Personal finance platform M1 Finance has introduced a feature that automatically links its investing, borrowing and spending capabilities, allowing money transfers between all three modules.
Smart Transfers, as the new feature is called, lets M1 clients set thresholds for minimum and maximum dollars in their Spend Plus checking account, which can be replenished from cash in their M1 Invest account when the balance falls below the minimum, for example.
When the balance exceeds the maximum set, they can move those funds into their Invest account. The client would just have to create the rules that set the parameters for the automatic movement of funds.
“Smart Transfers are the answer [to our] on-going quest to help investors optimize every dollar and build long-term wealth and achieve financial freedom with ease and control,” said Brian Barnes, M1 CEO, in a statement.
In all cases, including the investing module, the investor decides. This differs from other digital advisor services that offer pre-set portfolios based on risk tolerance.
“There is a lot of flexibility,” Barnes told ThinkAdvisor.
The Smart Transfers feature is available only to clients enrolled in M1 plus service, which costs $125 a year and has no maximum.
The feature is similar to Wealthfront’s Autopilot offering that also has checking accounts linked to investment accounts, and is the first tangible offering from the firm‘s Self-Driving Money platform.
The idea behind Smart Transfers and Autopilot — and most additional offerings from digital advisors — is to provide one destination for investors to save, invest and borrow so that they don’t have to venture anywhere else for those services.
“People want to go to one platform to manage their money,” said Barnes.
Launched four years ago, M1 offers clients three modules. In addition to its investing module, which includes 6,000 different securities (stocks, equity ETFs and bond funds), there’s a borrowing module that allows loans equal to up to 35% of a client’s portfolio, and a high-yield checking account module called M1 Spend, which pays interest on cash balances.
The basic service is free, but its borrowing rates are higher, around 3.5% rate. The premium service is M1 plus, which costs $125 a year, and its borrowing rate is near 2%.
M1 Finance has 250,000 clients with over $2.5 billion on its platform, up from $800 million at the start of this year, said Barnes.
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