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

Overview of Firstrade and M1 Finance

M1 Finance has a unique style of investment management, while Firstrade offers a more traditional lineup of self-directed services. So which broker do we recommend? To answer that question, we first need to explore some vital investing topics.

Cost

Broker Fees Stock/ETF
Commission
Mutual Fund
Commission
Options
Commission
Maintenance
Fee
Annual IRA
Fee
M1 Finance $0 na na $0 $0
Firstrade $0 $0 $0 per contract $0 $0

Services

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

Promotions

M1 Finance: Get up to $2,500 when you transfer account with $20K+.

Firstrade: Get transfer fee rebate.



Tradable Assets

Firstrade customers can buy and sell closed-end funds, ETF’s, mutual funds, fixed-income investments, equities, options, penny stocks (above 10¢), and OTC stocks.

M1 Finance specializes in what it calls Pies. These are baskets (not funds) of securities. A Pie can be made up of stocks, ETF’s, or closed-end funds, or a combination of all three. The broker creates Pies based on various themes like income generation or retirement. A software program rebalances them according to Modern Portfolio Theory. There are no other investments available. Whole-dollar amounts can be invested in Pies, which means it’s possible to trade small fractions of stocks and funds.

While M1 Finance’s investment method is intriguing, Firstrade offers more securities; so we pick it in the first category.


Security Research

On Firstrade’s website we found a rather minuscule section devoted to financial education (click on “Education” in the upper menu). There are videos and articles (mostly articles) on trading the securities the broker offers.

We did like the options learning section on Firstrade’s site. There are several derivative calculators available and even some e-books. These would be excellent for novices.

Also found on the broker’s site is a glossary of investing terms; and once again, this would be a good resource for new traders.

Security profiles are populated with data directly taken from Morningstar. Even the graphics and layout are the same.

Over on the M1 site, security profiles aren’t pulled from an external source. The broker provides the information, and there’s not very much of it. For example, a stock’s profile doesn’t offer return on equity (%) or the year’s price range, both of which are on Firstrade’s profiles.

For general learning, M1 Finance customers don’t have very much, either. The brokerage firm doesn’t have any learning articles, although there are a few videos on M1’s YouTube channel.

Firstrade wins category #2.


Financial Advice

Although M1 Finance doesn’t offer any type of financial planning services, it does have a software program that constructs Pies to make investment decisions easier. For example, there are target-date Pies that take a lot of the guesswork out of retirement planning. We found a 2030 Aggressive Pie that is composed mostly of Vanguard ETF’s. M1’s software program will rebalance the Pie periodically through 2030 and probably beyond.

Firstrade doesn’t offer any type of robo or human management or advice. It does have target-date mutual funds from various fund families, such as Vanguard, JPMorgan, Fidelity, and T. Rowe Price. These funds essentially do the same thing that M1 Finance does with its Pies.

With more fund family choices, we think Firstrade is the better option here.


Trading Software

Firstrade customers can place orders using the broker’s clever trade bar. There is no browser platform or desktop software.


Firstrade or M1


The trade bar can submit orders for stocks, ETF’s, closed-end funds, and options. Bonds and mutual funds are traded on web pages. The trade bar delivers a lot of useful tools, including quick security research, real-time data, option chains in a pop-up window, and multiple order types.

On M1 Finance’s site, there is no trade bar; nor is there a desktop program or browser platform. So how do M1 customers place orders? They don’t, technically speaking. Instead, they submit trade requests to M1 Finance, who then submits orders to the exchanges (only) at certain times of the day.


M1 vs Firstrade


Charting on M1 Finance’s site is dreadful. Firstrade uses Morningstar’s software.

Firstrade wins again.


Mobile Apps

Firstrade’s mobile app offers better charting than M1’s website. With a horizontal mode, several tools can be used. There are also multiple display styles.


Firstrade versus M1


The software’ order form provides market, limit, stop, stop limit, and trailing orders. Time-in-force choices include day, good-for-90 days, pre market, after market, and day + ext. Option contracts can be traded, although mutual funds have to be traded on the website.

Moving to M1 Finance, we get another user-friendly mobile app. However, charting is very rudimentary; and once again, there is no trade ticket. News articles are linked to external sources, and Pies can be researched.


M1 vs Firstrade


We were disappointed to discover that neither app has mobile check deposit or streaming business news. Both platforms do offer Touch ID, however.

M1 Finance loses another category.


Other Services

Dividend Reinvestment Program: Firstrade customers can sign up for a free DRIP service that converts cash distributions into additional shares of securities that paid the distributions.

At M1 Finance, the system is a little different. The broker takes cash dividends and uses the proceeds to purchases shares of underperforming assets within a Pie. These could be different securities from the ones that paid dividends.

IRA’s: Firstrade clients can open Roth, traditional, SEP, and SIMPLE Individual Retirement Accounts. M1 doesn’t offer a SIMPLE IRA. The broker also charges $100 to close an IRA, a fee that Firstrade doesn’t have.

Automatic mutual fund investing: Firstrade offers recurring deposits into mutual funds. For obvious reasons, this service is unavailable to M1 Finance customers.

All things considered, we have to pick Firstrade here.


Promotions

M1 Finance: Get up to $2,500 when you transfer account with $20K+.

Firstrade: Get transfer fee rebate.



Our Recommendations

Stock and ETF Trading: Although M1 does allow whole-dollar investing, it just simply doesn’t have the trading tools to get the job done. We have to go with Firstrade for its research materials (including great screeners) and trade bar.

Beginners: While M1 Finance has done a good job simplifying the investment process, we will pick Firstrade for its more thorough educational materials.

Mutual Fund Traders: Firstrade for reasons already mentioned.

Long-Term Investors and Retirement Savers: With mutual funds and better learning resources, Firstrade is the better choice.


M1 Finance vs Firstrade Summary

Firstrade won every single category we looked at. If M1 Finance wants to compete with other brokerage firms, it will have to make some changes.



M1 Finance


Continue Reading