means that if you invest in an Ellevest Portfolio, it has been optimized for women investors from the get-go.

Should You Use Ellevest, Betterment, or M1 Finance?

If you’re ready to take matters into your own hands, deciding which of these robo-advisors to go with can be tough. So, to compare the tools, we’ve put together a handy-dandy comparison chart for you.

What we discovered is that they pretty much come out even in terms of fees. And don’t forget that you also get access to an online financial advisor, too, so if you’re in the market for help, this is a convenient option. Keep in mind, however, that it’s still important to keep your finances in a great place. That means you may want to check out a few personal finance books and brush up on your budgeting skills before you get started.

Which Is the Best?

Currently, Ellevest is one of the best women-focused online financial management tools on the market. Their retirement and investing plans are uniquely designed to take into account life events such as career changes, childbirth delays, and time out of the workforce.

Their goal is to empower women by giving them a financial education and professional guidance to grow their wealth.

There are also many women’s focused personal finance websites and personal financial management programs available. These have been specifically designed to appeal to the needs of women, and are, on the surface, very similar in their offerings.

If you’re currently exploring the best option for yourself, you’ll likely find that all of these options are quite different in terms of their actual focus and the scope of their offerings.

Best Benefits

Overall, Ellevest has some of the most comprehensive and detailed offerings for women, which is what drives it to the top of the list.

In addition, Betterment and Ellevest are two of the highest-rated companies on the market. Their strategies have a good reputation among investors, with Betterment being the second largest investor among millennials.