2019 Etrade versus M1 Finance: compare IRA, commissions, investing fees, trading tools, account pros and cons. Which online broker is better?

Two Rivals: M1 Finance and E*Trade

E*Trade advertises a lot and it’s been around for several years, so it’s very well known. M1 Finance, on the other hand, is a recent entrant in the brokerage arena and is mostly unknown. This article will contrast and compare the two brokers, and see where their strengths and weaknesses lie.


Cost

Broker Fees Stock/ETF
Commission
Mutual Fund
Commission
Options
Commission
Maintenance
Fee
Annual IRA
Fee
M1 Finance $0 na na $0 $0
Etrade $6.95 $19.95 $6.95 + $0.75 per contract $0 $0


Services

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


Investment Offerings

M1 Finance clients primarily buy and sell Pies. These are collections of stocks and exchange-traded funds. Pies don’t trade on exchanges, so they’re not funds. It’s possible to have just one stock or ETF inside one Pie. A really nice benefit that Pies offer is fractional shares, which means it’s possible to buy a fixed-dollar amount of one stock or ETF. The primary weakness of M1 Finance is that it doesn’t offer trading in bonds, futures, options, or mutual funds.

E*Trade customers get all of these investments plus the stocks and ETF’s that M1 offers. Fractional shares of stocks and ETF’s are not available for initial purchase at E*Trade, although the broker does offer reinvestment of fractional shares from dividends. We found an IPO center on its website, something that M1’s site does not have.

The Pie system of investing is attractive, but overall E*Trade provides a larger selection of products; so it wins this category.


ETF Resources

There’s no point in examining mutual fund resources, because obviously M1 Finance would lose. As for ETF’s, both brokerage firms offer online resources for searching and learning. M1’s ETF profile pages show a small graph with no tools of any kind. An ETF’s prospectus is linked on the profile page, and this document is a must read. The number of holdings is shown along with inception date. And that’s about it.

E*Trade’s ETF profile pages provide Morningstar ratings, information on whether the fund is trading at a discount or premium, the dividend yield, the 52-weeek range, fund reports in pdf format, a link to an ETF’s prospectus, option chains if they exist, performance history with advanced charting, detailed information on portfolio composition, and much more.

E*Trade also provides an All-Star list of ETF’s. These are securities that have been screened by the broker-dealer’s investment professionals. There is no charge for this list, which could be of value to customers who don’t want to do their own research.

E*Trade triumphs in this category.


PC Trading Tools

The M1 Finance website is where trading takes place because the broker-dealer does not have a browser platform or desktop software. There is also no trade bar on its website. M1 submits orders within a trading window each day, so there isn’t a trade ticket that clients can use. Graphs on the M1 site offer no tools. We did find a watchlist that can be created, and the broker’s website offers user-friendly buttons to rebalance and edit Pies.


M1 vs Ally


Moving to E*Trade, we find a much more advanced website. Charting, for example, comes with technical studies, company events, full-screen mode, and comparisons. The broker’s order form offers market, limit, trailing, and stop orders.


Etrade Pro


In case the website isn’t enough, E*Trade clients can use the broker’s web browser platform. Called Power E*Trade, it offers a very sophisticated order ticket with lots of order types. The software provides multi-leg option strategies for easy order setup.

Finally, there is a desktop platform called E*Trade Pro for the most demanding investors. It offers a lot of professional-level tools, such as Level II quotes and profit & loss information.

E*Trade is our pick in this category.


Mobile Apps

M1 Finance’s mobile platform has the same look and feel as the website. Placing trades and charting have the same features. There is no mobile check deposit, and we couldn’t find video news. The broker’s app is designed only for phones, not tablets.


M1 Mobile


E*Trade delivers streaming financial news, courtesy of Bloomberg. The broker actually offers two apps: a Power version, modeled after the browser platform, and the regular model. Both offer a great deal in terms of security research. Stock reports in pdf format, for example, can be downloaded free of charge on the regular E*Trade app. The Power app offers a very advanced trading ticket and the ability to trade futures contracts.


Etrade Mobile


E*Trade is the outperformer here.


Other Technologies

Besides its phone app, E*Trade also provides a platform for tablets. Phone users may want to check out the broker’s smartwatch app, which is able to show info on market indexes, account positions, a watchlist, and more.

M1 Finance doesn’t offer anything in this category, so E*Trade is once again our choice.


Investment Education and Stock Research

M1 Finance doesn’t offer any learning materials for investing or personal finance. It does offer minimal research on stocks, but profile pages are very brief. We found data on number of employees, P/E ratio, dividend yield and market cap. Beyond these brief details, there’s not much else. The broker’s stock screener has just a few search criteria.

At E*Trade, we found articles and videos covering a lot of investment ground. There are topics on how to do sector rotation, how to use margin, and how to use technical analysis. E*Trade’s stock profiles offer data on insider trading activity, analyst research, financial statements, press releases, and much more.

E*Trade is definitely the top choice here.


DRIP Service

E*Trade customers can sign up for the broker’s free Dividend Reinvestment Plan. Stocks must be at $5 or more to be eligible.

M1 Finance doesn’t offer a traditional DRIP service. Instead, it pays cash dividends into a core account and then uses the proceeds to buy more shares of a Pie based on target allocations.

M1 Finance takes this category.


Promotions

M1 Finance: Invest for FREE + borrow up to $5,000 at 0% APR from 06/01/2019 to 06/30/2019.

E*Trade: no promotions offered.



M1 Finance vs Etrade Summary

M1 Finance offers impossible to beat pricing - $0 commissions. They make money by offering investors optional service of trading on margin. And even there they have some of the best rates in the industry.

E*Trade does have an edge in almost all other areas. But is it enough to justify paying higher than average fees? We don't think so.



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