Compare Charles Schwab vs M1 Finance: IRA, commissions, investing fees, trading tools, account pros and cons. Which online broker is better?

Overview of Charles Schwab and M1 Finance

If you’re thinking about paying $0 for stock and ETF trades at Schwab, you may want to check out M1 Finance. The latter firm is a new company that’s trying to alter the way people invest and save. Let’s compare these two and find out where each one excels.

Broker Cost

Broker Fees Stock/ETF
Mutual Fund
Annual IRA
Charles Schwab $0 $49.95 ($0 to sell) $0.65 per contract $0 $0
M1 Finance $0 na na $0 $0


Broker Review Cost Investment Products Trading Tools Customer Service Research Overall Rating
Charles Schwab
M1 Finance

Are Managed Accounts Available?

At Schwab, there are several investment choices available besides self-directed accounts. First on the list is a free robo-advisory service. There’s also a hybrid automated-traditional package that costs a low 0.28% annually. And then there are the old packages that cost more but offer more than just low-cost exchange-traded funds.

At M1 Finance, there are no managed accounts; but the company does offer Pies. These are baskets of securities created by investment pros at the broker. They are constructed with Modern Portfolio Theory, a style that attempts to achieve the highest possible risk-adjusted return using active management. Pies have no management fees other than expense ratios that any ETF’s in the Pies have.

Schwab doesn’t offer Pies, but it does manage its own lineup of mutual funds and ETF’s, some of which are actively managed; while others are index trackers. These can be traded in both managed and self-directed accounts.

What Financial Instruments Can Be Traded?

M1 Finance clients have access to stocks and exchange-traded funds. These are the investments that the company’s Pies are built from. The broker unfortunately does not offer trading in any other security. This obviously is a colossal weakness.

Despite its weak showing in number of investment vehicles, M1 does offer plenty of account types. We found IRA’s (except SIMPLE varieties), trusts, and custodial accounts.

Schwab customers have access to more account types. We found a SIMPLE retirement account, 529 plans, estate accounts, and a self-employed 401(k) offering. The broker-dealer also offers option contracts, bonds, mutual funds, and futures.

And What About Customer Support?

Schwab customers can reach a rep any time of the day or night. M1 Finance, by contrast, only offers phone support during the weekday. The M1 site offers no chat service, while Schwab does provide human chat most hours. We expect an AI chat anytime now.

Besides the support available through electrical wires, Schwab offers in-person service at hundreds of branch locations. M1 has none.

What Are the Cash Management Features?

Because Schwab operates its own bank, it offers a lot of services in this category. Checking and savings accounts are both available, and the checking variety comes with a Visa debit card and checks. There is no charge for these tools, and the ATM card offers worldwide fee rebates. A bank account can be conveniently linked to a brokerage account.

M1 Finance is offering free checking account and two debit cards. One is free and the other one has $50 annual fee but comes with 1.5% APY on cash held. It also has 1.00% cash back on all purchases and 4 free ATMs uses per month.

Which Broker Has Better Software?

Trading Pies at M1 Finance takes place on the broker’s simple website. Charting offers zero tools, there is no trade bar, no browser platform, and no desktop system. Schwab, by comparison, offers a very sophisticated website with a simple trade bar. The bar isn’t able to submit orders, but it does provide quick access to information.

M1 vs Schwab

Besides its website, Schwab offers two trading platforms: StreetSmart Edge and StreetSmart Central. The latter is a browser system that offers an advanced trading ticket and an excellent charting program. The former is a desktop system that offers Level II quotes, direct-access routing, live streaming of CNBC, and much more.

Schwab versus M1

Schwab also has a skill for Amazon Echo devices, and we don’t expect anything like this from M1 Finance anytime soon.

And Mobile Apps?

Both brokers in our review offer phone apps. Schwab goes two steps further and provides a platform for Apple Watch plus a tablet-designed app for iPad. M1’s app is simple to use and has a lot of the same functions that its desktop cousin has. Funds can be transferred electronically and trades can be submitted. But there’s no charting capability; and we were disappointed to find no check deposit feature.

Schwab customers can submit a paper check for deposit, watch CNBC news, place trades for options and mutual funds (in addition to stocks and ETFs), and much more. Charting is very good on the app.

Who Is Better for Investment Research?

M1 Finance emphasizes low fees, so it doesn’t offer much in terms of research or education. Its stock and ETF profile pages have almost nothing on them. There’s a simple graph, and a stock’s P/E ratio, market cap, and dividend yield are shown.

Schwab, by contrast, offers a tremendous amount of information on its equity profiles. For example, analyst reports can be downloaded free of charge. The broker displays put-call ratios for stocks, earnings histories, dividend payments, and so much more. No comparison.

And Retirement?

IRA’s are available at both brokerage firms. Schwab has the advantage of offering a SIMPLE IRA and a solo 401(k), neither of which are available at M1. We also like the retirement section on Schwab’s website. It offers lots of tools, such as articles, quizzes, and calculators to help self-directed investors build a nest egg more competently. Although M1 does offer target-date Pies, Schwab has target-date funds and much more.


M1 Finance: Get $30 for $1,000 deposit or up to $3,500 when you transfer account with $10K+.

Charles Schwab: Open Schwab account and get $0 fee stock trades.

Our Recommendations

If you want to buy a stock, but cannot afford a single share (something like Amazon trading at $1,650), we suggest M1 Finance over Schwab. The latter doesn’t offer trading in fractional shares, but M1 does. Simply put one stock in a Pie and trade that. You get to invest whole dollars instead of whole shares. In the Amazon example, you could invest $165 and get a tenth of a share.

For small accounts, we recommend Schwab, who doesn’t have any account minimums. M1’s is $100. Schwab seems like the better choice in most other categories as well.

M1 Finance vs Charles Schwab Summary

M1 Finance has rolled out a unique method of investing. It is definitely better priced than the bigger rival in some areas, such as margin rates. But in some categories, it doesn’t quite measure up to Schwab.

Since both brokers charge nothing to open, maintain, and close an account (non-IRA) it makes sense to open an account at both firms and see which one you like better.

M1 Finance

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